Ideally, when you're ready to visit dealerships to begin price negotiations, you'll already have done your research. You'll know:
… The car model you want.
… The options in which you're interested.
… Whether you'll be trading in a vehicle and what a reasonable trade-in price is.
… Whether you're financing is prearranged or you'll be financing through the dealership.
  The most effective way to get the best deal is to get price quotes from three or four different dealerships. Some dealers may be more willing to operate on a smaller profit margin or may have more models to move off their lot. A recentsurvey shows that about one-third of car buyers never visit more than one dealership, which means they may not be getting the best deal they could. Here are some key things to keep in mind:

  Be clear, courteous, and firm. If you've previously talked with a salesperson at a particular dealership, ask for that person. Explain immediately that you're interested in a price quote and that you're serious about buying, but you're not ready to buy on the spot. Add that you'll be visiting other dealerships as well, and that when you're ready to buy--sometime in the next few days--the dealership with the lowest quote will get your business. If a salesperson isn't polite and respectful in return, then either ask to speak with another salesperson or go to another dealership.

  Get a price quote. Tell the salesperson which model you're interested in and the basic options you want; and that you have a good idea of how much the dealer paid for the vehicle. The simplest and most effective approach is to present your figures and say you want the dealership's best price--that is, the lowest markup over invoice the dealership will accept. Write all the information down. Then leave, saying you'll be in touch soon if this is the best price you find.

  Dealer Prices for popular new models are likely to be 12 to 15 percent of the MSRP (Manufacturers Suggested Retail Price). For a leftover model (from the previous model year) that has a dealer rebate or is in plentiful supply, expect a price that's just over dealer cost, or below. For a model in high demand, you'll likely pay close to, or above, the MSRP. Despite any possible comments from the salesperson, don't feel guilty about squeezing the dealer's profit. Dealerships aren't in business to lose money; there's a price below which they simply won't go. Getting the best deal for you means trying to get as close to that price as possible. In addition, dealerships have other sources of profit to draw from, such as commissions they collect if they arrange your financing or insurance, profit from selling you an extra-cost warranty, reselling any car you trade in, and servicing your new car down the road.

  The Best Time to Buy. The last few days of the month are the best time. Sales Managers are eager to post good results and the number of vehicles sold is as important as the profit achieved for the month.

  Keep things simple and separate. Focus solely on the purchase price for the new car. Don't discuss a trade-in, leasing, or financing. Otherwise, the salesperson may confuse you by juggling the figures--say, by inflating the value of your trade-in and then raising the asking price of the new car accordingly, or vice versa. Another common tactic is for the salesperson to ask how much you're willing to pay, or what you think the new car is worth. Politely point out that you aren't interested in haggling; you just want the dealer's best price. In addition, don't let the salesperson coax you into naming a monthly payment you can afford. Talking in terms of monthly payments gives the salesperson wide latitude to shape a deal with a low monthly payment but a higher-than-necessary sticker price.

  Resist the pressure to buy immediately. Salespeople know that if you leave the dealership you may not be back, so they will often try to convince you to buy right away. One motivation is to offer you a deal that's "only good for that day." Don't be distracted from your objective. Usually any price offered "today" will still be good "tomorrow."

  Consider leftover models? A dealer may offer you a tempting deal on a "leftover" model, one that remains unsold after the next year's models have arrived at the showroom. These can be real bargains in terms of initial price, especially if the new year's model has been substantially redesigned. But realize that as soon as you drive such a car off the dealer's lot it will instantly undergo a year's worth of depreciation. In other words, two years from now it will look on paper like a three-year-old car, and its resale value will reflect that fact.

  Be flexible with options. A dealership may not have the model you want in the exact trim and with the options you're looking for. In that case, you may have to decide whether to accept a model off the lot that's close to what you're looking for or to special-order one. If you accept one off the lot, you may be able to get a better price. You may also have to compromise on how it's equipped. When talking options, keep an eye on the bottom line. Some options, for instance, can be obtained only as part of an option package or "equipment group." With these, in order to get the option(s) you want, you may have to accept some you don't care about. Consider the price for the overall package and weigh whether it's a worthwhile investment. If the dealership doesn't have the right model on the lot, it may be able to get it from another dealership in the area, which usually takes only a few days. Special-ordering from the manufacturer could take weeks.

  Closing the deal. Once you have several prices, you're ready to close the deal. Sometimes you may prefer one dealership or salesperson over the others--because of location or the way you were treated--but the best price came from another. If so, try returning to your favorite dealership with the lower price and see if they'll match it. Again, keep the transaction simple and handle one thing at a time. The salesperson may try to take this opportunity to make up for a low vehicle price by getting some extra profit in other areas. If you're interested in leasing the vehicle rather than buying it, now is the time to finalize the leasing terms. Similarly, handle the transactions for a trade-in or financing separately from any others.

  You have the final say. Remember that you, as the buyer, have the final say. If you feel that a salesperson is applying too much pressure or is hedging on the negotiations, you can always simply get up and walk out. Sometimes the simple mention of "going to look elsewhere" will smooth out the process. Some salespeople might try to wear you down by prolonging the process unnecessarily. If the salesperson is spending too much time away "talking to the sales manager," make it clear that you wish to work out the process. Either give him a time limit or ask to speak with someone directly who can work out the deal.

  Think twice about dealer add-ons. After you think you've agreed on a purchase price, the salesperson or the business manager may try to sell you an extended-service contract or dealer-installed "packs" such as rustproofing, paint sealant, or fabric protection. Refuse them. They're generally overpriced or worthless.

Lease or Buy