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01. Buy on payment rather than price
02. Don't research target price
03. Involve trade-in too early
04. Don't know trade-in value
05. Give bad first impression to trade-in
appraiser
06. Don't shop interest rates
07. Reveal hot buttons
08. No down payment
09. Wind up 'upside down'
10. Get clobbered by the 'back-end'
1. Buy on payment rather than price.
Most of us live on some type of monthly budget, and we all
have an idea of how much we would like our car payments to
be. But if you negotiate based on payment amount rather than
total price, you will probably end up paying too much; even
though you might meet your monthly payment goal. Remember,
ANY amount divided by the right number of months can equal
your desired payment amount. It's called 'stretching the term',
and car salespeople do it all the time. Let's look at a typical
example: A car salesperson is telling you that the payments
on the $20,000 car you want are $500 per month. You tell the
salesperson the price is way over your budget of $350 per
month. "What if I could get you into that car for $350 per
month," the salesperson asks, "would you take it?" You agree
that you would, and the salesperson is off for a secret conference
with the sales manager. "Great news!" they exclaim upon their
return, "We can do it for $360 per month!" What just happened
here? It seems as if you just skillfully negotiated a terrific
deal. In fact, the term or length of the loan, just changed
from 48 months to 72 months, and the price remained the same.
You will in fact pay about $2,000 MORE in interest. The bottom
line is this, negotiate the price of the car first and any
payment terms afterwards. 
2. Don't research target price.
Would you know a good deal if you saw one? Some car salespeople
use this line to try and make you commit to a buying price,
but it is a good question to ask yourself. Do some research
so you will know when to say yes. We offer a
free service which
can provide you with a free service target price for any new
or used car.
3. Involve trade-in too early.
I can't emphasize this enough...negotiate the price of the
new car BEFORE you involve your trade-in. It's easy to get
confused because of the trade-in allowance game most dealers
play. Do yourself a favor and keep your trade-in out of the
equation until AFTER you settle on the price of the new car.
More about your trade-in.
4. Don't know trade-in value.
If you sold your car private sale, you would have to set a
price. Perhaps you would look in the newspaper to see what
similar cars were selling for, or you could look in a N.A.D.A.
Guide to get an idea of price. Why wouldn't
you do the same thing when trading-in? Not knowing the value
of your trade is like announcing that your car is for sale
and taking the first offer you get, and that could be thousands
of dollars below fair market value.
5. Give bad first impression to trade-in
appraiser. Remember that you are SELLING
your old car to the dealer. If you bring it in filthy and
full of trash and other junk the appraiser will assume you
put a low value on your own car. If you were selling it private
sale you would be concerned about the potential buyers first
impression, you should be here too. More
about your trade-in.
6. Don't shop interest rates.
For some reason many people don't consider the cost of financing
a car 'real money' because you often don't see it. As long
as the payment fits ones budget, the finance rate is often
overlooked. Consider this, if you finance $20,000 for a new
car for 5 years at 12% you will pay almost $6,700 JUST IN
INTEREST. A rate of 9% would save you over $2,000.
7. Reveal hot buttons.
Buying a car is an emotional experience and sometime our own
emotions get in the way of making good decisions and sticking
to our plans. Salespeople use your emotions to help them make
the sale, so don't help them by revealing your 'hot buttons'.
Hot buttons are the things that excite or concern you most
about the purchase. If the salesperson knows that you love
blue, hate the vinyl interior of your old car and worry about
it not having air bags, do you think they will use that to
play on your emotions? You bet they will! Don't underestimate
this. They can't push your hot buttons if they don't know
what they are.
8. No down payment.
People are used to no money down or just trading-in. Unless
you own your trade-in outright or have significant equity
in it, you'll want to use at least some cash as a down payment.
Any amount is better than nothing. Borrowing money is very
expensive. Down payments will lower your monthly payments,
save you money on interest and can sometimes earn you better
rates on the money that you do borrow.
9. Wind up 'upside down'.
(Owing more on a vehicle than it's worth.) This is more of
a situation that you find yourself in rather than a mistake,
and it is VERY common. There are, however, things you can
do to avoid finding yourself upside-down. First, always make
a down payment when you buy. Using no money down sets you
up for trouble as soon as you drive off the lot. Second, watch
your mileage. High mileage is one of the most common reasons
vehicles loose value; and if you are racking up miles faster
than you are paying off your car, you are headed for trouble.
Third, buy a car with strong resale value. If your car depreciates
faster than you can pay off the loan...more trouble. And lastly,
get a good deal! Saving money on the price of the car AND
getting a good rate on financing means less loan to pay off
in the first place.
10. Get clobbered by the 'back-end'.
Dealers refer to the money they make after the sale as the
back-end. Items such as financing, insurance, warranties and
other add-ons are areas where dealers can make money... sometimes
more money than on the sale of the car (the front-end). These
items are typically sold to you by 'the Business Manager'
and they can sometimes be slipped into your payments without
being clearly disclosed. Keep these points in mind: dealers
make money on each of these items, they are often negotiable,
you don't need to buy them from the dealer (or at all) and
you can shop around for all of them.
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