How to Buy a New Car in Today’s Challenging Market

Consumer Reports is no stranger to new-car buying. Relying on our team of secret buyers, we typically buy 40 to 50 new cars every year to test the most popular models and trims, and we experience most of the same challenges as other buyers. Unlike a couple of years ago, however, when we were often paying thousands above MSRP for most models, most of our recent acquisitions have been at or below list price.

Gabe Shenhar, associate director of CR’s auto test program, points out that if you’re buying a new or redesigned model—especially one that has been greatly anticipated by the buying public—you’re much more likely to pay above sticker. "Keep in mind, too, that buying a first-year model often comes with more reliability problems because the manufacturer hasn’t had a chance to work out the bugs," he says.

As manufacturers have prioritized more-expensive models and higher-end trim levels in recent years, affordable new cars have become harder to find. Even so, according to the most recent Consumer Price Index report from the Bureau of Labor Statistics, new-car prices have eased off about 1 percent on average since last year.

If price is an issue, a smaller car, or one with fewer features, could be an option. But for someone who needs something more expensive, like a 3-row SUV, a truck, or a minivan, manufacturer-subsidized financing on new cars (for qualified buyers with good credit) can make buying more affordable. All you have to do, says Shenhar, is seek out the CR Recommended models with the best incentives.

Prearrange financing. Figure out your budget and get financing based on what you can afford to pay monthly and as a down payment. It’s always a good idea to get financing set up through your bank or credit union before going to a dealership to look at cars. That gives you a baseline against which you can compare the terms of dealer financing, which may or may not be a good deal. Sometimes dealer financing benefits from manufacturer subsidies that allow the dealer to offer a lower interest rate than you can get from your bank. Having financing ready to go will also give you a leg up if you’re looking at a sought-after car that isn’t likely to remain on the dealership lot for long.

Don’t pay too much. If you paid more than a few percent over MSRP, consider what the car will be worth when you trade it in someday. For example, if you buy an SUV that depreciates $15,000 off the sticker price in three years and you paid $8,000 over MSRP this year for it, that means it cost you $23,000 to own it for that short period. Cars are depreciating assets; overpaying for a new car is likely to compound your long-term losses. (See the worst car deals right now.) You don’t want to get a loan on a car that’s going to lose a lot of value over the next couple of years, or you may end up underwater on the loan, where you owe more than the car is worth for an extended period. This problem can compound when you buy your next vehicle, if you roll old debt into the next loan.

See what’s available. If you’re shopping for a new car, dealers near you may not have exactly what you’re looking for. Instead of going to the dealership to see what it has, search its inventory online, or call first. You may need to search several dealers to find something that’s close to what you’re looking for. Websites like TrueCar, Car Gurus, and Cars.com can show you what’s available within a specific geographic area.

Consider an EV. Many manufacturers bet big on EVs over the past couple of years, and they built more cars than consumers ended up wanting to buy. As a result, you’re likely to find a plethora of deals and incentives on new and lightly used EVs. For example, Ryan says Kia is offering 0 percent financing on the EV9. Incentives tend to change from month to month, so it pays to check often if you’re interested in buying. (See the most discounted cars right now.)

Expand your geographic search. If dealers where you live don’t have the car you want, try sellers outside your area. Be cautious about casting your net too wide, though. You want to be able to go see the car and test-drive it before signing a sales or leasing contract—especially for used cars. And with the market as hot as it is right now, the car you’re looking at might not be there if you have to travel too far to get to it.

Do your research. Whether buying new or used, consult CR’s road tests and ratings, looking at reliability, owner satisfaction, and safety. You want a short list of contenders to test-drive, and even more than before, you want a good understanding of the various trim versions and features because you might not find your dream configuration at the dealership. Print out information from CR.org and the manufacturer’s website so that you have it with you for reference and note taking.

Buy something reliable. Particularly if you’re forced to buy something more expensive than you normally would, your best bet is probably going to be to keep the new car for the long haul. Consult CR’s reviews and ratings to make sure you buy something reliable that won’t give you problems later on. (See our guide to car reliability.)

Compromise to a degree. Even if the dealer has the model you want, the car might not have some of the features you were looking for (and may have more than you want or need). Decide which options are really important and whether a vehicle not having all of them means you should consider a different car. 

Factor in your trade-in. Upgrading to a vehicle with better fuel efficiency, more up-to-date safety features, and even just more comfort or style can be compelling reasons to buy a new car. If you have a car to trade in or sell before buying something new, you may still be able to leverage its value against the elevated price of new cars. Also, a recent CR survey found that most people selling their old cars got more than they expected by selling to a vendor such as Carvana or CarMax.