Buy Car Negotiation:

Negotiating to Buy a New Car

By Dennis James

Negotiating with a dealer to buy a new car can be time-consuming and frustrating at the best of times.

Not everyone likes car sales men, no, I'm sorry let me take that back nobody likes car sales men. So, what should you do then? Don't worry. Negotiating to buy a new car is not that difficult after all. What you need is a little background information and some tactics to keep in mind before trying to get that great deal. These tactics will help you negotiate a fair price when buying a car, plus the tips are suitable for both new and used cars.

1. Find out the original price of the car when it first appeared on the market. The purpose of this step is to calculate the total dealer cost, i.e. the cost the dealer paid when he bought the car from the manufacturer. This cost is made up of two parts, which we will take a little look at separately - the Dealer Invoice and the Holdback.

-       Dealer Invoice is the actual cost paid by the dealer. Online resources, such as the Kelly Blue Book , Edmunds, and some others prove to be very useful to find out information about Dealer Invoices. You will be able to find information on new and used cars, including their market price plus various other features. You need to carefully assess the cost because the invoice sometimes also includes advertisements and certain other overhead charges which are not listed on the website. To be on the safe side, add around $300-400 to the listed cost to calculate total dealer invoice.

-       The second part of dealer cost is the Holdback. This price is the rebate paid by the manufacturer to the dealer whenever a car is sold. Rebates usually depend on the make and model of the car, but mostly it's up to 2-3% of the total cost of the car. Again, Edmunds is a good source to look for information about rebates on different kinds of vehicles. Remember that rebate or Holdback has to be subtracted from the dealer invoice to calculate the actual price paid by the dealer.

2. The Second step is to calculate hidden incentives to the dealer and any rebates that are advertised. Dealer Incentives are not known to a lot of people because they are hidden. If you know there are hidden incentives, you can bring them up during negotiation. Otherwise they will be kept secret by the dealer, you've heard of playing your cards close to your chest, well this is what the car salesman will do. The other thing to remember is the 'Cash Back' which is paid to you if you are going to buy the car. These rebates keep on changing every month, so you need to be aware of the current rates. Edmunds is a useful source to find out about these hidden incentives.

Edmunds also gives information on both the hidden incentives and the advertised rebates. Now to calculate the dealer cost you should subtract these hidden incentives from the total cost.

3. The final step in calculating the original price of the car is to determine the ultimate dealer cost. Normally it is seen that the dealer asks for $5000-6000 more than the original price he/she paid to the manufacturer. Of course they have to take out their commission from the whole deal, but don't you think $5000 is a little too much? Well, find out for yourself by visiting the above-mentioned sources and record that information somewhere. It will come very handy during your negotiations with the dealer.

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