Is No-Haggle Car Buying a Good Idea?
Are you looking to buy a car but feel nervous about the negotiation process? You aren’t alone — many car buyers dislike haggling.
Wouldn’t it be nice to find the car you want for an acceptable price and have that be the end of it? It’s possible, but no-haggle car buying is a process that should be researched just as thoroughly as you’d research the type of car you want to buy.
See how no-haggle shopping can benefit you, and when you should still haggle to get your best deal.
What is no-haggle car buying?
No-haggle car buying is a system in which you pay the dealer’s asking price on a vehicle — no more, no less. No-haggle pricing began in the 1990s when Saturn dealers instituted a strict no-haggle policy. Saturn customers loved the no-haggle part — but, unfortunately, Saturn didn’t last. No-haggle buying, however, is here to stay.
With traditional dealerships, you expect to negotiate on price. According to the Federal Trade Commission, you can bargain on the dealer’s profit margin on the car — the difference between the manufacturer’s suggested retail price (MSRP) and the dealer’s invoice price (what the dealer paid for the car). The FTC suggests you may be able to negotiate for a price reduction equal to 10% to 20% of this difference, depending on demand for the car.
No-haggle car dealers aim to make the process as straightforward as buying an item of clothing off the rack at a department store. The price for that new shirt is listed on the tag, and if you want to buy it, you just head to the register — the price is the price. And if you find a car you like at a no-haggle dealership, all you have to do to get the keys is to arrange payment and sign the papers.
Can you negotiate a no-haggle price?
The answer may seem obvious, but this is a fair question. The short answer is no. The buyer finds the car they want, pays the listed price and that’s the end of the process. No salesperson has to speak with their boss on the side, then find you in the showroom and “go over the numbers.”
Keep in mind that no-haggle pricing sometimes applies to your trade-in offer as well. If you plan to trade in your old vehicle as part of your car-buying experience, you may receive a firm offer with no room for negotiation.
Remember to take other factors into account when evaluating the out-the-door price you’ll pay. With taxes, service fees and administrative fees, you should be prepared to pay more than the sticker price when the deal is done, even at a no-haggle dealer.
Pros and cons of no-haggle car buying
This is a classic battle of time versus money. You’re likely to pay more for a car at a no-haggle dealership, but perhaps the saved time and hassle is worth the trade-off for you. Before committing to any purchase, be sure to understand the benefits and drawbacks of no-haggle pricing versus shopping at a traditional dealership.
A speedier process: Time is money. You know your budget and the car you want to buy. By avoiding the entire negotiation process, you can simply find the price you like and off you drive into the sunset.
Less stress: This process avoids the hours-long back and forth with a salesperson as you attempt to get their price down. If you’re someone who finds the negotiation process stressful, a no-haggle dealership might have you breathing easier.
More predictable: With haggling off the table, you’ll know what to expect when walking into the dealership in terms of total cost and time spent on the car-buying process.
Higher cost: Without the ability to negotiate the price, you have to accept what the listed price is. The price for a car at a no-haggle dealership is likely to be higher than the price of the same car at a traditional dealership. Experiences vary, but convenience comes at a premium. If you’re looking to save money, a no-haggle process might not be right for you.
No wiggle room: If you find your dream car but the price is just out of reach, you won’t be able to talk the dealer into dropping the price.
You still may have to negotiate: While the price of the car is fixed, you may still have to negotiate some aspects of your deal. If you’re using in-house financing, for example, there can be some negotiation involved. The same is true for your trade-in or any add-ons, like extended warranties or GAP insurance.
Shopping smart is crucial in a no-haggle environment to make sure you get a fair deal. Do your homework to determine the average price of the car you’re interested in. Industry pricing guides like Kelley Blue Book (KBB) and Edmunds can help you determine if the car you’re considering is reasonably priced.
5 ways to buy a car without haggling
If you’ve decided to opt for a no-haggle experience after weighing the pros and cons, you have several options. In addition to no-haggle dealerships, you could use car-buying sites, car-buying clubs or a car broker to acquire your next set of wheels.
No-haggle car dealerships
Some dealerships, like CarMax, offer no-haggle pricing as a core aspect of their business model. CarMax deals exclusively in used cars, which can be purchased online or at one of their store locations. They also offer in-house financing and tout a 24-hour test drive.
Of course, some dealerships have a better reputation than others. You can look up the dealership at the Better Business Bureau (BBB) to ensure you’re dealing with a reputable company.
Online car-buying sites
Sites like Carvana or Vroom keep the entire car-buying process online. You can search their inventory by make and model, price or location to find the car that best suits your needs. Once you find what you’re looking for, all that’s left to do is arrange financing or make your payment and choose your delivery method.
With a car broker, also known as a car concierge, a third party will work on your behalf to get the best deal on the type of car you want. You’ll begin with a quick interview, answering questions about your budget and must-have car features.
Your broker will then scour the market to find options for you. They can also facilitate test drives and handle all negotiations with the seller. They work exclusively for the buyer, not the dealer, so you can sit back and enjoy skipping the haggling. Car brokers will charge a fee for this service, often starting around $500, but their skill in negotiation may net you greater savings than you’d be able to get on your own.
Often, the price of the car is negotiated, but not by you. The club prenegotiates with dealers to present the best deal to its members, so all you have to do is find the car you want, take it for a test drive and sign on the dotted line..
Just pay MSRP
Of course, you could walk into a traditional dealership and offer to pay MSRP (manufacturer’s suggested retail price) to skip the negotiation process. MSRP isn’t always a bad deal. Many factors go into how a vehicle is priced; market conditions, location, make and model and even vehicle color can affect the cost. If a haggle-free experience is worth the added cost to you, this is certainly an option that will expedite the process.
Is no-haggle car buying right for me?
Whether a no-haggle experience is right for you all depends on your priorities as you begin your quest for a new ride. Talking to salespeople can be frustrating, intimidating or uncomfortable. Do you mind paying a little more if it means avoiding awkward negotiations?
The bottom line is that research is crucial and will help you decide how to proceed. Maybe no-haggle car buying is worth it for you if the difference is a few hundred dollars. But what if it’s a few thousand? Start by understanding how much car you can comfortably afford and what other consumers are paying for the same car. With that knowledge in hand, you can assess whether you’re receiving a fair deal.