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Vol. 10, September 2, 2004

Here is the latest issue. Enjoy.
Editor, Rick Doble

TABLE OF CONTENTS

1. CLOSE-OUT NEW AUTOMOBILE SALES IN SEPTEMBER AND OCTOBER
   Wait until the new models are introduced for the biggest discount
2. NEW AUTOMOBILE TERMS
   A little technical lingo could save you thousands
3. HAGGLING FOR A LOW PRICE
   Know what price to aim for
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#1. CLOSE-OUT NEW AUTOMOBILE SALES IN SEPTEMBER AND OCTOBER
Wait until the new models are introduced for the biggest discount

In September and October you will see ads that promise major discounts for new cars. As everyone knows the 2004 cars are being closed-out and the 2005 models are coming onto the lot. While the deals might look attractive, you may be able to get a much better bargain in just a few weeks.

This is because you will not get your best price until the new models have officially been introduced. This is often known as the "new model introduction" or NMI. After the NMI the 2004 models become "carryovers" a term used for last year's new car that is still sitting in the dealer's lot after the new models have been introduced (NMI). Once a car becomes a carryover, a dealer may receive a 5% rebate from the manufacturer.

So when you are bargaining for a new car after the NMI, subtract another 5% from the lowest price offered that does not already include the carryover discount. A 5% discount on a $20,000 car is significant; it adds up to $1000. You will not only pay a thousand dollars less, you will pay less in taxes and less in loan interest. So the savings are substantial.

#2. NEW AUTOMOBILE TERMS
A little technical lingo could save you thousands

Here are some other new car terms that you will encounter and which can be confusing. Understanding these terms can give you more room to bargain:

Monroney Sticker: this white sticker on the car's window is mandated by federal law. It must show the MSRP base price, the options installed at the factory and the MSRP price, freight charges and estimated mpg. No one can remove this sticker except the buyer.

Dealer Invoice: the price that the dealer was billed by the manufacturer for the car and factory installed options. This cost does not include dealer holdbacks (see below), rebates, incentives, or bonuses to the dealer.

MSRP: Manufacturers Suggested Retail Price.

Dealer Holdback or Pack: a percent that many dealers will be credited by the manufacturer from the sale of a car. Typically it is 2%-3% of the MSRP but this practice does not include all manufacturers. Factor in this amount when negotiating for a fair price. Edmunds.com lists the holdback percentages for most manufacturers.

#3. HAGGLING FOR A LOW PRICE
Know what price to aim for

Aim for a 5% profit over the cost of the car to the dealer. This 5% should include any rebates, holdbacks, bonuses, or incentives to the dealership.

With a few exceptions, dealers expect you to haggle over the price. With the help of the web you should be able to calculate a reasonable figure that a dealer will accept. Make this calculation before you walk into the showroom and bring your notebook with you. You might also bring printouts of pages from Edmunds.com and other car pricing services to back up your offer.