Buying a new car is one of the biggest purchasing decisions you will ever make. It is vital that you resist the urge to buy on impulse and that you know what to watch for as you negotiate a price with a dealer. Take time to perform in-depth research to ensure you are getting the best deal possible. With a little diligence, you will know just how much you should pay for a new car.

Discovering Dealer Cost

Research the base cost for the vehicles you are considering for purchase. Check the value with a vehicle pricing guide such as the Kelley Blue Book, which is available online. Discover what the actual cost of the vehicle is to the dealership using two well-known pricing indexes: Monroney Sticker Price (MSRP) is the manufacturer's suggested retail price. This price should be affixed to the car at the dealership. The invoice price is the price paid by the dealer to the manufacturer. However, just because the dealer says that you are getting the car for the invoice price does not mean the dealer is not making money. The dealer may be receiving a rebate, allowance, discount or an incentive award from the manufacturer. Use an online resource such as the service offered by ConsumerReports.org, which provides wholesale prices that factor in dealer incentives from the manufacturer. This provides a more accurate estimate of what the dealer is paying for the vehicle. You should also find out if manufacturers are currently offering rebates that would also lower the cost. This information is available at Carsdirect.com and Autopedia.com. Armed with this knowledge, you can negotiate with the dealer because you know what his true bottom line is.

Locking Down the Deal

Once you have negotiated a deal, beware of attempts by your dealer to make up for lost negotiating ground by adding costs in the name of fees and taxes. When you purchase a new car, you will be required to pay state taxes and registration fees. These should not be confused with the fees that many dealers charge as document preparation fees. This fee is negotiable. Do not allow the dealer to raise this fee. In fact it may be illegal for him to do so. For instance, in Idaho, it is unlawful for the dealer to charge these fees if they have not been clearly and conspicuously disclosed, according to the Idaho Attorney General's Office.

Source:

State.id.us: Buying a New Car

DMV.ca.gov: What You Need to Know When Buying a Vehicle

Pueblo.gsa.gov: Buying a New Car

Resource:

Kelley Blue Book