One of the least-liked and probably most frustrating parts about buying a used or new car is having to negotiate the deal. When car dealers advertise no-haggle pricing, it often looks desirable to car shoppers. The question is, what exactly is a no-haggle price, and is it actually "no-haggle?"
What Are No-Haggle Car Prices?
On the surface, the point of a no-haggle price is to give you an exact price on a car that you either pay or don't. It's like walking into a retail store and seeing a TV for $500. You either buy it or look somewhere else for a lower price. Many people feel that car buying should also be this simple. A firm price enables people to shop easily for a car as they would shop for anything else. If the car price doesn't fit their budget, they can move onto a different vehicle or dealer.
Who Offers No-Haggle Prices?
Sometimes car dealers advertise specific cars with a no-haggle price, other times the dealer exclusively does business like this. Membership warehouse stores like Costco and Sam's Club often offer no-haggle price programs, as do organizations like the AAA or even some credit unions. Dealer chains like CarMax are also well-known for advertising their no-haggle prices. At CarMax in particular, the salespeople are paid a guaranteed wage no matter which vehicle they sell. In other words, they don't get a commission based entirely on selling a vehicle for more money. Dealerships who use this pricing model typically get customer attention through decrying the usual haggling model of car buying. It tends to work as many people hate negotiating on new or used cars.
No Bait-And Switch
One very tangible benefit of no-haggle pricing is avoiding the common dealer tactic of bait-and-switch. This tactic mainly works by baiting buyers to come in with an advertised low price on a specific vehicle. The vehicle advertised is usually a basic model with no options, so naturally, the low price looks attractive. When you come in, you'll find that you have to spend a lot more to get options or higher trims. Another way this works is to advertise a vehicle at a low price, but then that vehicle is gone when someone comes in to see it. In a no-haggle program, an advertised price is tied to a stock number or VIN on the quote. If you come in and say that you want the red Toyota Camry with a navigation system, then that's the vehicle you'll see. If the vehicle is gone, then it's often possible to get it ordered for the price advertised.
Why Do Dealers Go With No-Haggle?
Many dealers who do this say that it's just less hassle and that it improves the buying experience for customers. They know that car buyers are going to use all the various online tools to find out exactly what a vehicle is worth in their area. Their attitude is that if a buyer knows what they want to pay and what the car is worth, what's the point of starting negotiations at $4,000 over on the off-chance that you might get it? In other words, some dealers and salespeople are just as tired of long haggling experiences as car buyers are.
Some Car Shoppers Like To Haggle
On the other hand, there are car buyers who really want to haggle with the dealer to get the lowest possible price. They believe that they can go into it and get a better deal than taking the no-haggle price. However, in some cases, these buyers may spend hours negotiating to end up with less than $1,000 off the price.
Can Dealers Falsely Advertise No-Haggle?
Generally speaking, any dealer that advertises no-haggle pricing usually sticks with it. The reason for this is twofold. If they publicize no-haggle pricing but start negotiating later, they aren't advertising truthfully. False advertising is illegal and could result in penalties if the dealer is caught. And if they haggle, word about that will eventually spread. If a buyer who didn't haggle a price finds out that another shopper was able to reduce the cost by haggling, they're likely to become angry and report the dealer through review sites or the Better Business Bureau. Further, other shoppers are expected to come in and haggle, which would render the dealer's advertisement of no-haggle prices pretty much worthless. Most dealers who identify as no-haggle also have policies against haggling, so if you hear from someone that they haggled at a no-haggle dealer, it's usually best to be a little suspicious of it.
Is No-Haggle Really Better?
Ultimately, the question comes down to whether buying from a no-haggle dealership will get you the best price or not. If the price on the car is much more than what you could potentially get from a traditional dealer, then it's probably better to skip it. However, it's also true that some car shoppers are willing to pay a higher price to simplify the car buying process. On the other hand, if you're a car shopper on a budget, it's probably not worth it to you to pay several thousand more for a vehicle that you could potentially pay a lot less for at a traditional dealer. If the price at a no-haggle dealer is only some hundreds over that of a traditional dealer, then it probably is worth it to many car shoppers.
Used and New No-Haggle Experience
Another area where the no-haggle experience can vary is with a used vehicle versus a new one. For example, one customer detailed his experience in shopping for a new car where he asked for the best deal from both a no-haggle dealership and a traditional one. The former offered $600 off the MSRP while the latter offered $1,800 off. When he tried to get the no-haggle dealership to meet it, they insisted it was their best price. The problem was, it was precisely the same new car. However, used cars can be a different experience altogether. The reason is that it's not as easy to find two used cars that are the same in your area. In another example, the customer finds two used vehicles of the same year and model. One is a non-certified used vehicle with 28,000 miles, and the other is a Certified Pre-Owned (CPO) vehicle with 27,000 miles. The dealership with the CPO car is a no-haggle dealership and has it priced at $29,500. The dealership with the non-CPO car has it priced at $28,700 and is willing to go down to $28,000. Even though the CPO car is $1,500 more, it's also being sold by a branded dealership and has a factory-backed extended warranty attached to it. That, and the 1,000 fewer miles on it adds value and, in effect, makes it the better deal.
In the end, whether dealers who promote no-haggle prices are better depends mostly on your situation. If you can find a lower price and more value at a traditional dealership, then you might skip the no-haggle experience. However, if haggling is your worst nightmare when it comes to buying a car, then you might be willing to pay a higher sale price to skip that part.