How to Get the Best Deal on a New Car

Walking into a dealership not knowing which car you want is like going into the grocery store without a list. You’ll easily get overwhelmed and you may end up buying a car you don’t even want.

Start by educating yourself BEFORE you visit the dealership:

  • Learn about the cars you like on the manufacturer’s website. 
  • Research the standard and upgraded features. 
  • Create a list of features you need and those you want. (There’s a difference.)

Then consult with third-party websites. Kelly Blue Book and Edmunds are reputable choices.

On these websites, you’ll get expert reviews, lists of the pros and cons, and an estimated value for your area.

Tip: Don’t focus on the price until you’ve found the car you want. Instead, create a list of the cars you think might be a good fit for you.

When you have that list in hand, it’s time to head to the dealer.

TAKE A TEST DRIVE

At this point, you are still in research mode. There’s no way to know for sure if a car suits you until you drive it.

Head to your local dealership(s) and drive each car on your list. Focus strictly on the car, how it feels, and what you like and don’t like. Third-party reviews are great. But until you are in the driver’s seat, you won’t know what you like.

Tip: Let the salesperson know you are just in the test-drive/research mode. They may lay off slightly on their sales tactics if they know you are not a serious buyer just yet.

After you are done test driving cars, it’s time to narrow down your choices. Weigh the pros and cons of each car and how it affects your lifestyle.

Once you choose the car you want, you’ll focus on it for the next part of the process.

DO YOUR RESEARCH

Now the real work begins. You know what car you want – it’s time to figure out the best price. You’ll be back at your computer for this step.

Again, you’ll want to use Kelly Blue Book or Edmunds. This time, you should be as specific as possible, right down to the color of the car. Each choice has an impact on the value for the area.

Tip: When looking at Kelly Blue Book or Edmunds, use zip codes of any town you’d drive to if you could get a better deal. You never know when a few towns over might save you money on your car purchase.

Once you have an average cost for your area, head to the manufacturer’s website again. Look for any incentives they offer. You may see cash back offers or special financing options.

Each manufacturer sets their own criteria. Make sure you read the fine print to see how you would qualify.

Your final step is to figure out the supply and demand of the vehicle. How fast are they flying off the dealer’s lot? Cars in hot demand mean less room for negotiation. A dealer won’t be desperate to get it off their lot.

Cars in less demand mean more room for negotiation. The dealer will be eager to make a deal with you. Create a list of the dealers that have your vehicle along with their contact information – you’ll need it in the next step.

Did You Know?: Car manufacturers tend to offer the best incentives at the early and late parts of the year. During the first few months, you’ll see incentives on last year’s model. So in the first few months of 2019, you’ll likely see large incentives on 2018 models.

During the last few months of the year, you’ll tend to see more incentives on that year’s model.

Manufacturers offer the incentives in order to clear the lots of the older models to make way for new models.

Keep reading for the next step in the car-buying process.

EMAIL THE DEALERS

Now you are ready to negotiate. Luckily, you aren’t sitting face-to-face with a dealer just yet. You still get the comfort of sitting behind your computer. It’s time to draft a very specific email to the dealers on your list.

In this email, you’ll ask for a quote on the exact car you want. You should include all the specifics you have gathered during your research. This includes:

  • Incentives you have found
  • Options and color you prefer
  • Bonus features you can live without

No matter what you write, make sure you are as specific as possible.

TIP: Give the dealer a deadline by which you want to purchase the car. Once they know that you are a motivated buyer, they know you can go elsewhere if they don’t respond in time. 

COMPARE QUOTES

Once you have several quotes, read each one closely. Look for any differences. If one dealer provides a quote on a car with all of the features, yet another provides one with fewer features, you cannot compare them.

Once you have your quotes, you have one last piece of information to share with the chosen dealer – your trade-in.

KEEP THE TRADE-IN SEPARATE

Your trade-in should be a last resort topic with any dealer. Don’t let them know you have one until you have a solid quote in hand. After you choose the dealer you’ll buy the car from, you can let them in on your trade-in secret.

TIP: Know what your trade-in is worth using Kelly Blue Book and Edmunds. Make sure you are honest about your car’s condition.

