The key to making a successful car purchase is being prepared. You will reduce the likelihood of making a mistake, overpaying, or being cheated. You will feel less pressure to make a hasty or expensive decision. And you will be more likely to negotiate a better deal.

Before you step into a dealer's showroom or meet with a private seller, know what car model and options you want, how much you are willing to spend and, if you plan to finance the purchase, what financing options are available. You should have a good idea of the price of the car you want, how the auto sales or leasing business works, and what your rights and responsibilities are as a buyer or lessee.

Whether you plan to buy or lease, the process of shopping for a new car is similar even through negotiating the price of the car. Negotiating the best price possible is always to your advantage. After reviewing this page, be sure to visit the additional links in the yellow box at the top for details on your financing and leasing options.

What Kind of Car Do You Want?

• Many internet sites provide car reviews, including pictures, pricing, performance, service and safety ratings. They may also reveal information on the dealer's actual cost (what the dealer pays the manufacturer) for specific models and options. Leading sites include Edmund's, Kelley Blue Book, and NADA. You may also review the many consumer publications dedicated to cars, which are widely available at libraries and bookstores.
  
  
• Test-drive several models before you make a final choice. Do not feel obligated to negotiate anything the same day you test-drive. It is okay to tell the dealer that you will come back to discuss a possible purchase at a later date.
  
  
• Once you have narrowed your car choices, research the frequency of repair and maintenance costs on the models through internet sites or auto-related consumer magazines. Also, the U.S. Department of Transportation provides information about auto recalls online, or by calling its Auto Safety Hotline toll-free (1-800-424-9393).
  
  
• Consider ordering your new car, even though taking a car from the dealer's lot is quicker. The cars on the lot will probably have some options you do not want, and options cost money.

How Much Do You Want to Spend?

• Using you knowledge from reviews on internet sites and other resources, contact car dealers and compare their prices. You will generally have to shop around to get the best possible price.
  
  
• Plan to negotiate on price. Dealers may be willing to bargain on their profit margin, which is generally between 10 to 20 percent. This is usually the difference between the manufacturer's suggested retail price (MSRP) and the dealer invoice price.
  
  
• Think twice about adding expensive "extras" to your purchase that you probably do not need, such as credit Insurance, service contracts, or rustproofing. For more information see Warranties, Service Contracts, and Financing with a Loan.

Learning the Terms

The following terms will help you understand the language of car buying:

Worksheet for New Car Shopping

Click here for separate, printable version.

Negotiating the Price

It is part of American life to negotiate the price of a car. Most dealers and individual sellers expect the buyer to bargain. The asking price of the car usually has a built-in margin for compromise.

Be patient; do not agree on a price right away. By the time you begin talking seriously about price, you should have visited several dealers and viewed several models. The buying process for most people may take several weeks.

As you begin discussing price, take your time. Check each option carefully and right down every quotation the salesperson gives you. Refer to the Worksheet for New Car Shopping above.

Trading in Your Old Car

If you are thinking about "trading in" your old car, and using its value to reduce the price of your new car, take the time to investigate your old car's value. Internet sites such as Edmund's, Kelley Blue Book, and NADA should be able to help you. You may also check your local library for references and periodicals that can tell you how much your car is worth.

Be aware that you will generally receive much less from a car dealer for your old car than by selling the car yourself. If you still want to trade in your old car, as a negotiation strategy do not discuss the possibility of a trade-in until you get the best possible price for your new car.

Reputation of the Seller

• Some dealers attract customers with "no-haggle prices," "factory certified" used cars, and better warranties. Consider the dealer's reputation when you evaluate these ads.
  
  
• When buying from a private individual make sure the seller is not a dealer posing as an individual. That might mean the dealer is trying to evade the law. It may also be an indicator of problems with the car.
  
  
• Look at the title and registration to make sure the seller is the registered owner of the vehicle.
  
  
• You may also want to check the complaint records of car dealers with your State or local "consumer protection agency" or Better Business Bureau.

Tips

Find out the dealer's invoice price for the car and options. The invoice price is how much the dealer paid for the car. The dealer's final cost may be even lower because manufacturers often give rebates, allowances, and other incentive awards. Sites like Edmund's, Kelley Blue Book, and NADA, should have this information.

• Find out if the manufacturer is offering rebates that will lower the cost.
  
  
• Get price quotes from several dealers. Find out if the amounts quoted are the prices before or after the rebates are deducted.
  
  
• Keep your trade-in negotiations separate from the main deal.
  
  
• Read and understand every document you are asked to sign. Do not sign anything until you have made a final decision to buy.

Helpful Links

The following sites offer consumer guides and buying services for both new and used vehicles. You can find out and compare prices, vehicle reviews, road tests results, financing tips and other helpful information:

autobytel autoconnect autosite autoweb

car and driver carOrder carpoint carprices

cars.com carsmart cartalk Edmund's

Kelley Blue Book Motortrend NADA StoneAge