Monday, August 17, 2009

How To...Negotiate a New Car

In the market to buy a new car? Car buying should never be a whimsical decision. There are several things that you should do before starting the negotiation process.

1. Do your homework.
  • Plan when to buy. In September, the next year's models start coming out on the lot, so dealers are anxious to get rid of any of the current year models as soon as possible, so there is some real potential for good deals out there.
  • Figure out what you can afford to pay. If you have saved up cash, then make sure you hold enough back to cover insurance, taxes, and gas. If you are going to be taking out a loan, then consider insurance, taxes and gas as part of your monthly payment.
  • Test drive several cars that you are considering to see which one is the best fit for you.
  • Visit or Kelley Blue Book ( to compare all the specs for the model you wish to buy. Keep a copy close on hand for your own personal reference during the negotiation process.
2. Guesstimate the lowest amount the dealer can take and still make money.
  • Visit or Kelley Blue Book ( to find out the dealer invoice. Keep a copy close on hand for your own personal reference during the negotiation process.
  • Don't forget about the hold back price (the amount the dealer gets from the manufacturer for every car they sell), which is usually around 3%.
  • Ask the dealer to see his copy of the invoice (each car has its own invoice, so Kelley and Edmunds may not be exact).
3. Begin the Negotiation process.
  • Get an offer on the new car from the dealer.
  • Counter the offer. Be honest with the dealer, tell him, that price is to high. That you want to work to make sure both parties benefit from the deal.
  • Be patience and stay firm in your offer. The dealer is going to try and get as much as he can.
  • Walk away, if necessary. If you feel you are being fair by the dealer, and he won't budge, walk away and go to another dealer. As you walk away, make sure that you leave the door open for them to contact you should they change their mind.
  • While paying cash is preferable, it doesn't work our for in all circumstances. Once the dealer accepts your offer, start negotiating the interest rate (if it isn't a zero % financing offer).
  • Negotiate any extras you may want, like tinted window's or car alarm.
  • Finally negotiate the price of your trade-in car.
4. Drive your sweet new ride home.

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