Conning car salesmen: A good idea?

Dear Terry,
If I know I'm going to pay cash for a car, should I let the dealer know that -- or should I pretend I'm interested in his financing package as leverage to try to get a lower sales price or higher trade-in value?
-- Kathy

Dear Kathy,
While subterfuge may seem like the best defense in the car-buying process, it doesn't have to be that cloak-and-dagger. The car-buying process should be thought of as three distinct negotiations:

First, determine the price of the vehicle and deflect any attempts to discuss trade-in or financing. When that price is determined, then bring up any vehicle you may want to trade. Know the wholesale value of your trade beforehand. Lastly, bring up the issue of whether you're going to finance or lease the vehicle.

By treating all three processes separately, you're less likely to wind up paying more overall than you should.