The order of these car buying steps can be interchanged.  I like to start by figuring out how much my old car is worth.  So I determine the Blue Book value to get a good idea.

You can also resell the car yourself; when done right you will probably get more money selling it yourself than trading it in.  When considering trade-in vs. resale you should give some thought to the taxes you will pay on the new car.  Sales tax is the biggy for most people when buying a car.  Trading-in the car will reduce the total taxable amount of your new car.  If you are only going to make a couple of hundred dollars more on the resale than the trad-in of the car then the 2 options are a wash.  Trading-in the car will be more convenient for most of us. 

Once I've figured out what car I want (don't do this at the dealership) then it is time to figure out what a fair price for the car is.  The invoice pricing for your chosen car is the place to begin.  Just run a Google search on the invoice price.  I've included a couple of links on the right.

Keep in mind that there are local fees that won't show up in either of my links.  They are national prices local fees on cars are, by definition, local.  I'd search on Google first and then ask people you know who are good bargain hunters.  Once you've started negotiations with a dealer they can show the local fees. 

Once you know what a fair price is go get quotes. Many people I know have suggested that the best way to comarison shop when buying a car is to fax local car dealers. When you fax these dealers you ask for their absolute best price on a given model. Then compare the prices and go to the dealership with the best price on your desired car.

When faxing dealerships for car prices there a tendency to play games with you. They will likely attempt to get you to come in to the dealership before providing you with a price. My advice is to

1. Give them an altimatum - "I want your best price before I step foot in your showroom."
2. Ignore them from that point forward.

With everything moving online I've provided a few links for websites where you can get an online quote for whatever make and mode of car you desire. It only takes a couple of minutes to get a quote from these sites and you should fill out all of them (and maybe some more). This will give you the best chance of finding the absolute best price on your car.

When you fill out the form for the new car quotes you will be asked for contact info - email, phone, address. This info is not sold it is used so they can look up what they need to look up and get back to you. If you don't provide accurate contact info then the car quotes won't ever show up.

Shortly after you are finished with the quote forms the dealer internet sales managers will contact you. Let them know immediately that you are getting multiple quotes for the new car you are buying. Provide details on the exact car you want to buy. Request the bottom line price with all dealer fees and tell them there will be no trade-in.

The salemen from the dealerships will often ask about financing so they can sell based on a low monthly payment. There are a lot of tricks to be played when it comes to car financing. Let them know you are not interested in discussing financing at this time. Financing your new car can be dealt with after you decide which dealer to buy from.

The dealership is not the only place to get new car financing. The car dealership, while you are drooling over your shiny new car, is not the best place to negotiate good loan terms.

Credit Score

Before you can get quotes for your new car you need a credit score. I've provided a few links. Go to these links, pick the credit reporting offer that looks best (maybe even apply to 2 of them). Most of these offers give a free credit report in the hopes that you will sign up for some credit protection program with a recurring monthly fee. With your credit score in hand you get car loan quotes online.

Quotes on Car Loans

I would recommend getting loan quotes online first - get as many as you can.  Then I would ask my local bank/credit union for a car loan quote.  After that, it is a matter of picking the quote you are most comfortable with.  You are going to live with this car loan for years so be comfortable with the loan company as well as the rate and terms.  It's not all about the monthly payment.

I've included a few links to auto loan quotes on the right. 

Here are some tips on the price of your new car:

1. Tell the dealer you are selling your old car - even if you plan to trade it in.
2. Contact dealers asking for lowest price. Take lowest price and ask the other dealers to beat it. Repeat until they won't go any lower. If 1 dealer is much, much lower than the others I'd be suspicious. Financing/Monthly Payments are not part of the price negotiations.
3. Decide Trade-in vs. selling your old car yourself. 
4. If you decide to trade-in your old vehicle then ask the dealer for their best offer on the trade-in. If they don't get close to the Blue Book value then tell them you will find someone who will.

Tips on the Financing of Your New Car:

1. You are only interested in the interest rate (or total amount of interest you will pay) and whether or not you can afford the monthly payments.
2. Decide what you can afford before starting this whole process do not walk into a dealership hoping for an unrealistic price and interest rate so that you can make your monthly payments.  If you do you will probably end up walking out with the car you wanted but a much longer loan term then you want (that is how dealers get the monthly payments down).
3. Negotiate on interest rate only and use the quotes you got online and from your local bank/credit union.  If the dealer won't beat those rate then go with the best quote you have instead of the dealer's financing.  The dealer can't do anything for you these other lending institutions can't.  If they say they can beware the dealer is probably tricking you.
4. Do your homework online and check out site that list dealer scams before you walk into to showroom.  Impulse buying and financing mistakes are expensive.