As new and used car prices continue to drop and there’s talk of the Federal Reserve lowering interest rates, some people might be considering buying that new or used vehicle they’ve put off for a while.
According to Edmunds.com data, the average transaction price of $47,616 for June was down 0.7%, or about $330, from $47,946 in June 2023. And car buyers are getting a bigger discount from the sticker prices. Edmunds’ data showed the average manufacturer’s suggested retail price was up 1.6% at $49,434 in June compared with $48,651 a year before, basically giving car buyers a $1,819 discount versus a $704 discount a year ago.
Prices are dropping for used cars, too. The average customer paid $27,277 last month compared with $29,573 a year ago, Edmunds data showed.
But as the year progresses, carmakers are not expected to offer a lot of deals, said Cox Automotive executive analyst Erin Keating.
“Even brands holding onto more days’ supply, like many Stellantis brands, are keeping incentive spend in check,” Keating said. “There appears to be a real effort to hold the line out there.”
So if you want to strike the best deal on a new or used car, here are some tips from the experts on the best way to shop.
The key to a successful car purchase is to know your options before arriving at a dealership. That means knowing everything from particulars of the new vehicle itself, the value of your trade-in (which you can get online or from an expert), interest rates and what you’ll qualify for to what is negotiable in the price and what isn’t, said Ivan Drury, director of insights at Edmunds.com.
Let’s look at financing. Experts agree, go to a few banks or credit unions to get preapproved so you’ll know what interest rates for which you’ll qualify on both new and used vehicles.
“Why both?” Drury said. “Because shopping online versus being at the dealership are two completely different experiences. You might fall in love online with a listing, but one test drive later with a seating position that you find unbearable and you’re back to seeing what other fish are in the ocean, or, in this case, you might go from shopping new to seeing an excellent used option on the other side of the lot.”
Drury said that even though you’re preapproved with your bank, let the dealership also look for loans for you. Dealerships work with multiple financial institutions and often have deep relationships with them from years of dealmaking. Drury said if a dealer can save you even just a quarter point in interest, it is worth it.
“There is one financial institute that franchise dealers have access to that you don’t: The automaker’s captive finance company,” Drury said. “This is where dreams of 0%, 1.9%, 2.9% … financing come true, if you’re lucky enough to be looking at a vehicle that has one of these low APR offers. So let the dealership run your numbers.”
But before jumping at any financing deals the captives offer, do the math to see whether the savings in interest will be greater than whatever cash savings offer might be on the table.
Matt Smith, head of Consumer Insights for car shopping site CarGurus, said beyond coming in with preapproved financing, the most important figure to look at is the total “out-the-door” cost for the vehicle. That figure will include all fees and taxes because some fees may be negotiatable.
“Look for an itemized list of the fees,” Smith said. “They might not take a dealer fee off, but they might make adjustments elsewhere in the deal. If a dealer really wants to sell a car and move some metal at the end of the month, then I don’t think anything is off the table.”
Used cars might carry fees for rustproofing or undercoating that a buyer might negotiate, for instance, Smith said. But one fee on a new vehicle is almost always nonnegotiable: the destination charge. That is typically over $1,000, he said.
Car buyers have another potential weapon in their arsenal, Smith said: the finance and insurance products.
“If the dealer isn’t going to budge on price, see if they’ll include tire-and-wheel coverage in the deal,” Smith said.
Tire-and-wheel coverage often takes care of replacing tires and rims if they are damaged by bad roads. It can be a valuable add-on depending on where you live and the road quality, Smith said. But avoid extended warranties, because those rarely pay off, he said.
A big mistake many car shoppers make is looking at the monthly cost of the vehicle. Experts understand why — consumers want to make sure it fits into their budget — but that’s not the way to get the best deal.
“Because we see loan terms stretch out to 72 months or 94 months, it might feel good for your monthly payment, but with interest rates over that long, it ends up being more than what you’re actually paying for the car,” Smith said. “So figure out the out-the-door cost.”
Drury agreed, saying salespeople will often ask what you’re looking to spend on a monthly basis or your current payment amount. None of that matters, he said.
“What matters is how much you want to spend today, on this purchase,” Drury said. “Just because you’re currently doing something or have the ability to do more doesn’t mean you should. Know your numbers and if you want, flip the question to be about the present vehicle. But also know that wherever you start, it is not going down from there.”
