Tips for Buying a Car

Decide What You Want And Need 

Think about what you use your vehicle for. If it's all about hauling kids around, get a minivan or SUV. If you need great gas mileage, get a subcompact. Then get a price range in mind and stick to it.

Know What Your Trade Is Worth 

If you're trading in your old car, make sure you check the value before you negotiate by going to www.kbb.com and www.nada.com (values can vary, so it's best to prepare with both estimates). If you still have a loan on your trade, find out exactly how much you owe. It's important to know if you start with a deficit (when you owe more than the trade is worth), because you'll have to add that to the cost of your new wheels. Sometimes it makes more sense to drive your oldie a little longer, or sell it privately. (If a new car isn't in your budget, here are some tips to make your current car more fuel efficient. Don't miss Get Smart With Your Current Car.)

Check for Rebates or Special Financing Offers
If you're buying a new car, look up the manufacturer website for rebates and special financing. Remember: those are incentives offered by the car's manufacturer, not the dealer! They don't cost your dealer anything, so there is still plenty of room for negotiation.

Check Internet and Newspaper Deals
Many dealerships advertise a car at a lower cost in the newspaper or on the internet. If you walk into the dealership without the ad in hand, they'll quote you a higher price. Remember that just like supermarkets have specials on certain foods to get you in the door, so do dealerships. Keep your eye on your research and budget; don't let yourself be talked into something else once you shake the salesman's hand.

Don't Show Your Cards
The first thing a dealer will do is ask you a lot of questions, trying to figure out what you're looking for. You should answer honestly - a sales person is there to help - but don't tip your hand too soon. If you know they have the car you want for a good price but you're willing to spend more, don't tell. Be vague if you have to, or give a price range. There's no need to talk numbers until you're ready to buy.

Use Ads to Negotiate
Let's say you've found the perfect car, but you know a dealer across town is selling the same year, make and model for less. Bring the ad. Many salespeople will deal to keep your business. (Find out how you can keep your car running longer for less in Top 5 Money-Saving Tips For Your Car.)

Check the Vehicle
Have your mechanic check the car if it's used. Check the vehicle's history; carfax.com has a VIN check capacity that will tell you if a vehicle has been in an accident or has other suspect history.

Be Ready to Walk Away
If the dealer isn't meeting your needs, won't let your mechanic look at the car or the vehicle history is suspect, walk away. There are other cars and other dealers out there. You did your homework. Don't be taken for a ride just because you fell in love with a car. (If you're looking to buy a car, check out Car Shopping: New Or Used?)

Beware of "Extras"
You're ready to sign on the dotted line, and you find the finance manager talking you into alarm systems and extended warranties, priced at a thousand dollars or more. This is how dealers make their money. Unless you buy a car with a bad history most extended warranties aren't a good deal for you. Think about it: the dealer wouldn't be making any money off these warranties unless the repairs cost them less in the end. Instead of paying for an expensive warranty, budget for repairs.