You've successfully applied your showroom shopping tactics and you're ready to buy your new car. The challenge here is to play the negotiating game with out being played for a fool. "When you're in a showroom, you're matching wits with someone who has been trained to get as much money as possible from you and who hones those skills eight hours a day," says Jack Gillis, director of public affairs at the Consumer Federation of America and author of The Car Book. "But the Internet hasd up tremendous bargaining power for consumers because it provides easy access to vital information that allows you to pit several dealers against each other, which is the only way to negotiate the best price for a car." What follows is a guide to finding the information you need to negotiate the best price for a new car. And for car shoppers who want to avoid haggling entirely, see our overview of online car buying services.
Deal only with the big cheese
When you're ready to begin negotiations, Ellis recommends you speak only to the sales or fleet manager. Communicate clearly that you're seeking bids from several dealers based on pricing only. You'll find a helpful script to follow at CarBargains.com under the heading "How to Get a Great Deal on a New Car. " You can do your negotiating face-to-face or you can ask for bids via the telephone and then have the low bidder confirm the bid by fax. If you belong to a credit union, a warehouse shopping club or an automobile association, also check to see if any local dealers have agreed to sell cars at a fixed markup from invoice to members of your group.
Ignore the sticker price
One of the biggest mistakes consumers make--with great encouragement from car salespeople--is looking at the vehicle's sticker price and bargaining down from there. In fact, the figure that should be your starting point is the factory invoice price, which is what all dealers must pay the manufacturer for a given model. While some consumer experts say you can assume you've gotten a good deal if you pay between $200 and $400 above invoice, that rule of thumb doesn't always apply.
That's because even though invoice price is a good standard reference point, it doesn't represent a dealer's true cost for a car. Even if you buy a car at invoice, the dealer still would be making a profit through a variety of less obvious financial arrangements with the manufacturer, such as dealer holdbacks and incentives. Knowing what those special deals are affords you greater negotiating power because you can prod the dealer to pass some of that money along to you in the form of a price reduction. And, of course, supply and demand also affect your bargaining ability. "If the manufacturer is offering a big dealer incentive on Isuzu Troopers, you may be able to negotiate a price that's $1,000 to $2,000 below invoice, whereas if you're shopping for a Corvette with limited production and high demand, the best deal available may be $1,500 above invoice," says Robert Ellis of The Center for the Study of Services, a nonprofit consumer group.
Avoid unnecessary fees
Don't pay dealer prep charges. Manufacturers already give dealers allowances for this, so there's no reason for you to pay too. Likewise, think twice before signing up for extended warranties, rustproofing or fabric protection that salespeople try to add on before you sign the contract. Such extras are primarily profit centers for dealers, providing little benefit to you.
Start a bidding war
So being armed with the right information and then seeking bids from several dealers who know they're pitted against one another is the only way to determine what a "good deal" really is for the vehicle you want.
