How to Negotiate a Price and Buy a New Car

Choosing a car is an important decision that merits careful planning. You are likely to live with this vehicle for quite some time. These pointers will help you choose effectively.

Difficulty:

Moderate

Instructions

Things You'll Need

• Car loans
• Car insurance
• Cars

1. Decide how you intend to use the car: for daily commuting, recreation, weekends and evenings out, carrying things, towing a trailer, carrying more than one passenger or driving in the city, suburbs or country. Consider factors that are important to you, such as fuel efficiency, reliability and safety features.

2. Check into the resale value and repair history of past models in this car line, such as by consulting Consumer Reports magazine or its website (see Resources).

3. Come up with a realistic budget, based on what you can afford (consider the monthly payment and cost of upkeep). If you're considering a trade-in, check the Kelley Blue Book value of your current vehicle. The Blue Book is a catalog of new and used car values, available at libraries, banks and online (see Resources). Factor your car's trade-in value into your total budget.

4. Locate a town or an area near your home with several car dealerships; check Sunday newspaper advertisements and the yellow pages. Choose one or more dealerships to visit and set out early, preferably on a weekday. Remember to bring your driver's license so you can test drive.

5. Find a car that interests you and check the stickers on the window. The first (and sometimes only) one is the factory sticker, which lists the MSRP (Manufacturer's Suggested Retail Price), and the second is the dealer's sticker.

6. You'll see that the factory sticker lists the car's features and its fuel-efficiency rating (or the number of miles per gallon expected for city and highway driving). The MSRP on this sticker includes the sum of the vehicle's base price, any additional options and the destination fee. The MSRP has a built-in profit for the dealer, often around 10 percent.

7. Understand that the second sticker, if there is one, reflects a higher price. This price is set by the retailer for options and services it has supplied apart from the factory. Examples include an undercoating (to protect the car's underside exterior), dealer prep (washing, waxing and interior cleaning), interior and exterior treatment (sealant for the interior, no-wax finish for the exterior) and extra items (specialty wheels, for example). The second sticker price may also include additional dealer profits.

8. Tell the sales representative that you'd like to have a look inside the car, or just hop in if it's unlocked. Adjust the seat and mirrors, and check leg room in each part of the car.

9. Ask to take a test drive. Start out on city streets and then head out to the highway. Pay attention to steering ease, turning radius, braking response and acceleration. Adjust the mirrors and radio while you're driving to test convenience.

10. Return to the dealership and thank the dealer. If you like the car, ask for a business card and say you will return later.

11. Head to the next dealership and investigate other car models as described above. Ask dealers which car most closely resembles the one you previously test-drove, providing the make and model and explaining which features you liked. Test a number of models until you decide on a car, and compare these prices with those at other dealerships.

12. Inquire about availability and delivery time, especially if you're interested in a popular model or want special features.

13. Factor the dealership and its sales staff into your choice. A dealership you can trust, especially one with a competent service center on site, is worth more than money in your long future with the vehicle. You can, of course, have your car serviced at any dealer authorized by your new car's warranty.

14. Start negotiations on polite and friendly terms. Comment on what you like about the car and ask questions. The intent is to make the seller comfortable.

15. Remember that the dealer's second sticker lists options, not requirements, regardless of whether those services have already been provided. Ask for the factory wheels back, for example, or order a car that has no undercoating.

16. Make your first offer. It should be lower than what you're willing to pay, but not an insulting figure. Use the MSRP as a reference, remembering that dealer profit (often around 10 percent) is built into this figure.

17. Allow the seller to make a counteroffer. If the price is too high, say you're not able to afford that and ask him to talk to his manager.

18. If the salesperson balks at your first offer, make a slightly higher one. Continue negotiating until you can agree on a price within your budget. If you can't agree on a price, seek out another dealer. You may be able to go back and get the first dealer to underbid the second dealer.

Tips & Warnings

• It is usually cheaper for dealers to order a standard options package than to order a customized set of options just for you. Thus, you may be able to get a better deal on a luxury package car than you would on a car with only a few options that you specially request.

• When the manufacturer sells a car to a retailer, the price is set to include a limited amount of dealer prep, such as washing and interior cleaning. Ask your dealer what additional services have been provided to warrant the charge, which is often listed on the second sticker as "dealer prep."

• Manufacturers often survey dealers' customer satisfaction rating and award bonuses to those who score consistently high. So be sure you're satisfied with your salesperson. Don't be shy about asking him or her to show you everything you want to know about the vehicle.

• Avoid setting your heart on one particular model or make. There are hundreds of excellent vehicles on the market, and becoming attached to one of them may make you less hardheaded in your bargaining.

• Avoid being nasty to the salesperson. Express regret over your own limited means and admiration for the sales rep's efforts on your behalf, as appropriate.