Tag Archives: What Should I Pay for a New Car
Here is my honest review of TrueCar. They claim to promote transparency in car buying, but are they really interested in getting you the best deal? Well, the answer is “kinda”.
From a marketing perspective, TrueCar wants to attract car buyers to their service. To do this, they’ve put a lot of money into a slick website providing car reviews, pictures, and nice graphs to show you what others paid in your area.
But at the same time, they make their money from the car dealers who pay them for the personal information of car buyers… that’s you! Sounds like a conflict of interest to me. However, it isn’t all bad, you just need to understand how to use a service like this to get the best possible price.
Before you bother reading any TrueCar reviews let me tell you it is possible to beat TrueCar prices. Do not settle for their TruePrice. More on that later, but first…
What is TrueCar?
TrueCar is an automotive technology platform that connects car buyers with car dealers. In addition to the TrueCar website, they partner with brands like USAA, Sam’s Club, and Consumer Reports showing Powered by TrueCar on partner websites.
TrueCar also aggregates car buying statistics and reports on market car sale prices to both TrueCar dealers and customers.
Put simply, TrueCar is a lead broker for car dealers. They ask for your contact information to put you in touch with local dealers in their network who pay TrueCar for the privilege of trying to sell you a car. You tell TrueCar the type of car you want, enter your phone and email, and they will give your information to 3 dealers who will each send you a fair price, but not necessarily the best price.
Editors Note: you can reach more than 3 car dealers using other services like these.
Is TrueCar legit?
Yes, TrueCar is a legitimate company listed on the NASDAQ stock exchange as TRUE. The company was founded in February 2005 and is headquartered in Santa Monica, CA.
Is TrueCar free?
TrueCar does not charge a fee to car buyers, only to car dealers. Although, if you accept TrueCar’s TruePrice without negotiating you are costing yourself money and inflating the dealer’s profit margin.
How does TrueCar make money?
TrueCar makes money from car dealers who pay fees to be a part of the TrueCar network in order to obtain your personal information when you request car prices. These dealers pay a premium to have their dealership appear in the results as “TrueCar certified dealers” when you click the button to “See TruePrice on Local Inventory.”
Does TrueCar work for used cars?
TrueCar does have a used car offering, but it doesn’t work the same way as their new car service. Similar to AutoTempest, TrueCar has a used car search engine that lets you input search criteria and filter results to narrow down used cars in your area.
TrueCar’s business model for used cars is different than new cars because no two used cars are exactly the same. As a result, dealers cannot provide competing bids on just a type of car. Instead, they just must provide specific listings of what is in their inventory.
Do dealers have to honor the TrueCar price?
No, dealers are under no legal obligation to honor the TrueCar price. Some dealers are on the up and up, but others may not be quite as ethical.
Many dealers will offer a car deal when they don’t actually have that model in stock in order to get you to visit (i.e. the bait and switch). Another common scenario is to provide a price that does not include all applicable fees for an unpleasant surprise at the dealership. Here are some other common TrueCar scams.
Does TrueCar check credit?
No, TrueCar will not check your credit. They will only collect your contact information to pass along to local car dealers. However, if you apply to finance or lease a car, the dealership’s Finance Department will check your credit.
TrueCar Review – The Good & Bad
TrueCar Video Review & Walkthrough
Pros: Here’s what I like about TrueCar
- Their Price Report shows you the actual car cost (invoice price), average price paid, and what constitutes a good deal in a clever graph. This is similar to Edmunds True Market Value® which I explain in this review of Edmunds.
- They’ve got a decent mobile app that shows you pricing, reviews, and images. Both the app and the mobile version of the TrueCar website are both very similar. However, the TrueCar app also allows you to scan a window sticker while on a TrueCar Certified Dealer’s lot. But there are some negatives to this (see next section).
- TrueCar’s Price Report also includes a “flexibility score” of how much negotiating room a dealer has on that model.
