How to Not Get Ripped Off When Buying A New Car (2026)

If not get ripped off is on your radar, this short guide cuts through the noise. Here is what is worth knowing, and how to put it to work today.

Key Takeaways

• What to know if you're being ripped off?
• These red flags could signal you are paying too much for a new ride.
• For many people, buying a new car is right up there with getting a root canal on a back molar.

What to know if you're being ripped off? These red flags could signal you are paying too much for a new ride.

For numerous people, buying a new car is right up there with getting a root canal on a back molar. It can be a painful process fraught with shady practices and dealer add-ons you never asked for. It’s no wonder so numerous people dread the negotiations that frequently lead to long waits while a salesman checks with his manager about giving you a better deal.

As with so numerous things, COVID has crept into the mix, ultimately leading to a shortage of new cars. Ronald Montoya, senior consumer advice editor for Edmunds, says the lack of new vehicles caused by a shortage of semiconductors (a part needed to make newer cars work) is having a significant impact on selection and cost: “Since the owners have fewer cars to sell, they want to try to maximize profits. You are going to get less of a discount than you might have.” 

That’s putting it mildly. Montoya’s company was looking to purchase a new cargo van recently and found one for about $7,500 over the sticker cost. When they asked for a lower cost, the dealer offered to lower the markup by half. They walked away, then found a similar van at another dealership for about - you guessed it - $7,500 less than the first van. 

While there are certainly honest auto dealers out there, not everyone is on the up-and-up. If you are in the market for a new vehicle or want to make sure you get the best deal possible when you are, consider these warning signs that you may be getting ripped off:

The Car Only Comes With Dealer-Installed Options

In this market, you are going to see vehicles featuring a lot of additional accessories that don’t always come standard, Montoya says. Think fabric protection, etched glass and wheel locks. Depending on the dealer, they may not want to take those items off. If the fabric protection was sprayed on, it’s not coming off. You also may not see these extras reflected in the cost of the car if you are shopping online. He suggests asking for a discount on the cost of the add-ons if they can’t be removed.

They Want to Know Your Target Monthly Payment

This seems like such a harmless request. And it might be if you were anywhere else but a place where you are being asked to plunk down a huge sum of money for something that will begin to lose value the moment you leave the lot. “Never answer that question,” says Ira Rheingold, executive director of the National Association of Consumer Advocates. “If you do, at that point, they’ve got you. Only negotiate the cost of the car. Period.”  

They Sold That Car, Here’s a Higher-Priced Model

If you see a vehicle offered online at a dealership, call first to verify the car is going to be there when you come for a test drive. Variations of this switch-and-bait scam have been around for years. A seller gets one or two cars without the bells and whistles and advertises them at a rock-bottom cost. Those models sell fast. When shoppers come in looking for that specific car, they are sometimes told ‘it just sold’ and then shown more expensive models.   

They Pressure You to Get an Extended Warranty 

When it comes to extended warranties on new cars, not everyone thinks they are a smart investment. A Consumer Reports study found most people didn’t get the value they paid for in the extended warranty. “I can’t speak for everyone, but I personally don’t purchase them,” Montoya says. “If you are getting a car known for reliability, it seems counter intuitive to get the extended warranty.” Plus, you are not obligated to purchase the extended warranty when you purchase the car. When you do that, you could end up paying interest on it if it’s rolled into the payments. He suggests saving up some money to purchase the extended warranty later on, right before the regular warranty is set to expire.

They Want to Mix Financing and the Cost of the Car 

The most key thing people need to recognize is that financing a car and negotiating a sales cost for the car are two separate transactions, Rheingold says. It’s just like when you purchase a house. First, you get approved for a mortgage and then you make an offer on a house. Because most people need financing for a new vehicle, you should secure that from a financial institution before you go to a dealership. Rheingold cautions consumers to only identify the total cost they are willing to pay - the out-the-door cost and “never, ever, ever mix the financing and the cost of the car.”  

Another key note is that dealers can make a tidy profit on the back end of a car sale by charging someone a higher interest rate on the loan, even if the buyer happens to qualify for a lower one, says Rheingold. 

They Add a Dealer Mark Up Because It’s a Popular Car

Remember the cargo van? If you are looking for a car that tends to be in demand, you may run into a dealer mark up, which means they can afford to charge a premium for it, Montoya says. Dealers charge higher prices because they can get away with it. A much anticipated Jeep Wrangler with a V8 engine, Montoya says, already has buyers on waiting lists willing to pay $30,000 above the sticker cost. If you’re not willing to pay a higher-cost on purpose, be ready to walk away and take your business - and hard-earned money - somewhere else. 

They Offer Very Little for Your Trade 

Before the pandemic, people trading in an older car as a way to lower the cost of their new car didn’t have high hopes for how much dealers would give them. Shortages of used cars on the market have changed that for now. Because of the lack of vehicle inventory, people are making more than they ever expected on used cars right now, Montoya says. Which means if a dealer is offering you way below the market value for a trade, and your car is in good shape, that’s a red flag you are potentially being ripped off. 

How to Purchase a Car Like a Pro 

Admittedly, the way most cars are sold in the U.S. is ridiculous, says Rheingold, the consumer advocate. “There should be a big supermarket of cars and the prices should be listed as opposed to the smartest, most sophisticated person getting the best deal.” 

To avoid being scammed, take these steps before purchasing a new vehicle:

• Do your homework and research the cost of the car online with a service such as Kelley Blue Book, at KBB.com. 
• Get your financing lined up by being pre-approved for a loan at a bank or credit union. 
• Only negotiate the cost of the car with the seller, not the financing.
• When trading in a vehicle, know its value by using an online resource.
• If you don’t want dealer-installed options, ask for them to be removed, if possible.
• Wait until a new car’s regular warranty is about to expire before buying an extended warranty.
• If a dealer wants you to pay much higher than the sticker cost, be willing to walk away.

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Final Thoughts

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Originally published at savingswitch.com.