Buying a Car : Scoring a good deal.

Researching cars is one thing – negotiating with a car salesperson is a whole other ballgame. But if you follow a few basic guidelines and some handy tips, you’ll be fine – and you might just get yourself a good deal.

You’re in the driver’s seat: Whatever it feels like on that showroom floor, remember that you have all the power. If you don’t like the salesperson you’re talking to, or if you’re not getting the price you want, you can always walk away. There’s always another dealer down the street.

Even if you don’t want to walk away permanently, don’t be afraid to walk away temporarily. Go home and sleep on it. Don’t give in to dealer pressure – they’re not the ones who’ll be paying the monthly tab, you are. You have every right to move at your own pace.

Know your stuff: The more you know when you walk into the dealership, the better off you’ll be. That doesn’t mean you need to be an automotive engineer just to get a good deal, but if you know what make and model you want, and what options, that limits the amount of selling you’ll be subject to. If you can focus the conversation on price, you reduce your risk of being talked into a high-end options package that you just don’t need.

Negotiate like a pro, even if you’re not: No question about it, negotiating price with a car dealer is one of the most stressful things you’ll ever do. Just remember to keep your cool and remember the following tips, and you’ll be fine.

  • Don’t get excited: If a salesperson catches you drooling on the hood, you’ve just lost a little negotiating power. Keep your emotions in check, and the onus is on them to give you a reason to buy.
  • Don’t talk about financing: Tell them you’re paying cash – they won’t hold you to it. If you agree on a price before you work out the payment plan, the dealer has fewer avenues by which to inch up their profits.
  • Take your time: The salesperson is there all day anyway, so he may try to tire you out. Stay strong, keep negotiating, and you might save some money. An extra hour of persistence could save you a few hundred dollars.
  • Watch out for good cop, bad cop: You know the drill – Sales Guy says if it were up to him, he’d give you the price you’re asking for, but he needs to ask his manager. Now you’re thinking Sales Guy is on your team, right? He’s not. It’s you vs. them, don’t forget that.
  • Ask to see the invoice: That’ll tell you how much they bought the car for. If they won’t show you that, it’s probably because they’re offering a lousy deal.
  • Shop late in the month: Dealerships get bonuses and rebates from manufacturers based on monthly sales quotas. Depending on how your dealer’s doing, you might find a little more leeway as the 30th approaches.
  • Don’t haggle if you don’t want to: Some dealers – Saturn, for one – don’t negotiate. It’s the same price for everyone. If you really don’t like haggling, that may be your best bet.

Let’s talk price: Look, car sales is a business. Nobody’s going to sell you a car if it’s a bad deal for them. So you’ll need to find a price that works for the dealer – but that doesn’t break your budget. Find that fair price, and you’ll drive home in a new car.

When you do start talking price, there are some terms you should know:

  • Invoice price: We mentioned this above – the invoice tells you what the dealer paid the manufacturer for the car. Do some Web research – if you can find out what the dealer paid, you’ll know where that fair price begins.
  • MSRP – Manufacturer’s Suggested Retail Price: That’s the "sticker price," the number on the car’s window. It’s not a price tag, it’s a starting point. Of course, if the model you want is in high demand, you probably won’t get much lower.
  • Dealer incentives: Manufacturers sometimes give dealers extra money, bonuses and rebates for selling overstocked and undersold cars. Find out if the car you’re interested in buying has any dealer incentives attached to it. Then subtract that amount from the price you’re willing to pay.

So how much should you pay? Obviously, it’s impossible to do your negotiating for you, but if you offer somewhere around $200 more than the invoice price, minus any dealer incentives, you’ve probably started a good negotiation. You may not get that price, but it shows you know what you’re doing.

Beware the add-ons: Once you’ve settled on a price, the dealer will probably offer all kinds of add-ons – anything from an extended warranty to detailing the car before you drive away. Feel free to refuse these, even if they try to include them automatically. Most are optional:

  • Destination charges: Some manufacturers charge separately for shipping the vehicle to the dealer. You can’t get around this. But check the sticker to make sure it wasn’t already included in the price.

  • License and registration: Also unavoidable, but call your state’s Department of Motor Vehicles to make sure the dealer hasn’t padded this fee.

  • Extended warranties: Also called service contracts. If you buy a car with a good service history, this shouldn’t be necessary.

  • Dealer prep: In other words, getting the car ready for you. The dealer gets paid for this. Don’t pay twice.

  • Credit insurance: This insurance pays off your car loan should you die while leasing it. As long as you have life insurance, don’t worry about it.

There are others, too. Just be assertive. If you don’t understand what the add-on is for, ask. And if you don’t have to pay a fee and you don’t want to the fee...don’t pay the fee.

When it seems as though a price compromise is inevitable, ask for more. Ask to throw in the floor mats. Ask for some small extra you want on the car. You won’t get it if you don’t ask. So what do you have to lose?

One more step: Make sure everything’s in order. You’ve worked hard to negotiate a price – now take a minute, or an hour, or overnight, to be sure that you can afford that price. Include financing and gas and insurance. Check it all against your budget. If you can’t make it work, don’t buy the car! Period.

The salesperson will flip. You’ll feel lousy. You’ll probably be completely disappointed. But none of those things is worse than screwing up your financial future. You’ll get through a little disappointment – a lousy credit rating will burden you for years to come.

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