What to Consider Before You Talk to a Car Dealer

If you’d like to avoid being taken for a ride (and we don’t mean a test drive) the next time you buy a new car, do some homework first. Consumer advocate W. James Bragg describes the smart car buyer as someone who “doesn’t rely on the salesman for important information.” To buy the car you want at the lowest possible price, follow this checklist below:

1. Start with the car you’ve got. Find out how much it’s actually worth and decide whether to trade it in or sell it yourself. Trading it in means selling it at wholesale; by selling it privately you get the retail price.

2. Figure out how much money you’ll need. Calculate the monthly payment you can comfortably afford and figure out the down payment based on how much additional cash you can kick in with the proceeds from your current car. The idea is to maximize your down payment and lower your monthly payment.

3. Shop for money. Knowing what a loan will cost helps define the upper limit you can afford to pay for that new vehicle. This is a good time to figure what tax and license will cost you for a vehicle in that price range—information the dealer usually won’t volunteer until you’re committed to the price of the car. Shopping for a loan also helps you evaluate the relative merits of financing deals the car store might offer.

4. Date dealers, don’t marry them. While you’re in this research phase, keep reading up on the models that appeal to you and by all means stop by car stores for test drives. But make it ultraclear that you’re there only to shop, not to buy.

5. Never volunteer information. You lose your advantage when a salesperson learns how much you’re willing to pay, what monthly payment you can afford, and—above all—that you’re really excited about a certain car.

6. Learn the dealer’s cost. Once you’ve narrowed the field to the two or three models you’re considering (including options), find out what each vehicle cost the dealer. The Web site www.carprice.com publishes dealers’ invoice prices at no charge. Consumer Reports magazine will give you the dealer’s invoice cost and the crucial information about current dealer incentives for $12; without knowing about factory rebates and other dealer incentives, you could still end up paying hundreds—or thousands—more than necessary. Keep in mind the dealer’s cost, with the incentives and rebates figured in, when you begin negotiating. (A handful of businesses offer more complete assistance to the car buyer, including “coaching” on negotiations. See the “Resources” section on page 293 for more information.)

7. Memorize these mantras. Keep these bits of wisdom from Bragg in mind as you prepare to shop for your next car.

• Eighty percent of a dealer’s profits on new-car sales come from 20 percent of his customers.

• Most dealers make several “slim-profit” deals every month in order to close sales with savvy customers.

• From the car dealer’s perspective, almost any sale is a good sale.

• It will always be much easier for you to find someone who wants to sell a new car than it will be for a car salesman to find someone who wants to buy one.

• One reason God gave you feet was to walk away from car salesmen