New Cars – Homework pays off in better deals

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The last person you should ask about the price of a new car is a car salesman. To him, uninformed shoppers equal big commissions and huge profits. So, do some homework and save your money. Position yourself to be the one who decides how much you’ll pay for your next car.

You can find information on autos, options, and accessories in books and online. Sources like the Kelly Blue Book, Edmunds.com, and Consumer Reports offer car shopping pointers, detailed descriptions and comparisons of every new vehicle, definitions of terms, and, of course, prices.

Begin your quest with one basic question – how much does the car I want really cost? If you call a dealer and ask, the first figures you’ll hear will be “sticker price” or “MSRP” (manufacturer’s suggested retail price). But the hunt for a great deal has to start with “dealer invoice” – the price the dealer pays for the car. Dealers hope to keep that a secret, so you’ll have to find it yourself. Plan to bargain up from invoice, not down from MSRP.

Next, figure out the amount they plan to make on this car. It will typically be between 10 to 20 percent. You can find the actual “profit factor” by dividing the dealer’s cost (which you’ve dug up) by the MSRP, then subtracting that amount from 1. Knowing this percentage will let you figure for yourself how much you’ll allow the dealer to profit from the sale. If you’re generous, offer him 3 percent. That would be a $750 profit on a $25,000 automobile.

If you have access to a computer, visit auto manufacturer’s Web sites. There you’ll unearth special offers, promotions, and rebates being offered on select models. These mean added bonuses and price reductions.

Finally, construct your bid and start shopping. If you’d like to spare yourself the discomfort of face-to-face negotiations with a salesman, visit dealer’s Web sites and make your offer online. Or visit sites such as Autobytel at www.autobytel.com or AutoWeb at www.autoweb.com.



All the best,



Timben