Negotiate the Best Deal on Your New Car

Physician's Money DigestMarch15 2005
Volume 12
Issue 5

Who doesn't love buying a new car?There's a feel and a smell to the inside ofa brand new automobile that's unlikeanything else. For some it's intoxicating.What we despise, however, is the process of buying anew car. Haggling and negotiating over the price cangive even seasoned shoppers indigestion. And no matterhow good a deal you think you got, chances are you'llleave the showroom wondering if you got the best deal.But if you do your homework thoroughly, you mightrelieve some of that indigestion and begin to feel betterabout the deal you arranged.

Conduct Key Research

It all starts with being prepared. Auto sales personnelare professionals; they sell cars for a livingand most of them are very good at it. The more youknow before walking into the dealership, the betterequipped you'll be to level the playing field.

Consumer Reports


(; suggests that you thoroughly research the differentmodel cars you're considering for reliability, safety,fuel economy, and price. In addition, research thevalue of your current car if you're considering tradingit in. Auto Web sites like Edmunds ( and Kelly Blue Book ( can helpyou get an idea of what your vehicle is really worth.But remember to look at the car's wholesale or trade-invalue, not the price you could expect to get if yousold the car privately. There are big differencesbetween those two numbers.


It's also important to understand that there's both asticker price and a purchase price for a car. If you pay thesticker price, you're probably overpaying. What youwant to know is how much the dealer paid for the vehicle.You can find dealer invoice information on Web sitesand in pricing guides, but because of bonuses and dealerincentives, the invoice price might not be what the dealerpaid. 's New Car Price Report and some auto pricingWeb sites can help you sort through the incentive maze.

Drive a Bargain

Car salespeople often like to negotiate more thanone thing at a time, such as financing, leasing, andtrade-in values. That can get confusing. The articlesuggests that you first make it clear that you are notbuying the first time you walk into the showroom.Inform the salesperson that you plan to visit otherdealerships selling the same model and will give yourbusiness to the one that presents the best offer. Arriveat an agreeable price before discussing financingoptions and/or trade-in value for your current vehicle.

60 Minutes

Your best bet when it comes to financing a newvehicle is to check out all of your options before goingto the dealership. Know what your credit rating is andcheck out loan arrangements with local lending institutions.Salespeople may say they are giving you the lowestrate available, but according to a recent report on, that's not always the case. Dealers havebeen known to tack on a few points to the interest ratethey receive. This is known as dealer reserve, and it canpotentially add hundreds or even thousands of dollars infinance charges to the cost of your new vehicle.

Perhaps the most important point, and one that'seasily overlooked, is that you are in charge. You don'thave to purchase a certain vehicle at a specific dealership.You can go elsewhere, and should do so if you don't geta deal that meets your satisfaction. And showing thatyou're serious about leaving can often get a stalled pricemoving in your direction.

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