The trade-in value isn’t based on the make, model, and year of the car alone. The condition of the car can increase or decrease its value.

Letting the dealer know ahead of time can ruin your negotiation plans. If they offer you a higher price for your trade-in than you thought, you’ll feel like you are getting a “great deal.”

This means, you may pay less attention to the price of the car you purchase. The dealer comes out the winner in the end.

The good thing about a trade-in is that the value will come right off the amount you borrow. This means less interest that you pay in the end.

FIND THE RIGHT FINANCING

Once you have the deal you want, you still have more work ahead of you. The best-case scenario is to walk in with a pre-approval.

It’s as good as cash to the dealer. You don’t have to worry about dealer financing or haggling after you have your car’s price.

You Should Know If you have great credit, the dealer may approve you for 0% financing. This is like paying cash for the car over an extended period.

It doesn’t cost you any more money for the loan. However, you should be ready for large monthly payments and a shorter term. 

Having a bank’s preapproval can also give you an advantage. The dealer may try to beat the rate the bank offered or will work with you on the price. They know you can go to any dealer and get the car you want. They can’t lure you in with their new car financing.

Consider what you can afford and compare the sales prices. What you want to know is what the car will cost you in the end. This takes into consideration all interest charges you’ll pay on the loan.

For comparison purposes, let’s look at a 60-month, $25,000 loan:

  • 0% loan = $417/month payment
  • 4% loan = $460/month payment

$43 per month doesn’t sound like a big deal. But when you think of paying an extra $43 per month for 60 months, the 4% rate costs you $2,580 more. That’s $2,580 you can add to the price of your car.

PREPARE FOR FINAL NEGOTIATIONS

Once you do all of the legwork, it’s time for the final negotiation. This is when the deal goes down or you walk out the door.

It’s important to remove your emotions from this process. You must be willing to walk out the door if the dealer won’t give you the deal you want.

With your knowledge in hand, you can tell the dealer you know exactly what is available. You know the going price for the car in your area, demand, your available financing options, and what you want.

If you don’t want to do this in person, you can go through the internet department, asking for a final quote on the exact car you want from the dealer’s lot. This gives you the chance to bargain with several dealers at once without leaving your home.

Tip: Don’t focus on monthly payment. Dealers can stretch out your term or lower your interest rate to make the payment lower. But they could also charge you more for the car. Rather than focusing on the monthly payment, look at the bottom line.

We recommend emailing the dealers that are the furthest away from your home first. Get a few quotes in hand, then walk into your local dealer with these quotes.

Chances are they will match or beat it. Now you have the lowest price possible and you purchase your car from your local dealer, making future visits convenient for you.

HANDLING YOURSELF IN THE FINANCE OFFICE

Just when you think the hard part is done, you have one more person to face – the finance manager. If you came with your own financing, you won’t spend a lot of time in there.

You’ll already have the rate and term of your loan negotiated. There are other fees, though. The following fees are non-negotiable:

  • Sales tax
  • Licensing and title
  • Registration
  • Destination fee (manufacturer charged)

Many dealers tack on other fees that you can negotiate, though:

  • Documentation fees
  • Delivery fees (dealer charged)
  • Dealer fees
  • Acquisition fees
  • Advertising fees

If you see any fees outside of the tax, title, registration, or manufacturer’s destination fee, then feel free to negotiate.

TIP: Don’t be afraid to walk out of the deal even once you are in the finance office. Including extra fees into your loan only increases the cost of the car in the end.

If you have your own financing, you may have to pay the fees in cash up front. 

Find out the average costs for your area and call the dealer out on it. The dealer may try to sell you add-ons as well.

Again, do your research. Most add-ons can be done after market and on your own when you can pay cash. Even the extended warranty can be added after you already own the car.

THE BOTTOM LINE

It is possible to get the lowest deal on a new car. But you have to put in the work. The more research and shopping you do, the better your chances of finding the best deal.

