So, you’re getting ready to buy a new car and you’re wondering where to begin. The good news: You’ll find no shortage of information on the web as to pricing, negotiating strategies and even which dealership to choose. The bad: There is such a thing as too much information. Who has time to do all the research?
With that in mind, here are six basic tips to guide you through the car-buying process. (This is presuming, by the way, you’ve already settled on a make and model and just need to purchase the actual vehicle.)
1. Know the Price (or Prices)
There are three key prices to keep in mind: the dealer invoice (the “cost,” which is typically at the low end of the price spectrum); the MSRP (the high end) and the price that people are really paying (typically, somewhere in the middle, though it can be lower than invoice). If you’re going to get a fair deal, it helps to have all three on hand, so you know where you fit in the spectrum. (As for why cars are sometimes sold below invoice, it’s because “invoice” is hard to define, since dealers get all sorts of incentives and price breaks from manufacturers.) You can find all three prices on a variety of sites, including TrueCar, Edmunds.com and Kelley Blue Book.
2. Consider a Middleman
Sure, you can do the haggling yourself at the dealership. But you can also have someone do it on your behalf. That’s the idea behind TrueCar, which gathers quotes from dealers and then gives you a certificate to present when you’re ready to buy. (Warning: Be prepared to be contacted by dealers almost the second after you fill out the online info.) If you’re a Costco member, you can let Costco be your middleman — the warehouse club has arranged for special pricing at select dealers.
3. Or Go Straight to the Dealer (via the Web)
In some cases, you can score a better bargain going directly to the dealership’s Internet sales department: These are sales folks trained to work with customers who understand the pricing game. In turn, they can often negotiate the purchase with much less back-and-forth compared with the path of visiting the dealership and speaking to a showroom salesman.
4. Don’t Make Your Trade-in Part of the Purchase Negotiation
When you talk buying and trading at the same time, the dealer may offer you a “great” price on a new car, only to make up the difference by giving you a not-so-great price on your trade. If anything, you should “shop” your trade the same way you shop a new car — getting quotes on it from multiple dealers. If you end up buying and trading with the same dealer, that’s fine, but there’s no rule that says you must. Or if you’re up for it, try selling your car on your own — you’ll almost always get a better price from a direct buyer versus a dealer. After all, the dealer is looking to buy your car at a low price and then sell it at a higher one.
5. Time Your Buying
Yup, there are good times and bad times to buy a car. The good ones almost always involve periods when car salespeople are trying to make a quota—as in end of month, end of quarter or end of year. (Read: The year’s best day to buy a car is approaching.) But it’s worth keeping in mind that special pricing incentives can fall at other times of the year — July is often a popular month for such deals.
6. Always Get an ‘Out-the-Door’ Price
So, you’ve negotiated a good deal on a car and all that’s left to do is sign paperwork. Surprise: You may be in for more charges. Dealers often tack on administrative fees and other charges — and these can be presented after you’ve agreed on a “final” price. The solution? When you’re negotiating, ask for an out-the-door price. This means no surprises. Plus, in some cases, you can negotiate these fees down (a couple of big exceptions: taxes and state tag/license plate fees).
Charles Passy covers personal finance, consumer spending and all things food and drink for MarketWatch in New York. Follow him on Twitter @CharlesPassy. This article originally appeared on MarketWatch.com and is reprinted by permission from Marketwatch.com, ©2014 Dow Jones & Co. Inc. All rights reserved.