How to Buy a New Car in Today’s Challenging Market

CR is no stranger to new-car buying. Our team of secret shoppers typically buys 40 to 50 new cars every year to test the most popular models and trims, and we experience most of the same challenges as "civilian" buyers.

Gabe Shenhar, associate director of CR’s auto test program, says that if you’re buying a new or redesigned model—especially one that has been greatly anticipated by the buying public—you’re much more likely to pay above sticker. "Keep in mind, too, that buying a first-year model often comes with more reliability problems because the manufacturer hasn’t had a chance to work out the bugs," he says. The smart money is waiting until a model is in at least the second model year for its generation.

In recent years, manufacturers have prioritized more expensive models and higher-end trim levels, making budget-friendly new cars harder to find.

If price is an issue, a smaller car, or one with fewer features, could be an option. If you’re gravitating toward more expensive models—like 3-row SUVs, trucks, and minivans—manufacturer-subsidized financing on new cars (for qualified buyers with good credit) can make buying less expensive. All you have to do, says Shenhar, is seek out the CR Recommended models with the best incentives.

Below, we present more strategies for getting the most car for your hard-earned dollar.

See what’s available. If you’re shopping for a new car, dealers near you may not have exactly what you’re looking for. Instead of going to the dealership to see what it has, search its inventory online, or call first. You may need to search several dealers to find something that’s close to what you’re looking for. Websites like TrueCar, Car Gurus, and Cars.com can show you what’s available within a specific geographic area.

Look for incentives. Check dealership and manufacturer websites for local and national incentives such as cash-back offers, low-rate or even 0 percent financing, and lease deals with low monthly payments. (CR updates its best new-car deals list monthly.) Chances are that if you look among less-popular offerings—such as sedans, small hatchbacks, and front-wheel-drive (as opposed to all-wheel-drive) SUVs—you may find attractive deals. (See the most discounted cars right now.)

Expand your geographic search. If local dealers don’t have the car you want, try sellers outside your area. Be cautious about casting your net too wide, though. You want to be able to go see the car and test-drive it before signing a sales or leasing contract, and you don’t want it to get swooped up by another buyer while you’re on your way to see it.

Do your research. Whether buying new or used, consult CR’s road tests and ratings, looking at reliability, owner satisfaction, and safety. Make a short list of models to test-drive. Research the various trim versions and features available on each model, because you might not find your dream configuration at the dealership. Print out information from CR.org and the manufacturer’s website so that you have it with you for reference.

Buy something reliable. Particularly if you’re forced to buy something more expensive than you normally would, your best bet is probably going to be to keep the new car for the long haul. Consult CR’s reviews and ratings to make sure you buy something reliable that won’t give you problems later on. (See our guide to car reliability.)

Be flexible. Even if the dealer has the model you want, the car might not have some of the features you were looking for (and may have more than you want or need). Decide which options are really important and whether a vehicle not having all of them means you should consider a different model. If you can’t find the features you want on the car you like best, consider downsizing or shopping among models that aren’t as popular.

Leverage your existing car. Upgrading to a vehicle with better fuel efficiency, more up-to-date safety features, and even just more comfort or style can be compelling reasons to buy a new car. If you have a car to trade in or sell before buying something new, you may still be able to leverage its value against the elevated price of new cars. Also, a recent CR survey found that most people selling their old cars got more than they expected by selling to a vendor such as Carvana or CarMax.

If you have an extra car you’re not using much, consider selling it. You’ll save money on annual taxes, registration fees, and insurance premiums, and you can use the money from the sale to help finance a more expensive car now or in the future.

Consider a U.S.-built car. If you plan on financing your next vehicle, you may want to take advantage of a new tax credit that allows qualifying buyers to deduct up to $10,000 in loan interest paid on the purchase of a vehicle that was assembled in the U.S. Any new vehicle purchased after Jan. 1, 2025 is eligible for the deduction, but the tax credit will be phased out after 2028—possibly before the loan is paid off. This new deduction is considered “above-the-line,” so even if you use the standard deduction instead of itemizing specific tax breaks, you can take advantage of this auto loan interest deduction in addition to that. Tax experts we spoke with said that the average consumer might save $500 per year. Plus, because this deduction lowers your adjusted gross income on your federal return, it could also reduce the amount of state income taxes owed in certain states. However, don’t let the savings cloud your judgment: Only buy a qualifying car if it’s also safe, reliable, and satisfying. 

To determine whether a car qualifies for this new credit, you’ll need to double-check the final assembly location on the car’s window sticker. Don’t assume that a car was assembled in the U.S. or not based on the badge on its hood—many American brands assemble cars in foreign countries, and most major foreign brands manufacture at least some of their cars in the U.S. Moreover, production can be split between multiple locations or change over time, so you’ll need to verify that the specific vehicle you want to buy was assembled here before you can take advantage of this tax credit. (For example, the Toyota RAV4 is built largely in the U.S. for our market, with some production in Canada and imports from Japan.)

Consider an EV—but do it soon. Federal tax credits for EVs of up to $7,500 will be discontinued on September 30. However, state and local tax credits for EVs may still be available after the federal tax credit is discontinued, so it’s worth checking with your local authorities to see if you qualify for other incentives. In addition, there may be factory incentives and dealer discounts on EVs once the tax credits disappear, since many manufacturers bet big on EVs over the past couple of years.

Buy a CPO car. These cars—sold by branded dealerships—are typically 2- and 3-year-old models coming off a lease, which means they’re newer, have low mileage, and are usually in top condition. They come with one- or two-year factory-backed warranties that kick in when the original factory warranty ends, and often include other perks as well. Any issues found during the CPO inspection are addressed and repaired before you even look at the car. Dealers cherry-pick the best examples for these programs, so cars with serious damage from a flood or crash won’t make the cut. According to CR’s most recent analysis, CPO cars are worth the higher sticker price—a 2 percent premium over non-CPO cars, typically—because they have about 15 percent fewer problems than other used cars.

Buy out your lease. Almost all lease contracts come with a buyout clause, so consider buying the car you’re leasing when the term ends. One of the reasons to consider going this route is that you may be looking at a much larger down payment and higher monthly payments to lease a newer version of the same car. Plus, you know the car’s history, making it a safer used-car purchase than buying one off the lot or an online marketplace.

Fix your old car. Even an expensive repair like an engine rebuild or a transmission replacement may be worthwhile if you can get a few more years out of an otherwise reliable car. If you’ve fallen behind on routine maintenance, get back on schedule and stay on top of it so that your vehicle will last until interest rates come down again. If you can’t decide whether to fix it or move on, CR suggests figuring out how many months you want to keep the car, then dividing the cost of the repair by that many months. The monthly amount for the repair could be cheaper than the monthly payment on a new car (especially when you factor in the rising cost of car insurance). If you don’t have enough money to pay for a major repair up front, you may be able to find a shop that will finance the work. (See our guide to car maintenance and repair.)

Refinance your old car. If you’re inclined to wait for more optimal buying conditions or an upcoming model, refinancing your car loan can be a great way to save money if you’ve improved your credit score since you bought your car. Credit Karma has found that consumers can save an average of $3,000—about $55 per month—over the life of the loan by refinancing.