The 10 Least Expensive Cars to Own

When it’s time to buy a new car and desperation comes calling, all other priorities peel away, leaving price alone to govern the decision. But simply buying the cheapest car isn’t necessarily the cheapest route. Cars—even the affordable ones—are expensive to own and operate. So we went in search of the answer to an important question: What is the cheapest car to buy and own? Fuel is an obvious consideration, but insurance can’t be ignored, either.

To normalize purchase-price variations based on the terms of a loan, we’re using MSRP for purchase price and settled on a three-year ownership window. On top of MSRP, we rolled in the cost of insurance over three years for a 28-year-old male, single, living in the same area as our Ann Arbor offices. Fortunately for him, he has no tickets. To that sum, we added the cost of fueling each car during that time based on 12,000 miles traveled annually and using the EPA’s combined fuel-economy rating and the nationwide average price of regular gas over the past year—which, at $2.57 a gallon, sounds mighty appealing. Although the EPA’s figure doesn’t perfectly reflect the fuel economy people will see in day-to-day use, it does provide an accurate prediction of how vehicles will fare relative to one another.

DISCLAIMER: The figures below are accurate as of the publishing date. However, MSRP varies almost daily. Fuel mileage will vary depending on driving conditions, driving style, and other factors. Insurance rates vary town to town, driver to driver, and minute to minute. Cars are listed in descending order of ownership cost. No, we will not buy you one.

Hyundai Elantra

A manual transmission is the short-changed buyer’s best friend, as manuals are typically $1000 or so cheaper than automatics and, except in the case of today’s most bleeding-edge transmissions, are more fuel efficient to boot. This Hyundai is a perfect example, as the only manual transmission available in the entire 2010 Elantra sedan lineup is in the base Blue model tuned for—you guessed it—maximum fuel efficiency. Lower-rolling-resistance tires, a more efficient alternator, and electric power steering—instead of hydraulic—also aid fuel economy. We here at C/D like manuals because they increase driver involvement, too, an area in which the Elantra sedan could use some improvement, so there’s a bonus.

Kia Forte Sedan

Of the 10 cars on this list, five are Korean: Kias or Hyundais. (The Japanese industry has three representatives; the U.S. has one; and a European, as imported by Roger Penske—the Smart—fills the last spot.) Of these Korean cars, the new-for-2010 Forte is the strongest in its respective class. In its slightly more expensive coupe form (only $600 more than a similarly optioned sedan), the Forte is even sort of attractive, too. The cheapest Forte is arguably the most fun, as the larger engine adds pounds without much extra power, and the manual transmission is a six-speed, giving enthusiast drivers plenty of ratios from which to choose. If we were to pick a car from this list, the Forte would be among the front-runners.

Suzuki SX4 Sedan

In its more expensive (by about $2500) and better-equipped hatchback form, the SX4 is one of the most underrated cars on the market. The four-door comes in a more America-friendly three-box shape—although it’s a bit gawky-looking—and it’s actually decently quick for something so affordable, although a nine-second 0-to-60-mph time is only favorable when compared with many other cars on this list, fully laden freight trains, and limping lambs. Although it is moderately fun to drive, the SX4 sedan placed sixth in a recent eight-car comparo, mostly because we just couldn’t get comfortable in it. Be sure to take a long test drive before committing to this Suzuki.

Kia Soul

The small-car explosion that’s been going on over the past few years has reached the point at which we start to see automakers investing in interesting and fun small cars and not simply inexpensive ones. The Kia Soul belongs to both groups. Its presence here is testimony to its affordability—even in the long run—and its appearance immediately identifies it as something different. Kia offers an extensive menu of customization options—including stripe packages, wheels, and body add-ons—and a Scion-esque stream of limited editions sporting exclusive paint and interior trimmings. In the often dreary small-car segment, the Soul stands out.

Toyota Yaris Three-Door Hatchback

The Toyota Yaris is often cited as an example of why the Smart Fortwo needn’t exist. About $1000 more expensive, it feels and looks more like a real car, it has more cargo space, and it won’t hang your buddies out to dry if you occasionally need to accommodate more than one passenger. Even so, the Yaris is as devoid of driving pleasure as the Smart, although its center-mounted instrument panel adds driving excitement by taking the driver’s eyes off the road whenever he wants to know how fast he’s going. So there’s that.

