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How to negotiate when buying a new or used car and other useful information

Updated on August 29, 2008

The Insider's Edge

I grew up around the car business and even worked in the business for 7 years. The key to buying a new or used car is doing your research. With today's technology, researching the car of your dreams is as easy as making a peanut butter sandwich.

Most of you may want to trade in a car on a new or newer car. In this general case, most of you may consult the little blue book called Kelly's Blue Book. Those that are unaware of KBB, it's a little blue book that is used to determine the value of your trade-in. Whatever knowledge you have of this book- delete it from your mind, forever. Instead, go to www.nadaguides.com. This is the guide that 99% of all car dealers and secondary dealers use. Why chose NADA or Kelly's. It's simple. NADA was created by car dealers. Kelly's is an independant source. Meaning NADA has lower values for the most part and gives greater cuts due to high miles and other various categories.

How to use the NADA Guide against the dealer?

For the most part, a dealer will mark up the price of the vehicle $3,500- $5,000 depending on the car and condition. This is the devil's playground of car business. If you're trading in a vehicle, you know what it's worth, they know what it's worth, but theit as a reference. y're going to immediately hit you with a lower figure. It's up to you to stand your ground and say no, I want $4,500 for my car. After about an hour or so of working and crunching the numbers, you're either going to leave pissed or settle. Remember, just because you owe $10,000 on a vehicle, this doesn't mean it's actual value is that or higher.

If you're buying a used car, consult NADA and research the value of a car, as well as the retail price for that car. Call around and ask several dealers if they have the car you want in stock, ask what the options are, if it's an automatic, and how many miles are on it. Then sit down and do your research. If the value of the car is $12,700 and the retail value is $15,995- they may have it priced at a little over $16,000 for a little extra wiggle room. Make up your mind and come up with your own figure. Tell them that you'll offer $13,900 and go up a couple of hundred dollars until you reach your limit. Let's just say that in this case your limit is $14,900.

Before you make your initial offer, request the carfax report on the vehicle as well as the service records for the vehicle. If the car has been wrecked at any point, it will be on the carfax. If the car has been in an accident, then it should be priced accordingly and then my only suggestion is to proceed with caution.

Buying that new car of your dreams

It's always nice to find yourself in the market for a new car, but the MSRP will most likely throw alot of people off. The good thing is with new cars these days, is that it's a little easier to buy a new car. In most cases it's also cheaper. With all the rebates that manafacturers offer these days, it definitely makes a new car more appealing, because you believe you're getting a great deal. Which, you are. But the point is to get that car at the cheapest possible price. That's where the invoice sale comes is.

The invoice price is the "price" the dealer "pays" for the car. In all reality, the dealer doesn't buy the car. He just has permission to sell that car and the dealer gets commission, just like a salesman/woman gets commission. The invoice price is roughly around 20% more than what the actual cost of the car is.

The best way to shop for a new car is to find out how long the particular car has been on the lot. If the car has been on the lot for over 90 days, the dealer has to pay a penalty for not selling that car. Each 30 days the dealer will incur another penalty. In other words, if a car has been on the lot for longer than 90 days, they will more than likely jerk your arm off at any offer, just to get it off the lot. Especially, when you consider getting hit with a 25% of the invoice penalty every month after the 90 grace period. My friend purchased a brand new $58,000 BMW for $18,000, because it had sat on the lot for almost the entire year.

Another cheap alternative to buying a new car is to ask to see the demo's. Demo cars are the vehicles that the owner(s), management, and some of the top salespeople drive. These cars are reduced, mostly because they have several miles on them and may have some slight imperfections. Those imperfections can easily be fixxed after the fact and aren't really worth arguing a lower price over.

These are just a few tidbits of information that I hope proves to be valuable to you in the future.

Always be respectful, the salespeople, though sometimes annoying, are only doing what they're told to do. Being respectful is likely to get you some free perks down the road. Not always, but they usually are more willing to adhere to these perks if you're not rude or anything in that nature.

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