Three Steps to Getting A Good Deal on a New Car

By: Mike Cotter


We've all heard the horror stories of car shopping. Someone paid
too much for a new car because the dealer refused to negotiate.
Another person walked away with monthly payments higher than
they could really afford. Yet another person settling for a car
that had way more features than they wanted or needed because it
was the only car on the lot.

While it's true that finding and then negotiating for a new car
can be challenging, chances are that if you're prepared before
walking into a car dealership, you'll walk out with a better
deal. Here are three things that you can do to prepare yourself
to get the absolute best deal.

Research

You should know what type of car you're interested in, and how
much it should cost before you ever walk into a dealership. The
salespeople are paid on a commission, and their objective is to
get you to pay as much as they can for your car. Your objective,
of course, is just the opposite! Begin by doing some online
research to find out the going rate of the car, and then check
around in various dealerships. You should know that the
"sticker" price that is on the windshield of the car isn't the
cost at all--but instead it is the starting price. You will be
able to negotiate between 10-20 percent off of that
price.

Trade-In

If you have a car that you plan to trade in, don't present it to
the dealer until after you've negotiated your best price. In
addition, you should be aware--after conducting a lot of
research--how much your old car is worth. Many times, dealers
will try and pay a fraction of what a trade-in is worth in order
to increase the price of the new car. Once you have done your
research on the wholesale value of your car, stand firm and
don't allow the salesperson to take advantage of you. If you
find that you can't get as much trade-in value as you think you
should, be prepared to walk away from the deal, sell the car on
your own, and then return with the money to use as a down
payment. This will take some time, but you will come out
financially better for it.

Financing

Be aware that the dealer offered financing isn't always the
best. It's important for you to compare the interest rates and
terms with those of a private lender, and then select whichever
one will offer you the best deal. In addition, look closely at
how your down payment will affect your loan balance and monthly
payments. Remember, a 1 percent change in your interest rate
will not only affect your monthly payments, but your overall
loan balance as well! Finally, be sure that the dealer hasn't
included any life insurance or warranties in your loan balance
that you didn't authorize, otherwise you could find yourself
paying thousands of dollars that you hadn't intended to. Ask to
see a complete listing of all charges before you sign on the
dotted line.

About the author:
Mike Cotter has been a professional lender for over 30 years. He
began his career in the commercial banking industry in 1972 and
steadily progressed to become Vice President of Retail Banking
with a major Denver bank. In 1982 he opened his own commercial
bank and served as President and CEO for 10 years. In 1992 he
left commercial banking for the mortgage banking field. Rocky Mountain
Mortgage Rates