How to Avoid Dealership Markups and Other New Car Shopping Ripoffs

Right now, new car shopping can be a stressful experience. Coupled with the fact that new car prices are higher than ever, you might not get a car at the price you want. What ways to avoid dealership markups and still walk away with a vehicle you want?

Watch out for dealership markups and added fees

New cars on a lot are impacted by dealership markups
New cars are prepared for distribution at a Ford factory | Carl Court/Getty Images

Depending on what kind of car, truck, or sport utility vehicle you might be interested in, there could be some sort of dealership markup. This additional fee is located on the window sticker or online listing. If the vehicle that you want has this markup, you might want to find a less popular model. The Kia Telluride SUV and Ford Maverick truck have been victims of this pricing switch lately.

The more popular the vehicle is, the higher the potential dealership markup. While some brands denounce these markups (looking at you, Ford), that doesn’t mean it isn’t happening daily. According to iSeeCars, this recent study took a look at 1.2 million new car listings last month and found that most new cars sit somewhere around 9.9% above MSRP.

Try looking online for your desired vehicle to see a fair price. You can check local dealerships or one in another state to see what the pricing looks like from another dealership. Don’t be afraid to walk away if you notice any additional fees added on.

Shop around to avoid dealership markup on a new car

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Consumer Reports’ Gabe Shenhar supervises car buying for the auto-testing program. He says, “If you can’t find the exact car you want locally, try expanding your search.” Many dealerships and online shopping websites will have a shipping option. CarMax offers to ship to your nearest dealership for a fee.

Finding a good deal might be worth it, even if there is a shipping fee. Some dealerships have more success at additional dealership markups, and others don’t believe in the practice much. It depends on the owner and the brand.  

Shenhar suggests getting a photo of the window sticker to see all the fees and taxes. You can negotiate over the phone and then show up to sign the paperwork. While it still requires a little bit of work a preparation, shopping around might get you a better deal in the long run.

Know your vehicles trade-in value before heading to the dealership

You can use a few tools to estimate your trade-in before you even get to the dealership. Kelley Blue Book has the My Car’s Value tool to help assess your trade-in. Consumer Reports has the What’s your car worth? tool. You enter your car’s make, model, and trim information. Add in the mileage, vehicle condition, and anything else that might impact the value. Consumer Reports will give you an estimate for the trade-in value or the private party price.

Buying a popular car like the Kia Telluride almost certainly means dealership markup. Try the 2022 Hyundai Palisade instead. The SUVs are almost identical but the Palisade doesn’t get marked up nearly as often.

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