Jerry Robbin

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Heading to the auto dealership to buy a new car is a daunting prospect. For many of us, it represents the second most expensive purchase we’ll make in our lives, behind buying a home. With so much money on the line, buyers should be armed with as much information as possible. We spoke to buyer advocate Jerry Robbin to learn his top 15 tips for the best deal on a car. For a fee, Robbin will negotiate with a dealer for you, so he has plenty of experience with this process. Heed his advice and you could save thousands on your next new car purchase.

Zero in on what you want

It seems simplistic, but you need to know what car you want. Base your information on needs for fuel economy, capability, space, passenger capacity and price range. Also consider your desires for performance, looks, amenities and reliability. Focus on a few vehicles and narrow the list by reading reviews and using guidance tools on the Internet. Once you have a short list, test drive or rent the vehicles. If you take your test drive at a dealership, don’t get caught up in the buying experience. You are only researching at this point. The test drive should narrow your choice down to one vehicle. Then you need to go deeper.

Zero in even further

Once you’ve picked the vehicle you want, choose the trim level based on the features and options you can’t live without. Go to the brand’s website and navigate to the “build and price” area. Build the car to the specifications you want. This will give you the manufacturer’s suggested retail price, plus the destination charge. Visit third-party websites such as MSN Autos to find the vehicle’s invoice price (more on this later). When the time comes to buy, don’t deviate from the trim level you chose — why pay for features you don’t want? Note that you might have to special order a vehicle to get exactly what you want.

Get price quotes

Once you’ve chosen the model and options, email a few local dealers and ask for a quote on that exact vehicle. Add a timeline for your buying process to show them that you aren’t just a tire-kicker. You can also use Internet services for this step, such as the “get a quote” links on websites such as MSN Autos and pricing sites such as TrueCar.com. To get your business, one of those dealers might quote you a good price right up front.

Take the best price quote to your preferred dealer

Take documented evidence of your best price quote to your preferred dealer and start the negotiations. The dealer will be compelled to meet or beat your best price to earn your business. If this dealer is close to your home or workplace, it’s best to buy from them for your convenience and because they will be more willing to work with you on service issues if you’re a customer. Also use timing to your advantage. Buy when you want to — not when you need to — and go to the dealer at the end of the month when the staff is trying to meet sales goals.

Leave the emotion at home

Once you get to the dealer, don’t get caught up on the emotion of the car-buying experience. Yes, that car you’re considering is likely much nicer than the one you’re currently driving. The new car smell is intoxicating, and the prospect of showing off your purchase to your friends is enticing. Don’t let that emotion affect your poker face. The buying process is an emotional drain, but don’t get too down or too excited before the deal is done.

Research incentives

In addition to invoice prices, you can find information on factory incentives on many auto websites. Incentives are typically cash back, a special financing rate, or both. In addition to the standard cash back, there may be incentives for first-time buyers, military personnel, college grads, or owners of competitive brands. Incentives are between you and the factory, and the dealer should not present them as a concession they are making to you. If the choice is between financing and cash back, do the math to determine which saves you more money.

Aim for invoice

Internet research will reveal the invoice price for your chosen vehicle. In general, that’s the price the dealer pays the factory for the car. However, there are other considerations, including dealer holdback and ‘factory “spiffs”‘ that lower the price the dealer pays. A good rule of thumb is to try to buy the car for the invoice price. But as Robbin says, “Don’t stop there. Try to ask for a price below invoice.” Shoot for as much as 10 percent off the sticker. You may do no better than the sticker price for a hot new car, but you may even beat invoice for a slower seller or high-volume model.

Never shop by monthly payment

All too often, buyers shop by the monthly payment instead of the final price. If during negotiations you complain about the high monthly payment, the dealer may try to get you to extend the term of the financing to lower the payment, taking it out to six or even seven years. It’s more than likely that you’ll pay more for the car overall and add a year or two to your payment. Determine the price on total dollars spent, not the monthly payment.

Lease or buy?

One tactic dealers will use to upsell you is to talk you into a lease. They’ll say it lowers the monthly payments and that you can get more car for less money each month. That’s true, but you’ll have no equity when the lease is up and you may be subject to extra charges. Generally, if you drive more than 12,000 miles per year, a lease doesn’t make sense. Here’s another good rule of thumb: If you are considering a lease, ask your accountant if you should lease or buy, and if you don’t have an accountant, don’t lease.

Be prepared to walk away

If at any time during the negotiation you don’t feel that you are getting a fair price, walk away. This can mean going out to lunch for an hour or leaving for good. If a salesperson thinks you are serious about buying and you’re both close to a deal, they will likely do what it takes to get the deal done. That may mean a call later or they might even chase you out the door. “What they say is their best price is not always the best price. If you can, walk away, think about it, and then come back. You may end up getting a few hundred dollars,” Robbin says.

Pay only these charges

Once you’ve settled on a price, you should only pay the purchase price, the destination charge, the documentation fee, the tax for your area, and the title and license plate charges. The documentation fee is a charge for storing documents and doing paperwork, and it’s usually fixed by state law. The destination charge is the cost of trucking the vehicle from the factory to the dealer. Don’t pay for items such as paint guard, rustproofing, advertising and Internet fees. Advertising and Internet fees are part of the price of doing business. Some of these charges may show up on an extra sticker added by the dealer. Say no to these add-ons.

Prepare your trade-in

Prior to going to the dealer, research your car’s trade-in value on sites such as MSN Autos or KBB.com to make sure you get a decent price. Also check sites such as Craigslist and Autotrader.com to see the private-party prices of cars similar to yours. You may even want to get a quote from a company such as CarMax that will buy your car outright. You won’t get as much from a dealer as you will by selling it privately, but listing a car and dealing with buyers can be a pain. Be sure to detail your car before trading it. According to Robbin, $150 in detailing could mean $300 in value.

Keep the trade-in separate

Some experts suggest saying that you don’t have a trade-in, and then springing it on the salesperson after the deal is struck. That’s not entirely necessary, but the point is to separate the trade-in from the sale price. You have to be vigilant in each part of the buying process, and as Robbin says, “You can get the best price on a car, but lose it all on the trade-in.” Finish negotiating the sale price, then negotiate the trade-in value. Be sure to add the sales tax savings to the trade-in price, since you only pay tax on the difference between the sale price and the trade-in value.

Consider financing

Once the sale price is reached, the salesperson will send you to the finance office to complete the transaction. This is no time to let your guard down. Before going to the dealer, get a quote on new car financing from your bank. Scour the Internet for other offers as well. Compare those rates to what the dealer offers and pick the best one. You can even negotiate the finance rate. If the rate seems high, suggest a percentage point less. The finance manager will likely say no, especially if your credit is shaky, but you could get a quarter or a half a point off the rate.

You’re not done until you exit the finance office

It’s also the finance manager’s job to upsell you on several items, including extended warranties, paint protection, wheel locks, tire and wheel protection packages, floormats, and other incidentals. “You’ve got to be astute, aware, and ready to say, no, no, no,” Robbin says. If you do want to consider an extended warranty, it’s usually best to go with a factory warranty instead of one from a third party. These are also negotiable. Ask the dealer to knock down the price.