How to Keep New Car Prices Down

The trick to getting a good price on a new car is to be patient, informed and firm.

Difficulty: Moderate

Instructions

1. Be informed when you shop. Know the options and the invoice price of each car before you look at it. Also, decide exactly what you're willing to pay for a particular model. Edmund's has the information you'll need for this (edmunds.com).

2. Let the dealer make the first offer. Keep counteroffering until you're within a percent or two of what you planned to pay.

3. Bone up on incentives, rebates and dealer holdbacks. The more information you have, the more power you have to deal.

4. Think twice about allowing the dealer to sell you an alarm, an extended warranty, undercoating, rustproofing, paint sealant or fabric protection. If you really need those things, consider having them done off-site. Dealerships make a lot of money from these extras and pass the fees on to you.

5. Watch your options. Power seats and windows, sunroofs and upgraded stereo packages add a lot to the cost of a new car.

6. Figure that the difference between a two-door and four-door model of the same car is about $500. Do you need those extra doors?

7. Negotiate ruthlessly for the best price on your trade-in. Note that it's usually better to just sell it yourself.

Tips & Warnings

• Remember that everything is negotiable, and if you aren't satisfied, you don't have to buy from a particular dealer. The salespeople know this; they want you to forget it.
• Don't forget the "bird dog." This is a fee given to someone for referring a buyer to the dealership. The fee usually runs from $50 to $100 and the person doing the referring doesn't even have to be a previous customer. Ask for it right before you sign the papers, after the price has been set.
• Dealer holdbacks are rarely negotiable, but you have an advantage if you know about them. Don't use this information until the salesman starts trying to tell you he's not making a fair profit when you refuse to pay more than 3 percent over invoice.
• Things you'll have to pay for include taxes, registration and licensing, and the destination charge. Contrary to what a salesperson may tell you, you don't have to purchase dealer-installed options.
• Refuse to pay for profit makers such as a handling and delivery charge (even if it's a factory-ordered car), dealer advertising or sales promotion fees, and administration charges of more than $100.