Kia Rio Sedan

Her name is Rio, and although she doesn’t exactly dance like a river twisting through the dusty land, she does manage more than just an anemic shuffle. In a comparison test of econocars, we placed the Rio third, finding it actually kind of cute and almost fun to drive—certainly when considered in the spectrum of under-$15,000 hatchbacks. Buyers looking for a similar driving experience with a little more funk in the styling—and who can shake loose a few more bucks—would do well to consider the Kia Soul, just two notches pricier on this list.

Chevrolet Aveo Sedan

Remember Daewoo, the poorly received Korean subsidiary whose products GM thought would be the next big thing after it gave them to college kids for free? As Oprah would prove again with the Pontiac G6, giving cars away doesn’t help anyone’s perception of their value. Daewoo lives on outside our shores and sends an undercover agent here as the Chevrolet Aveo. The little Chevy has improved dramatically in the past few years, but if you’re drawn to this little four-door, might we suggest waiting another year or so? A replacement is due in 2011, and it should be wholly more exciting than the current car while being similarly thrifty.

Smart Fortwo Coupe

Think of the Smart as the perfect cure for parallelparkusphobia, or as a motorcycle for people with chronic vertigo. The Fortwo actually is a good idea: Just look around and notice how few cars actually have more than one person in them. It’s a strong argument for the smallest possible vehicle, period. Still, we fall short of wholehearted endorsement—heck, even half- or quarter-hearted endorsement—for one reason alone: The sole transmission choice is a total bummer. If all you want is small, cheap, and fuel efficient, get a Suzuki Hayabusa superbike. It, unlike the Smart, at least will pop wheelies.

Hyundai Accent Three-Door Hatchback

The Accent is something of a darling at our office. It’s a delightfully tossable little blob, and there’s something liberating about driving around in a brand-new car with a replacement price of less than $11,000. But the Accent illustrates an interesting trend we noticed in researching this roundup: Korean cars tend to have higher insurance rates than similarly priced and matched cars from other countries. The Accent is actually the cheapest car on this list in purchase price, yet the Accent’s insurance cost over three years is nearly $750 higher than the Versa’s. So remember, if your decision will be based strictly on dollars, your insurance agent can be more important than your salesperson.

Nissan Versa 1.6 Base

The Nissan Versa is a competent and capacious car in any trim, and even people with no criterion but price of entry might be a bit shocked at how little a base Versa includes. Both the engine (1.6 liters) and the wheels (14 inches) are smaller on the ultra-cheap 1.6 than they are on other Versas. It has no ABS and no power locks, mirrors, or windows. Not even a radio is standard. The transmission is manual, Nissan skimps on the seat padding, and even the clock is gone. If all you want is cheap, then all you get is this. It’s still not a bad package, but if you want the cheapest car possible, for goodness’ sake, buy used.

HOW MUCH DOES A CAR BATTERY COST

How Much Does a car battery Cost and What Determines Its Specific Price? When you’re in the market for a new car battery, the question “how much does a car battery cost?” is among the most important ones, especially if you’re on a slightly lower budget. Fortunately, the price ranges available today are much wider and more diverse than they used to be, so making up your mind is no longer a big issue. The real problem is checking all your facts in advance and knowing enough about your vehicle and the battery it needs, in order to make an informed choice regarding quality and long term resilience. Which battery is right for your vehcile.

THE TYPICAL COST OF A CAR BATTERY

Compared to other vehicle maintenance tasks, replacing your car battery is relatively inexpensive, but a good battery can still easily top $100. Experts estimate that the average price tag of a battery is between $60 and $120, and premium batteries are rated above this interval, with the least expensive ones cost maybe $75 apiece.

WHAT FACTORS DETERMINE HOW MUCH CAR BATTERIES COST?

How much does a car battery cost, and what would lead to a higher or lower cost? Estimated lifespan is one of the major factors that determine the price of a car battery as well as the size of battery you actually need for your vehicle.. While most batteries are estimated to last up to 4 years, more expensive brands can even last more than 5-6 years before needing to be replaced. Moreover, size groups, the type of vehicle you drive and any special requirements such as increased resistance to cold and corrosion will weigh in when it comes to determining the overall cost. Lightweight batteries are also less expensive, since they reduce the load on your car, and the performance of lithium-ion versus lead-acid technologies also warrants a sizable price increase.

