by Vince Capece

Created on: June 22, 2008   Last Updated: November 07, 2008

Negotiating with a car salesman to get a good deal

Buying a car or truck is unlike any other major purchase. When you buy anything, education is the most important factor to ensure the best deal. With anything, shopping around will improve your chances of not wasting money. But when it comes to an automotive purchase, preparation before shopping is key.

Shopping for a new vehicle and a used vehicle require different types of information. Websites and books are available that show vehicle values. With used vehicles, sources such as Kelley Blue Book and NADA outline retail and trade-in values for most cars and trucks, but these prices vary from region to region and season to season. Few dealers will ask for full retail price for a used vehicle and many dealers have paid less than trade-in value for the vehicles being sold. But if you know what these prices are on average, you can find a price that is reasonable.

When shopping for a new vehicle, the prices are more readily available and more reliable. With used prices based on a national or regional average, used prices are just a guide but new prices are set by the manufacturer. Publications (both on the internet and in print) like Edmunds highlight MSRP (Manufacturer's Suggested Retail Price) and invoice pricing for new cars and trucks. These publications are updated regularly since manufacturers can change their prices at any time, and usually do.

Invoice prices are usually believed to be the dealer's "cost" of the vehicle. The truth remains that dealers pay less than invoice for these vehicles with something called "holdback" which provides an incentive just to sell a vehicle.

And then there are rebates and incentives. Rebates are highly publicized payments direct to the customer designed to encourage sales of slow-selling vehicles. "Dealer incentives" are provided to the salesman and/or the dealership to give additional negotiating room, but these are less well-known. Other incentives include lower finance rates, special leasing prices, or "free" options. The incentives that are not advertised can be found in various publications, most of which are for automotive industry people, most notably Automotive News. Insider hint: many dealerships have Automotive News lying around for customers to read and incentives are published near the back of each issue.

If you're trading in your old vehicle, price it like you would buy a used vehicle. Make sure you know the retail price, trade-in value, and loan value. A salesperson

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