Cons: Here’s what I don’t like about TrueCar
- They only put you in contact with three local dealers…which must be in their network. You can reach a wider variety of dealers using one of the alternatives to TrueCar below.
- TrueCar’s advice is to take your “Best Local Price” to the dealer (which is usually good), but to not bother negotiating the price any further. A TrueCar Price Report will certainly help you get a fair price, but by itself will not get you the best price.
- Dealers quote a price through TrueCar on a model, color, and options, but may pull a bait and switch scam and not actually have that configuration in stock.
- You can get a TrueCar guaranteed savings certificate, but it will not include all the extras they will try to sell you at the dealership. Expect both the car salesman and the finance department to offer you various add-ons like tech systems and extended warranties that could significantly increase your total.
- TrueCar’s mobile app allows you to scan a window sticker while on a TrueCar Certified Dealer’s lot. However, you are required to create an account and sign in to use this feature so you must provide your personal contact details. Plus if you are not at a TrueCar Certified Dealer you can’t use this. And because other dealers may take a day or so to respond to you with competitive prices, I suggest not using this feature. Instead, get all your pricing lined up BEFORE you actually visit a dealership.
- TrueCar doesn’t help you find the best car financing or get the most trade in value for a car which are huge aspects of a car purchase and can cost you a lot of money if not handled properly. But then again, you’re on your own for these items when using any car price service, so I can’t fault TrueCar too much for leaving them out.
Is it possible to beat TrueCar prices?
According to the New York Times, a nonprofit consumer group found that the TrueCar guaranteed price averaged $1,550 more than what consumers paid when dealers independently bid for their business.
So the answer is clearly, yes, you can beat TrueCar prices.
Deals promoted on the TrueCar website only scratch the surface of the best car deals available. If you want the best price, the one thing you must do is contact more than 3 dealers. You can use other services to get in touch with more dealers and then negotiate to beat TrueCar prices.
Here are some tips:
- TrueCar only puts you in touch with 3 local dealers and I suggest contacting 6-8 to get truly competitive pricing.
- If you get to the dealership and they do not have the exact configuration you were quoted, don’t get sucked into paying a higher price. Before you go to the dealership, make sure the dealer provides you with a specific VIN number, price, and list of options. If they try to add options and increase the price, consider checking with other dealers for what you want.
- Don’t forget that a good car price is only half the battle. Once you get to the dealership be prepare to negotiate car financing and the price of your trade-in as well.
Alternatives to TrueCar
There are many alternatives to TrueCar that provide a similar service to help you get car prices from local dealers. However, TrueCar only connects you with 3 dealers while each of the TrueCar competitors below will connect you with 5.
The more dealers you reach, the more they must compete with each other resulting in a lower car price for you.
My four favorite TrueCar alternatives are below (in order):
- Find The Best Car Price…yup, that’s the website you’re on right now. We’ll connect you with up to 5 dealers at once AND you can enter multiple searches for nearby zip codes to reach even more than 5 dealers. We are powered by Rydeshopper and work with the largest network of dealers in the U.S. Like TrueCar, dealerships pay me a small commission for referrals, but it costs you nothing to use my website. And if you read my car buying guide I’ll teach you how to negotiate with dealers for the best possible price.
- Edmunds was called the “best site for shopping for a new or used car” by The Wall Street Journal. Edmunds provides a True Market Value for new cars which is similar to the TrueCar TruePrice but doesn’t require you to provide your personal information to see it.
- CarsDirect has been rated the #1 site for buying new cars online by Forbes, Time, PC Magazine, and PC World. They are known for their buying guides and “head-to-head” comparisons of popular new cars. They also offering financing for both good and bad credit.
- MotorTrend is a trusted auto enthusiast magazine with a monthly circulation of over one million readers. They provide road test results, car guides, and reviews of popular new cars as well as the latest in automotive industry trends and news
It’s easy to find many local dealers by combining several of these car price websites who each have slightly different dealer networks.