TYPES OF CAR BATTERIES AND THEIR SPECIFIC PRICES

The cheapest types of car batteries are traditional lead/acid batteries, which are typically rated at about $65 to $130 or so. Calcium-calcium batteries are only slightly more expensive, while the more advanced fluid regulation technology of valve-regulated lead-acid batteries will typically drive the price up to a maximum of $250. From there on, you only get the highest quality and best technology. How much does a car battery cost above the range of normal lead-acid batteries? The more durable, deep-cycle batteries will cost you at least $200, while the top-of-the-line lithium-ion battery has a starting price of $1,000.

NEWER VS. OLDER CARS AND BATTERIES

If you have an older car, it stands to reason that you may not be hanging on to it for much longer and don’t want to spend a lot of money on a battery, so a price that’s less than $100 is usually warranted. In addition, older vehicles don’t require the current draw of newer, more sophisticated cars and put less demand on a battery. As a result, buying a new car will likely require a pricing range of $150 to $350 for a brand new battery. That isn’t necessarily just a result of the need for better technology, but for the greater amperage and CCA values demanded by modern standards. In most cases, if you ask “how much does a car battery cost in today’s market,” experts will refer to these prices, while also pointing out the possibility of buying cheaper or more expensive units, depending on the vehicle you own.

Which cars are the cheapest to repair?

When it comes to choosing a car, it makes good financial sense to opt for one that won’t cost you an arm and a leg should it need any repairs. So before you buy your vehicle, it’s well worth doing some research into which cars are the cheapest to repair and which manufacturers are the most reliable (inasmuch as they make vehicles that, statistically at least, are less likely to need repairs in the first place). Here’s a quick round-up of some of the best options…

Cheapest cars to repair

MoneySupermarket and Warranty Direct investigated which cars are the cheapest to repair and put together the top 10. At number 10 was the car manufacturer Seat, with repairs costing an average of £273.35.

This was followed by Citroen, where repairs cost an average of £270.72. Vauxhall (£270.42), Hyundai (£269.90), Smart (£268.27), Skoda (£261.02), and Fiat (£260.25), took eighth, seventh, sixth, fifth and fourth place respectively.

Third place went to Peugeot at £251.57 and Suzuki took second place, with repairs costing £234.96 on average. But at number one was the car manufacturer Ford, with repairs on Ford vehicles found to cost an average of £223.92.

Most reliable cars

When it came to reliability, Japanese manufacturers took the top three spots – Honda, Suzuki and Toyota. The fourth and fifth most reliable manufacturers were found to be Ford and Kia.

Maintaining your car

The best way to avoid paying out for expensive repairs is to look after your car and carry out regular checks. It’s a good idea to check the tyre pressure every two weeks and check the tread is above the minimum legal requirement of 1.6mm. You should also regularly check that the car’s horn, lights, handbrake, seatbelts, mirrors and windscreen wipers all work properly.

Replacing light bulbs if they have blown is relatively easy to do and it won’t cost you much. Topping up brake fluid, windscreen washer and oil levels is also a simple task. If there are any problems with your car, getting them fixed while they are still relatively small will prevent them from escalating into a larger, more expensive problem. What’s more, it will also increase the chances of your car passing its MOT. All cars have to have an MOT every year once they reach their third birthday.

Maintaining your car becomes even more important when winter strikes. Ice and snow can affect how well your car grips the road, so it’s crucial to check that the tyres are inflated correctly and the tread hasn’t worn down. Checking the windscreen for cracks is also important as even the smallest of chips could turn into a large crack as soon as temperatures drop. Keep the windscreen clean too because a build up of dirt can reduce visibility and increase dazzle from headlights and the low winter sun. Also ensure the battery is in good working order because it can quickly run itself flat in the winter months.

