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3.1 GETTING THE BEST PRICE; AUTOMOBILE DISCOUNTS - BUYING, LEASING

Never, never buy a new car without doing your homework. It might take a little time, but it will pay you hundreds of dollars an hour.

Know the dealer's cost. The CR Annual Auto Issue lists a cost factor for each model; use this to get an estimate of the invoice price.

Buy the latest edition of Edmund's New Car Prices. Do not shop for a new car without it. It lists the manufacturer's invoice price plus how much to add for extras, and gives you a worksheet to figure your final cost. Or go to their web site at www.edmunds.com

A rule of thumb is that you should pay 2%-3% over invoice. The dealer's profit will be a reasonable 5%-6%, since most dealers get a "holdback allowance" from the manufacturer of about 3%. Look at the list of dealer hold backs in Edmund's. Expect to pay closer to invoice+5% if there are no dealer hold backs.

Check which cars have rebates. This often happens after inventories have built up. USA Today is an excellent source. Also enquire about "dealer incentives" which are bonuses from the manufacturer to the dealer. The dealer may or may not choose to pass these savings along to the customer. Still, if you know there are incentives for a model, you are in a better position to bargain. (Subtract a rebate or dealer incentive from the invoice+2% target price.)

Automobile Calculators Credit Card Calculators Family Budget Calculators Health Calculators Real Estate Calculators Retirement Calculators Utilities Calculators

Use a service to get most of this information. Use a service like the CR "New Car Price Service".

Pick your car dealership carefully. Check its reputation as it will be responsible for warranty repairs. I've read some real horror stories.

Never buy any dealer add-ons. Dealer extras are incredible money makers. Refuse to pay for: rust proofing, extended warranties, undercoating, etc. Refuse even if the work has already been done. Insist that the dealer find you a comparable car without these extras.

Extra charges. Typically there is a destination charge, a preparation charge, and an advertising fee. Make sure you are not billed twice. For example, the sticker price often includes a destination charge. Check that the dealer doesn't add it in again. Edmund's has a worksheet to help you figure a final cost. www.edmunds.com

Know the firm value of your trade-in and the bank car loan rates. Before you start bargaining, you must have these numbers. NEVER say how much monthly payment you can afford. The dealer can confuse you by lumping everything together and then offering you an attractive payment schedule.

==Negotiate each transaction separately: cost of the new car, value of the trade-in, loan interest rate. Be ready to go back to the bank for the loan and/or sell your trade-in to another dealer.

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