If you choose to lease a new car, the dealership often asks for a couple thousand dollars down. This gets you to a lower monthly payment than purchasing a car does. But given that you will have no equity in a lease, is it wise to hand over $2,000 or more that you will not get back?
Drury recommends zero down or a low down payment when the interest rate for the lease is low.
“This would result in a higher monthly payment, but it does leave you with more cash on hand for other expenses, planned or otherwise,” Drury said. “I say this so that the buyer is borrowing more cheap money versus putting up a lot up front.”
But if the interest rate is high for the lease, then a higher down payment should lower the monthly payment and would be advised to minimize how much you spend just to borrow the car during the duration of your lease. 
Now let’s look at the shopping and test driving experience. Smith said always set up an appointment with the dealership before showing up.
“Otherwise, the car you wanted might be sold already,” Smith said. “And negotiate a price ahead of time. These people are professional negotiators, so get as much in writing ahead of time. Showing up and saying, ‘What have you got for under $20,000’ is not a successful negotiating strategy anymore.”
Do not be afraid to ask detailed questions about the vehicle, Drury added, because even the same model can undergo drastic changes from one model year to the next, some obvious and others not.
“You don’t want to buy a new vehicle in July only to find out that the next model year is being sold in September and has that one feature you really want,” Drury said. “This applies to used vehicles as well, saving money by purchasing an older version of the same model might not be worth it if you find out after the fact that you missed out on that one little option that could make your life so much easier.”
Drury recommends these shopping tips:
“One of the biggest mistakes that happens is trading in a vehicle within a month, a year or even two years. Unless you’re putting up a massive down payment or have a lot of positive equity, you’re going to be either in negative equity or having eaten a lot of depreciation,” Drury said.
Choose the options that help every time you drive the vehicle. For example, heated or ventilated seats are nice if the weather in your area varies greatly. If you are bad at parking, then cameras can help, Drury said, “but opting for a moonroof that you keep closed 95% of the year, probably not as worthwhile.”
Something else to keep in mind when shopping, Drury said, is that a bad weather day is a car shopper’s dream.
“There will be fewer people at the dealership and you can test drive a vehicle during a time in which you really need to know what you’re getting into,” Drury said. “Bright, sunshiny days are great and all, but newer vehicles tend to have less glass for safety reasons and that could translate into more blind spots than you’re accustomed to.”
For used vehicles, the opposite is true. You want a bright-enough day so you can see the vehicle to spot imperfections. Still, Drury said, make sure to drive it in the rain, too, before buying it to see whether there are any leaky seals or foggy headlights or taillights. And, even if it is hot outside, test the heater, heated seats and heated steering wheel. If it is cold, try the AC or ventilated/cooled seats.
The test drive is as important as the negotiations, so here is how to approach it:
“Test the stereo, but only briefly,” Drury said. “During most of the test drive, silence is golden. You want to hear any noises or just in general how much road noise enters the cabin. Pair your phone, see if the infotainment system is up to your expectations, if it or any other features annoy you today, they’ll annoy you tomorrow and for the rest of your ownership experience.”
Smith has this list of tips to consider when test driving a new or used vehicle:
According to Google Trends data, searches for “what to check on used car” have risen by 350% in the last month. Luke Bishop, parts manager at GM Parts Direct. which is owned by Flow Automotive, offers the following when shopping for a used vehicle:
To that end, Smith said he would never buy a used car without paying for a prepurchase inspection by a trusted mechanic and getting a vehicle history report. A prepurchase inspection typically costs $130 to $200, according to www.repairpal.com.
Drury said he gives everyone one more piece of advice: “Know when to walk away.”
Go home, do some math or reevaluate your needs versus wants, he said. The purchase of a vehicle can be overwhelming, especially if you’re only at the dealership once every few years.
“You might also be emotionally drained if you’re shopping because of a repair bill on your current vehicle mirroring a down payment and you’re debating on what to do or your current vehicle was just totaled,” Drury said. “Try not to let those emotions get the best of you, solving the problem immediately but not completely by purchasing the wrong vehicle will haunt you longer than just giving it a day or two to simmer.”
On the flip side, he said, automaker incentives do expire. So if the salesperson says that you won’t get this deal tomorrow, they could be telling you the truth.
Contact Jamie L. LaReau: jlareau@freepress.com. Follow her on Twitter @jlareauan. Read more on General Motors and sign up for our autos newsletter. Become a subscriber.

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