How Much Over MSRP Should I Pay for a New Car?

Just a few years ago, the thought of paying MSRP for a new car sounded ridiculous. If you told anyone that you paid MSRP for a new car, they would most likely think that you got ripped off. In today’s market, that’s no longer the case. In fact, nowadays, if you can manage to pay the full sticker price for a new car, you’re doing quite well as most dealers are marking up the prices.

But if you can’t negotiate down to the car’s original sticker price, how much over MSRP is “too much?”

car dealership
Vehicles sit on display for sale | Getty

How much over MSRP should you pay for a new car in 2022?

It depends on the car’s make and model; however, paying a 10% markup at the most is ideal. According to Autoblog, “the average price for a new car hit $48,043 (as of August 2022).” That’s a 12.7% increase from June 2021, as buyers were reportedly paying an average of $1,000 over MSRP. As we can see, the glory days of large discounts are gone as paying more than the sticker price for any car is the new norm.

“If you’re anywhere between 15 to 20% (over MSRP), this is very common, but it’s also ‘negotiable.’ This is what you should shop around to get a good deal for,” said Ari Janessian, from NegotiationGuides.com. “If you’re getting over 20%, you’ve lost.”

In that case, if the car you want is selling for over 20% above the sticker price, you may want to expand your search to get a better deal. Either that or find a different car to buy altogether.

Which car brands have the highest markups?

As of February of this year, MotorTrend reported that a few luxury brands were the worst offenders when it came to markups. Cadillac buyers reportedly spent more than $4,000 over MSRP on average, and Land Rover buyers spent an average of $2,500 more. Surprisingly, Kia followed closely behind with an average Actual Transaction Price (ATP) of $2,289 above MSRP.

Meanwhile, many used cars still carry astronomical prices across the board. There are plenty of used models that carry higher price tags than their new counterparts. According to a study from Jerry, the following used 2021 models carry a higher price tag than their 2022 counterparts:

  • Toyota RAV4 ($5,900 more)
  • Honda Civic ($5,300 more)
  • Honda CR-V ($3,800 more)
  • Toyota Camry ($3,200 more)
  • Nissan Rogue ($3,100 more)
  • Toyota Highlander ($2,100 more)
  • Ford F-Series ($100 more)

Is it a good time to buy a new car?

Although the car market has cooled down this year, it’s still not the best time to buy a new car. The ongoing chip shortage, which has led to an ongoing inventory shortage, continues to plague dealers across the nation. And with the continued demand for new cars, these high prices are expected to stay elevated until at least next year.

However, that doesn’t mean we expect those hefty discounts off MSRP to magically come back. If anything, prices may come down as the supply chain gets better, but if you can get anything close to paying MSRP, you’re doing well.

RELATED: These 5 Cars Reportedly Cost More Used Than New