Car Buying: 4 Questions You Need to Ask (and 1 You Shouldn't)

by Ryan Lane

Updated on: July 18, 2021

You and the car salesman share the same ultimate goal: you leaving the showroom with a new car. But you probably have different ideas when it comes to pricing, and no buyer wants to see the bill jump after they’ve finished haggling over a car price. Understand the final purchase price—and know what you're getting in return for that "door price"—by asking just four questions, and avoiding one, too.

1. What's the total out-of-pocket cost, including taxes and fees?

When a car dealer advertises "no cash down," or the "best deals of the season," those lower prices generally don't include taxes and fees. Even the manufacturer's suggested retail price (aka the MSRP or "sticker price") is listed before tax, so be prepared to pay a lot more than that amount for the actual car purchase.

Taxes on vehicle sales vary greatly by state and county. For instance, cars bought in Pennsylvania and registered in Philadelphia come with an 8% sales tax. That would add $2,400 to a $30,000 purchase. You can’t avoid that chunk of change, but you can factor it into your car-buying budget.

Similarly, car dealerships might charge fees for things like filing paperwork ("doc fees"), registering a car, and getting inspection stickers. These fees aren’t out of the ordinary and shouldn't be considered unfair, but you might see if you can haggle to get them waived. It's always worth a shot. At the very least, you should ask what they're for.

2. Can we discuss the car, my trade-in, financing, and add-ons separately?

You might assume that dealers make the bulk of their profit on a new car's sales price, but in reality, dealerships make money on six levers, including what they pay for your trade-in and any financing and accesory costs for your new car. Negotiating these items one at a time may mean more time at the dealership, but you'll get the best possible deal for each.

For instance, knowing whether you're getting appropriate trade-in value is impossible if you never actually discuss it. Before you head to the dealership, research how much your current vehicle is worth. That way, you'll be prepared to quickly and fairly negotiate this price, and move onto the next question.

3. Which banks do you work with, and can I use my own financing?

You may get better loan terms with financing options outside of the dealership—particularly if you're buying a used car. Before you go car shopping, see what options financial institutions like your personal bank or credit union offer. They may come with better terms, like a lower interest rate, depending on your credit score.

If you go with the dealership's offer, understand which bank or provider they will use to finance the car loan. If you're buying a new car, you may need to use the finance arm of the original equipment manufacturer (OEM) to secure the best deal—which may include benefits like special rebates. Be sure to ask about this option.

For any lender you end up using, make sure it will be easy to work with and is reputable. And of course, an important part of the car-buying experience is making sure you know exactly what you're agreeing to. Be sure to read the loan's paperwork carefully before signing on the dotted line.

4. What other amenities does your dealership offer?

Whether you're buying a used vehicle or a new vehicle, don't be afraid to ask for free perks during the negotiation process—oil changes, car washes, loaner cars or same-day service for maintenance, etc. Use the same tactic for any accessories or add-ons the dealer tries to sell you, such as an extended warranty.

The worst thing a sales manager can do with such requests is say "no," but they may not want to if they feel a sale slipping away. Sometimes, to close a car deal, you just need a little extra value to feel you're really getting a good price. And here's how you can get it without the dealer having to lower the price of the car further—that's a win-win, and great negotiating!

5. Never Ask if the Dealer Will Sell You a Car for a Certain Monthly Payment

Many dealerships are happy to negotiate based on monthly payment. One reason is that it provides car buyers with a simple, single number to think about. Odds are they'll take the deal if that number sounds affordable each month.

Another reason is that structuring a deal around monthly payment could add more months to an auto loan's term—increasing and masking the total you pay. That's good for the lender, but not you.

It's great to know how much you can afford to pay each month, but don't invite the dealer to sell you "any old car" with a similar market value. Target vehicles within your price range that make sense for you using our payment calculator, located on every CarGurus vehicle listing, and understand all the costs that go into that amount. Don't forget to schedule a test drive before you start making your counteroffers—fair price or no, you want to be sure you're getting the best car you can, and that means making sure you feel comfortable driving it.

The Bottom Line

Hidden costs are only "hidden" if you don't ask about them. When swapping numbers with car salespeople, understand what they are and aren't including, as well as how they got those numbers. It may sound like a hassle, but getting all this information is critical to the car-buying process. You don't want to negotiate down to what seems like the best price only to have thousands slapped onto it—or realize you left money on the table.

Related Topics

Everything You Need to Know About Leasing
What to Know When Getting a Car Loan
What Smart Car Shoppers Should Bring to a Dealership

Read More CarGurus Tips and Advice

The content above is for informational purposes only and should be independently verified. Please see our Terms of Use for more details.