Most batteries are reliable for two to four years, so if your car’s battery is older than this it could be worth replacing it. Keep a few essentials in the car boot, such as a spare tyre, tool kit, jump leads, ice scraper, torch, blanket and first aid kit so that you’re prepared in the event that your car breaks down. And, of course, make sure you have breakdown cover. You can compare quotes on the MoneySupermarket comparison service. Similarly, use our car insurance comparison service to find the best deal on your car insurance.

You can keep the costs down by taking care of your car and parking it somewhere secure such as your driveway or garage. Fitting an alarm or immobiliser will also help to keep your premiums down. But avoid modifying your car as this will only help to push up the cost of your car insurance. Finally, don’t forget to take your car to be serviced. Generally-speaking this should be done every six months, but your car’s manual should tell you how frequently your car should be serviced.

How to Buy a New Car

Buying a new car is a little like a game show. Choose the right door and you win your prize — a sweet deal on a good car. Choose the wrong door and you’ll lose money and hate the shopping experience. Navigating the car-buying process has never been easier, thanks to the transparency created by the internet.

Before we go into detail, here’s an overview of the steps you’ll need to take to buy a new car:

  1. Set your budget. Decide how much you can spend, what your monthly payment should be, and how you will finance your new car.
  2. Choose the right car. Narrow the field and choose the model that best serves your needs.
  3. Check reliability and ownership costs. Choose a reliable car that is inexpensive to own, even if it costs a bit more to buy.
  4. Test-drive the car. Test-drive your top choices to see which car is right for you.
  5. Locate your car. Cast a wide net by searching dealership inventories online.
  6. Find the right price. Use pricing guides to see what other people are paying for the car you like.
  7. Get dealer quotes. Contact several dealerships and ask for the best price.
  8. Maximize trade-in value. If you trade in your old car, figure out how to get the most for it.
  9. Seal the deal. Review the contract and sign documents.

With that road map, let’s get started. (If it isn’t a new car you want after all, check out guide on how to buy a used car.)

Set your budget

Start by deciding if you want to pay cash, take out a loan, or lease your new car. Paying cash makes your budgeting process pretty simple, but don’t spend all your savings. And remember that you will also have to pay sales tax, registration and insurance. Use the Nerdwallet auto loan calculator to figure out the right monthly payment and down payment.

Most people take out a car loan or, increasingly, opt for leasing a vehicle. It’s smart to get preapproved for a car loan because it simplifies the buying process and puts you in a stronger position at the dealership. Later, you’ll see how having a preapproved loan fits into the process.

Choose the right car

Now the fun begins — picking the right car for you. Think about how you plan to use this car. For example, if you have a family, you’ll want enough room for everyone plus ample cargo space. If safety is a top priority, check out the Insurance Institute for Highway Safety for crash tests.

Narrow the field by making a list of must-have features. Then, search for models with the car finder tool found on some automotive sites. Filter your search according to your budget and desired features. As you move forward, list three target models to research in more detail.

Check reliability and ownership costs

You want to make sure to choose models not only for their dependability but also for their low cost of ownership. Consumer Reports and J.D. Power collect maintenance reports from owners and rate all cars for reliability.

A closely related issue is the total cost of ownership. Some cars are cheap to buy, but will cost a lot in the long run because of insurance, maintenance, repairs and depreciation. Several automotive websites — such as Kelley Blue Book’s Five-Year Cost to Own or Consumer Reports’ Cost of Vehicle Ownership — show estimates of these expenses. It may be wiser to shell out a bit more money upfront when buying a car. 

Test-drive the car

Ideally, you want to test-drive all the cars you’re interested in buying in quick succession so that the impressions will be fresh in your mind for comparison. Consider setting aside a morning or afternoon for the process, and, if possible, do it mid-week when the dealership isn’t too busy.

Rather than just walking on to the car lot, call ahead and schedule an appointment with the internet sales manager. That way, the right model will be pulled out and ready to go.

Select a test-drive route that has a bit of everything: hills, rough pavements, curves and even a stretch of highway.

Locate your car

Maybe one of the cars you tested meets your needs and is the right color. If not, you will have to search local dealerships until you find the right car.

