How to be a Smart Car Buyer
SHOP FOR YOUR CAR LOAN
BEFORE you go to the dealership, consult you bank or credit union
Thereís an old expression in the car business: "Payment buyers are low
flying ducks." Don't negotiate based on monthly payment!!! It is OK to let
the dealer try to beat your bank or credit union terms, but you have to
know those terms in order to let the dealer compete for your business. Do
not rely on dealer staff for monthly payment quotes during sales
negotiations. Get that information from your bank or Credit Union before
you go to the dealership. Ask your bank or credit union how much you
should be borrowing given your debt to income ratio and heed their advice.
DO YOUR HOMEWORK
Itís the only way to know if youíre getting a deal or being taken for a
A car deal is a negotiated transaction - actually it's three major
negotiations: price of car, trade-in allowance, and finance package.
Everything is negotiable.
Remember, the dealer's staff is commission-paid professional negotiators.
The more money they get from you, the more they get paid. Use the internet
or consumer publications to find out what the dealer paid for the car you
want. Keep this in mind: the dealer's "invoice price" usually includes a
3% holdback. Negotiate from their actual cost up, not from the sticker or
Know what your trade in is worth at wholesale and negotiate that amount
separately. A good place to check is
BE PREPARED TO WALK!
Use competition to your advantage. This isnít the only car dealer on the
Do not accept high pressure sales tactics! The dealership either accepts a
fair offer in a reasonable period of time or you will see if their
The biggest mistake is to act in haste based on emotion, forgetting that
car buying is a significant business transaction. Rush into a transaction
and you could buy too much car at too high a price. You might also get
unfavorable credit terms. Figuring that out after you sign the contract
doesnít do you much good.
Remember, this is horse-trading. The dealerís team is there to extract
maximum profit from the new car sale, sale of the trade in, sale of the
credit or lease agreement and sale of extra car related goods and
services. Your job is to get the right vehicle that fits your needs and
CHECK THE PAPERWORK
And do it before you sign! There is no 3-day cooling off period for car
Make sure you get full credit for your down payment, trade-in allowance
and all rebates on the purchase order and credit contract (if applicable).
Read your contract carefully to ensure you are not paying for things you
did not agree to buy!