Shop around for the best interest rate
While automakers tout zero percent financing and other low interest rates in advertising, only those with the best credit -- about 10 percent of car buyers -- actually qualify.
So, don't visit a dealership until you've researched the best interest rate you can get.
Use Bankrate's rate search tool to see current interest rates and also check with local lenders, including credit unions, which are 1 percent to 2 percent lower on average than conventional banks on car loans. There are now many community credit unions open to anyone living in their area, eliminating the need to work at a certain company or in a specific industry to join. Use CULookup.com to find a credit union you can join.
Be cautious using manufacturer financing
Manufacturers want your business and they would prefer to sell you a car and provide you the financing, but that may not be the most financially savvy choice unless you qualify for a zero percent car loan. Even with a low-interest-rate loan, you may be better off taking the cash rebate and getting a car loan elsewhere. Once you've determined your best interest rate, use the car rebate versus low interest
calculator to determine the best deal.
Know the invoice price
Your initial research as you narrowed down your car choices may have given you the invoice price, but if it didn't (or you didn't note it), do so before you visit the dealer's lot. Visit several third-party car information websites and print out the invoice price for the specific cars you're considering, including model, engine type and size, and options.
While invoice pricing on third-party information websites isn't 100 percent accurate, it will give you a good idea of what the dealer paid for the car and it's the best number to start your negotiation. Keep in mind that the dealer needs to make at least a few hundred dollars in profit to cover the cost of running the dealership, in addition to the applicable fees listed on the invoice that dealers are charged by the manufacturer for every new car.
Research cash-back rebates and personal discounts
With slower new-car sales than in past years, it's pretty common for manufacturers to offer cash rebates on many of their models as well as discounts that are based on the person who is buying the car.
Discounts are often offered to students or recent college grads, current and former members of the military, and even members of certain credit unions. These personal discounts, typically around $500, can be combined with each other and with the cash rebates on the model to give you substantial extra savings. While third-party information sites often list this data, it's best to check the financing section of the automaker's website for the most complete and up-to-date list of discounts.
Look for dealer incentives
In an effort to boost slow sales, manufacturers will sometimes offer dealers a cash incentive to sell a specific model and occasionally, for an entire brand. Cash incentives to dealers are often $1,000 and sometimes much more, depending on how anxious the manufacturer is to get rid of those cars.
This money can be used to further reduce the price of the car, but only if you know to ask for it. Use a third-party car information resource such as Kelley Blue Book or Edmunds.com to see what incentives are being offered to dealers on the cars you are considering.
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