Think about what car model and options you want and how
much you're willing to spend. Do some research. You'll be
less likely to feel pressured into making a hasty or expensive
decision at the showroom and more likely to get a better
deal.
Consider these suggestions:
Check publications
at a library or bookstore, or on the Internet, that
discuss new car features and prices. These may provide
information on the dealer's costs for specific models
and options.
Shop around to get the
best possible price by comparing models and prices in
ads and at dealer showrooms. You also may want to contact
car-buying services and broker-buying services to make
comparisons.
Plan to negotiate on
price. Dealers may be willing to bargain on their profit
margin, often between 10 and 20 percent. Usually, this
is the difference between the manufacturer's suggested
retail price (MSRP) and the invoice price.
Because the price is a factor in the dealer's calculations
regardless of whether you pay cash or finance your car
— and also affects your monthly payments — negotiating
the price can save you money.
Consider ordering your
new car if you don't see what you want on the dealer's
lot. This may involve a delay, but cars on the lot may
have options you don't want — and that can raise the
price. However, dealers often want to sell their current
inventory quickly, so you may be able to negotiate a
good deal if an in-stock car meets your needs.
Learning
the Terms
Negotiations often have a vocabulary of their own. Here are
some terms you may hear when you're talking price.
Invoice
Price is the manufacturer's initial charge
to the dealer. This usually is higher than the dealer's
final cost because dealers receive rebates, allowances,
discounts, and incentive awards. Generally, the invoice
price should include freight (also known as destination
and delivery). If you're buying a car based on the invoice
price (for example, "at invoice," "$100 below invoice,"
"two percent above invoice"), and if freight is already
included, make sure freight isn't added again to the
sales contract.
Base Price
is the cost of the car without options, but includes
standard equipment and factory warranty. This price
is printed on the Monroney sticker.
Monroney Sticker Price
(MSRP) shows the base price, the manufacturer's installed
options with the manufacturer's suggested retail price,
the manufacturer's transportation charge, and the fuel
economy (mileage). Affixed to the car window, this label
is required by federal law, and may be removed only
by the purchaser.
Dealer Sticker
Price , usually on a supplemental sticker,
is the Monroney sticker price plus the suggested retail
price of dealer-installed options, such as additional
dealer markup (ADM) or additional dealer profit (ADP),
dealer preparation, and undercoating.
Financing
Your New Car
If you decide to finance your car, be aware
that the financing obtained by the dealer, even if the dealer
contacts lenders on your behalf, may not be the best deal
you can get. Contact lenders directly. Compare the financing
they offer you with the financing the dealer offers you. Because
offers vary, shop around for the best deal, comparing the
annual percentage rate (APR) and the length of the loan. When
negotiating to finance a car, be wary of focusing only on
the monthly payment. The total amount you will pay depends
on the price of the car you negotiate, the APR, and the length
of the loan.