Six Steps to a Good Deal  

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Some car buyers consider it great sport to try to beat the last penny of profit out of an auto dealer. But most consumers look upon the car-buying process as one of the most unpleasant shopping ordeals a person can experience.

If you're planning to go through traditional channels for your next car purchase, these Six Steps to a Good Deal should prove very helpful. Even if you are thinking of using CarPoint's connection to Auto-By-Tel and the streamlined buying service it provides, we recommend that you look this article over.

Step #1:
Know the car you want and how much you can afford
Some experts say your annual income should be at least twice the price of any new car you buy. In any case, you should be clear about the car you are shopping for and sure of how much you can afford.

Use CarPoint's Find mechanism to sort the myriad of vehicle choices by price range. You'll end up with a Personal Find List of models that fit your budget. This will help you avoid wasting time test-driving and negotiating for cars you can't really afford.

Step #2:
Study retail and invoice prices
Start with the top-level retail and invoice prices in CarPoint for the cars and trucks that interest you. Then, as you narrow your search, download IntelliChoice Just the Facts reports for detailed invoice pricing information. Just the Facts reports contain dealer invoice prices (on vehicles and options), current factory-to-dealer and factory-to-customer rebates, destination charges and other tax and fee information.

Add up the dealer's cost for the car and the options you want. Subtract any factory-to-customer rebate (unless you plan to take discount financing) and any factory-to-dealer rebate. Then add in what you think is a fair profit for the dealer. What is a fair profit? Well, opinions vary. On an economy car, a fair profit might range from $200 to $500. On a luxury car in limited supply, $1,000 to $2,500 might be more appropriate.

Step #3:
Qualify the dealer
Call several dealers within a reasonable driving distance and ask each if they have a car on their lot with the options you want. You'll nearly always get a better deal if the dealer doesn't have to trade with another dealer for the car you want.

Step #4:
Remember the golden rule:

    First negotiate the price of the car.
    Then discuss financing.
    Then discuss the value of your trade-in.

Always keep these three transactions separate. Salespeople are very good at giving away with one hand and taking a lot more with the other.

For instance, a salesperson may focus discussion on monthly payments rather than a vehicle's true total price. This is usually done in conjunction with stretching out the term of a loan from, say, four to five years. Correspondingly, the monthly payments drop in price and the car may seem more affordable to you. But you may also find your ability to negotiate a fair purchase price has been eroded as the salesperson seeks to merge discussion of price with that of financing.

Step #5:
Keep your cool
The salesperson may try to pressure you: "Are you ready to buy today?" Or the salesperson may play on your sympathy: "I'd lose my job if I agreed to a deal like that." Intimidation is another ploy often taken: "Those invoice numbers you have are all wrong." Or the salesperson may indicate you have a deal and then turn you over to the sales manager who nixes it. Together they'll work on you for hours, if necessary, to sweeten the deal in their favor.

Some of trickiest moments come in your dealings with the dealer's finance department. This is where a dealer can recoup possible losses resulting from a low negotiated price. Think carefully before purchasing aftermarket protection packages or vehicle service contracts. These aftermarket items are typically high-margin add-ons for dealers.

Through it all stay confident of your research. Be prepared to put down a deposit as soon as you've arrived at a fair price, and if you feel mistreated, be prepared to walk out.

Step #6:
Let the dealer make a buck
Bear in mind that "profit" is not a dirty word, and that no dealer is going to sell you a $10 bill for a buck and remain in business.

The average car buyer enters the market once every five or six years to conduct a single transaction. Car dealers, on the other hand, conduct several transactions a day. They know their business. The playing field is theirs and they know all the moves. Be careful.