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CAR PRICES: HOW TO BUY A NEW OR USED AUTOMOBILE

1.0 OVERVIEW

Many people have what I call a "black box" mentality about cars: they do not understand cars and don't want to understand them. They just want them to run.

This attitude can be very expensive and even dangerous. For example, two friends of mine both drove their cars "just a few more miles" after the oil light had come on. Both had to replace their engines.

I am not suggesting that you become mechanical if you're not. In fact it could be dangerous. Still, you can learn about your car as the opportunity arises. For example, each time you get your car repaired you can ask the mechanic to explain. Over a life time, even the most unmechanical person will absorb the fundamentals.

In addition you need to learn signs of danger. Read Don Patten's column at the end of this section to understand which conditions are really dangerous.

1.0.1 BUYING A CAR IS THREE NEGOTIATIONS

Even if you get a good price on a new car, and low bank financing, you can still get taken. How? By selling your trade-in for a low price. Buying a car usually involves three separate transactions. You must do your homework on all three or you won't get the best price.

== TRANSACTION #1.
Negotiating the best price for a new car.

== TRANSACTION #2.
Financing. The rate varies depending on whether you are buying new or used. Bank loans are usually cheaper than dealer financing.

== TRANSACTION #3.
The value of your old car. Car dealers can make up for lost profit on a new car, with a low price for your trade-in. You need to know what your car is really worth.

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