Auto Loans

Sidestep Car Buying Hassles with No-Haggle Car Buying

For those of us who don’t have much experience with haggling, trying to buy something for less than the asking price can be stressful. It feels unfriendly, rude or even cringe-inducing. We hate it, and we’d do anything to avoid it.

Auto dealers know that customers hate the whole negotiation process, and some have even instituted no-haggle policies. Can no-haggle dealerships help you skip the haggling process?

If no-haggle car shopping sounds perfect for you, it just might be — but you still have to shop smart. 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 asking price on a vehicle — no more, no less. No-haggle pricing gained extra attention in 2006 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.

In theory, a no-haggle deal gives you the same price you would get after negotiating, but without all that work. However, not all no-haggle auto dealers are equal. Some dealers offer a true no-haggle experience with good value, typically pricing vehicles at invoice price plus a profit margin. Others may not give you as good a deal as you can get elsewhere. Still, it’s “buyer beware,” even with a no-haggle system. In other words, the only way to know if you’re getting a good deal at a no-haggle dealer or elsewhere is to do your research before you buy.

Pros of no-haggle pricing

No-haggle car shopping is popular, for good reason. For example:

  • No embarrassing negotiations. If you really, really hate to haggle, the idea of no-haggle pricing may be very attractive.
  • No wondering if the next customer got a better deal. At a no-haggle dealership, everyone pays the same amount. The guy who enjoys spending the afternoon wearing down sales managers is no better off than you are.
  • Speed. Buying a car is exciting. Hanging around car dealerships is not. By avoiding the potentially lengthy negotiation process, you could be on the road in far less time.

Cons of no-haggle pricing

In some cases, no-haggle pricing may be oversold. Here are some things to look out for:

  • It’s possible you won’t get the best deal. Just because you aren’t haggle on a price doesn’t mean it’s the best deal you can get. There may be a trade-off for being able to walk onto a car lot, pick out a car and buy it.
  • You still have to do your homework. If you don’t compare prices, or have someone do it for you, you won’t know if you got a good deal. According to Sean Pour, the founder of SellMax.com, which buys used cars, in his experience, some buyers don’t realize how much they overpaid for a car until they try to resell the car later; all along, they had a false sense of what their car was worth.

Is no-haggle pricing a good deal?

Whether or not no-haggle pricing offers your best deal depends on who you ask, and whether you are buying a new or used car.

Tom McParland of Toms River, N.J., has been a professional car buying consultant and manager for the past nine years with Automatch, a company that charges a flat fee, starting at $500, to find customers a car. According to McParland, typically on a new car deal, the no-haggle arrangement doesn’t help you — “You can do better,” he added.

“On new cars, the dealers that are willing to haggle usually offer lower prices than the ones that aren’t willing to haggle,” McParland added. “On used cars, no-haggle could go either way for you. You’ve got to do your homework.”

In his experience as an auto purchasing consultant, he has found that results on online no-haggle sites can vary dramatically: some tend to charge more for cars, while others are on the low end. “On pre-owned cars, there are a lot more variances than just price that determine what makes a good deal,” he said. For example, they may add in a service contract or warranty that makes a deal more attractive.

Pour says that no-haggle sales work out very well — for the dealerships. He doesn’t recommend going to a no-haggle dealership, unless you happen to be exceptionally rich and don’t want to take the time to negotiate or look up prices. “I think if you’re an average, middle-class buyer, it’s worth your time to do your own research,” he said. “Don’t pay hundreds, or even thousands, of dollars over the fair price just to avoid haggling.”

That doesn’t mean you can’t get a good deal on a no-haggle car — it just means you can’t walk onto any no-haggle lot and trust that the price you pay is the best one you can get at that dealership. Whether you are willing to haggle or not, the secret to getting a good deal on a car remains the same. Do your homework, before you go car shopping.

Where to turn if you want no-haggle pricing

Finding no-haggle dealerships might sound like it’s difficult to do, but you have a few options:

  • No-haggle dealerships: The first place that comes to mind for many people is a no-haggle car dealership. You can start shopping at a dealership in person or check out their dealer website first. Dealerships that don’t haggle generally present that as a benefit in their advertising. But as with any dealership, traditional or no-haggle, some have better reputations than others. You can look up the dealership at the Better Business Bureau, check online reviews (like those on Yelp) or ask your friends and relatives for recommendations.
  • Car concierges and brokers: You tell these services what you’re looking for, and they do the searching and negotiating for you. The fees, which start around $500, may be money well spent if your time is valuable and you don’t want to look for a car and negotiate a price yourself. On the other hand, the fees may offset some of your savings; if you are on a tight budget, the concierge fee may be more than you can afford or are willing to spend.
  • Car buying clubs: At a car buying club, the price of the car is negotiated — not by you individually, but by a collective group. If you’re a Costco member, you can shop pre-negotiated prices on the Costco Auto Buying Site. AAA members have their own site for cars, as well. Car buying clubs sell both new and pre-owned cars.
  • Car buying websites that don’t haggle: You don’t need to be a member to shop at CarMax or CarsDirect. If you know what vehicle you want, you can get one no-haggle price for it. You can also get price quotes from the contracted dealerships (those that sell vehicles for CarMax or CarsDirect) and use that as a starting point for shopping at a local dealership. According to a study by Cox Automotive (which runs the prominent auto resource Kelley Blue Book, among others), new car buyers often start researching on a third-party website and end at a dealership. Used car buyers are more likely to both start and end at a third-party site.
  • Private sales: If you look at Craigslist or other classified ads, you’ll see some used car “by owner” ads marked OBO (or best offer), which indicates the seller may be open to haggling. Other ads say “Firm” — that means the seller has already decided on their best price and is willing to sell to you, at that price, with no negotiation.

Two tips for the best no-haggle experience

Here’s how to prepare for good no-haggle car buying experience:

  • Do your homework! Be sure you know your car trade-in value, financing options (including the best interest rate) and the fair market value of the car you want to buy before you go to the dealership. The FTC recommends that you check publications and websites to learn about new car features and prices, as well as dealer’s invoice cost for specific models and options (some of the well-known ones include the National Automobile Dealers Association’s (NADA) Guides and Kelley Blue Book). Know that finding the dealer invoice price can be a bit tricky. Check out our story here to learn more about how best to get the invoice price of a vehicle.
  • Be ready to negotiate for extras. The price on the car may be firm at a no-haggle dealership, but that doesn’t mean you can’t ask them to sweeten the deal.

The bottom line

If you’d rather not haggle, you’re not alone. Most car buyers would rather not have to negotiate to get their best deal. In fact, less than half of car buyers in the Cox Automotive 2018 Car Buyer Journey Study were satisfied with how long the car buying process took, with negotiations and financing being the top two areas that took longer than expected.

You don’t have to haggle to get a good deal on a car. Regardless of where you shop for a car, the time you spend researching your next vehicle is more important than whether you are willing to haggle or not. After all, you can always leave a car lot or website and go on to the next one if the price you are offered isn’t right.

 

Compare Auto Loan Offers