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Where do I start?

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The first step in negotiating is to know what you want. If you have not figured out what car you want before you step onto the car lot to buy, you are at a great disadvantage because you know neither what these mystery cars are worth, nor if they really meet your needs. It is a good idea to go to dealerships sometimes just to look around. Test drive a car or two, and find out what you like, making it clear that you have no intention of buying a car that day. A first important question to answer is whether you will be buying new or used. Buying new is very popular today, but negotiating a new car is more difficult and less likely to lead to a good deal for you. The problem is that every new car loses 25-35% of its value as soon as you drive it off the lot. You are paying thousands of dollars for the word "new" and as soon as you "use" the car yourself, these thousands are irretrievably lost. Therefore this article will focus mainly on used cars. Suffice it to say that if you are shopping for a new car, the best time to buy is between June- August, because this is the time for the year end closeouts. By this time last year's new cars are basically a year old, and the prices should reflect this fact. Also, dealers sometimes run specials such as cash back, 0% financing, and below invoice prices when the manufacturers subsidize such incentives. The best way to get a good deal on a new car is simply to wait for these special offers to come around, and then take advantage of them.

A second question regarding used cars is whether to buy from a dealer or an individual. Though many people do buy through the paper or through car trader magazines or the internet, these avenues are quite risky. Once you buy, there's no going back. Individuals can't offer you a warranty or a guarantee. When you buy "as-is" you are taking a large risk. The car you test drove may have a transmission that is about to go, but you couldn't tell when you bought it, and before you know it, you are out several thousand dollars and you have no car. Though the "used car salesman" is a cultural symbol for untrustworthiness in some places, there's no arguing with a warranty.

Once you have made these decisions, you need to figure out what kind of offer you will make for the car.

Next Page: How do I figure out what the car is worth?

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