CAR BUYING: HOW TO NEGOTIATE

Monday, December 5, 2016

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The most important piece of information you can have to GUARANTEE that you get a fair deal is knowing how much the dealer paid for the car, which is called the true invoice, and is provided by AUTOPEDIA™. To this you must add freight, tax, and license. You should also add advertising association fees, if the dealer belongs to a regional advertising association(most major dealers do). This final figure enables you to know how much profit the dealer is actually making.

Decide in advance the total amount you can afford to spend for the vehicle, including tax, license and insurance. This will prevent emotional buying. Once you decide which car you want, begin your negotiation using the figures supplied from above. (Remember the dealer must make a profit to stay in business and be there to service your car.)

Don't be a monthly payment buyer, always negotiate the total price of the car first, and be aware of what the monthly payments should be by getting information from your bank or credit union BEFORE you go to the dealer. If you feel the monthly payments are too high, simply ask what interest rate is being used, and if it is too high, ask for a better rate(interest rates are negotiable too!). You can obtain your own financing or consider extending the length of the loan, but remember the longer the term, the more interest you will pay. Be aware of what interest rates are available from your bank or credit union before you go to the dealership and if the dealer is not competitive, obtain your own financing.

Know what your trade in is worth before you begin your negotiation. This information can be obtained from your bank or credit union or by studying the newspaper classified adds. The dealer will usually go by wholesale "book" value, since that is what they can buy the vehicles for on the open market. If at all possible, sell your car yourself, since you can usually get higher price than from the dealer.

Make sure of the condition of the new car before you negotiate the deal and if there is any thing that will be done after the sale make sure you get it in writing. Be aware that undercoatings, rust proofing, interior protection packages, and special paint coatings, are profit centers for the dealer.

And finally, double check everything to see that it is exactly as agreed upon. Make sure any verbal promises are written in the contract to avoid later disputes. Check all numbers and figures carefully for mistakes.

As prices have risen, more and more people are leasing their cars and trucks since leasing enables you to maximize the amount of vehicle you can afford, while minimizing the amount you must pay. But these benefits require you to usually have better credit than buying and have the disadvantage of being more complicated and open to more pitfalls for the average buyer.

For a detailed explanation and comparison of leasing and buying, please go to our Lease Comparision page.