Attention, prospective car buyers: Now is the best time in a decade to negotiate a great car deal. Even though car sales remained surprisingly strong in February, plunging consumer confidence indexes have left car manufacturers and dealers uneasy. The means they've been jump-starting sales with an array of generous rebates, dealer incentives and low-interest loans for buyers.
But you've still got to do some homework to land the best deal.
"Remember that a new car is a commodity," says W. James Bragg, author of "The Car Buyer's and Leaser's Negotiating Bible," and founder of Fighting Chance, an information service for new-car shoppers. "You always get the best deal on a commodity by searching out competitive bids."
Once you've decided on the car you want, here's how to buy it at the most competitive price possible:
l Be able to "show the money." Getting a preapproved loan puts you in a stronger position to negotiate. A local bank or credit union is likely to offer better terms than the dealer, unless your model has a special low-rate financing offer backed by the manufacturer.
l Assess the value of your old car. Check your local newspaper for prices. If you have a late-model used car, Bragg also suggests visiting a used-car dealer that sells that make, and deduct 25 percent to 35 percent to arrive at a trade-in price. Always negotiate separately for your trade-in; dealers rarely pay what a trade-in is worth.
"The biggest mistake people make is to trade in, say, a Toyota at a Ford dealer," Bragg said. "The dealer will just turn around and sell your car to the Ford dealer for a better price. You can do that yourself."
l Set your target price. Find out how much the dealer paid for the car (the invoice price), and any incentives before you enter a dealership. Negotiate up from the invoice price, rather than down from the Manufacturer's Suggested Retail Price, or MSRP. You can get this pricing information from a number of sources, including the Kelley Blue Book or its Web site, www.kbb.com, and from Edmund's New Car Prices and Reviews, which also has a very consumer-friendly Web site, www.edmunds.com. Add to the invoice price the cost of options you'd like and subtract rebates and incentives. The resulting price should be fair to both you and the dealer.
l Get multiple bids. You can't negotiate in a vacuum; the car dealer must know you have other offers. So solicit bids from at least three to six dealers, via phone, fax or e-mail on the specific car you want.
l Let the Internet help. Some Internet-based services have streamlined the car-buying process. For $165, the nonprofit www.carbargains.org, a comparative bidding site, will get five dealers in your area to compete against each other to sell you the car you want. The bidding dealers agree to honor the price they offer. Independent sellers such as Carsdirect.com and Greenlight.com work differently: They actually sell you a car over the Internet, then deliver it through a dealer. The prices are preset, and are usually less than the retail price, but may not be the most competitive you can find.
l Stand firm at closing. Review the contract carefully and avoid high-priced, needless extras such as rustproofing and road safety kits. Feel free to go elsewhere if there are too many surprises at the closing.
"One of the reasons God gave you feet was to walk away from car dealers," Bragg said.
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