Nearly all dealerships list their entire inventory online. But if you’re searching for an unusual color or option combination, you can use sites that cover an entire region — or even the whole country. Many new cars are listed on sites such as Autotrader.com or CarGuru.com. Manufacturer websites might also allow you to search a broader area rather than individual dealerships. Keep widening your search area until you find exactly the car you want.

Find the right price

Pricing guides, such as Kelley Blue Book, allow you to cut to the chase and find out what other people in your area are paying for the car you want. On the website, accurately input all the options you want and, in some cases, even the color, since all those factors affect the car’s price.

Make sure to see what, if any, incentives and rebates are available for the car you want. Most manufacturer websites list current offers, which usually change each month.

Get dealer quotes

Requesting dealer quotes by email can take the stress out of negotiating. You can ask for a price quote by emailing the dealership through its website. Or, to save time, use a third-party site such as Truecar.com to request quotes from multiple dealerships simultaneously. Compare the seller’s asking price to the average market price you determined through the pricing guides. Chances are, the seller is asking more than the market average.

If you negotiate in person, here are a few tips to use on the car lot:

  • Don’t be a monthly payment buyer. If you have a preapproved loan, you’re a cash buyer and you should negotiate the price of the car, not the size of the monthly payment.
  • Be unpredictable. Don’t let a salesman leave you trapped in a sales office while he “goes to talk with his boss.” Instead, roam around the showroom or go get a cup of coffee.
  • Negotiate slowly and repeat the numbers you hear. It’s easy to get confused, so go slow and even write down the numbers thrown at you. Make sure you know whether you’re talking about the “out-the-door” price, which includes all taxes and fees, or just the sale price of the car.
  • Ask about fees before saying yes to a deal. Some dealers may include bogus fees to recoup the profit they lose while negotiating. Ask for a breakdown of additional fees before you agree to any deal.
  • Be ready to walk. If you aren’t making progress toward a deal, or you don’t like the way you’re being treated, just walk out. No goodbyes are necessary.

Maximize trade-in value

A lot of people like to trade in their old car so they can resolve all their car-buying hassles at the same time. But this could be a costly choice. While trading in a vehicle is convenient, dealers usually may try to low-ball customers and only pay the wholesale price. To see how much that is, go online to a pricing guide, look up your car and compare the trade-in price (what you would receive) to dealer-retail (what the dealer will try to sell it for).

Often, the difference can be $3,000. For example, Edmunds.com’s True Market Value used-car pricing shows that for a 2013 Honda Accord EX, the difference between trade-in and dealer-retail is $3,100.

New trade-in options are available, such as selling the vehicle to CarMax. Or, you can sell it to a private party.  At the very least, look up the trade-in price of your car and negotiate the highest possible price for it.

Seal the deal

If you are negotiating via email or phone, ask to have the car delivered to you rather than picking it up at the dealership. It’s quick and stress-free.

But most people go to the dealership to sign papers in person. Even if you have a preapproved loan to pay for the car, the dealership’s finance manager may offer to beat the terms of the loan. It doesn’t hurt to see if he or she can get a better interest rate. Just make sure all the other terms of the loan are the same.

Before the contract is drawn up, the finance manager may also try to sell you additional products and services. Buying an extended car warranty at the right price can provide peace of mind. But check first to see how much warranty is included with the price of your new car. Most new cars have a bumper-to-bumper warranty covering at least three years and 36,000 miles, along with a powertrain warranty that typically lasts up to 75,000 miles. The powertrain warranty covers all the parts that make the car driveable, such as the engine, transmission and suspension.

Take your time reviewing the contract and don’t let yourself be pressured into signing just to get it over with. The contract will include the agreed-on sales price and these additional figures:

  • State sales tax. This is a percentage of the cost of the car.
  • Documentation fee. As crazy as it sounds, the dealership actually charges you for filling out the contract. This “doc fee” is capped in some states. In states such as Florida, some dealerships charge as much as $700 for doc fees.
  • Registration fees. A dealer has the ability to register the car for you, which is convenient.

Some dealerships might include additional fees, of which some may be bogus. It’s tricky to know what’s legit and what’s included just to boost their profit. If the dealer’s finance manager can’t explain a fee in the contract to your satisfaction, ask to have it removed.