Have We Got a Deal For You!

Nobody likes to hear they could have paid less for their new car.

But unless you know how to drive a bargain, you'll likely pay hundreds of dollars more than necessary.

What you need is a strategy.

"You've got to know what the deal is before you make the deal," says W. James Bragg, author of "The Car Buyer's and Leaser's Negotiating Bible."

When most customers walk into a car dealership, they meet a salesperson who sets the agenda. He or she, usually he, asks several questions, including something like: "How much were you hoping to pay each month?"

It's a question designed to steer you to the highest price, and it doesn't have to be that way.

Buyers can control the conversation if they know what to expect and have the know-how.

"Most dealers agree to several slim profit sales each month to customers who have done their homework and know how to use it," according to Mr. Bragg.

You can be one of those customers, if you know the dealer invoice, the value of your trade-in, and the best financing.

The key is to get at least three dealers to compete for your business. Remember, if one won't meet your price, you can always leave and go to another.

Invoice price. The invoice is what the dealer pays the factory for a car. The sticker price is the one on the window and the dealer's target for your wallet.

You want to get closer to the invoice, which is neither difficult nor uncommon as you can see from Drive a Bargain, below.

Several consumer books list invoice prices, but since they can change from month to month, a few services now offer up-to-date invoice prices over the Internet or by fax or mail.

Dealer discounts. Sometimes carmakers offer discounts directly to dealers, an incentive to move certain models.

Pricing services can tell you about those incentives, and you can then use that knowledge to negotiate a lower price.

Carmakers also pay "holdbacks" to dealers - 2 or 3 percent of the sticker price - for every car sold. And while dealers rarely pass it on to customers, mentioning it gives you more leverage in getting the factory-to-dealer incentives included in your price.

And then there are the "$1,000 cash back" ads. That's money in your pocket, to be added to your down payment. You should still negotiate the price lower.

Trade-in. Finding the value of your trade-in can be tricky. Price services and guides often list wholesale prices for used cars. But the best route, Bragg says, is legwork: Shop around.

But not while you're shopping for a new car. Visit several dealers the weekend before, and ask the used-car manager for a bid and how long it lasts.

If the dealership where you finally buy your new car won't match that price, you know where to sell it.

Financing. Call a few banks for loan rates. If you belong to a credit union, that's probably your best source.

And don't rule out a dealer's in-house financing. It's often more expensive, but sometimes includes a subsidized rate from the manufacturer. You may have seen such rates advertised at around 3.9 percent.

Properly armed, you're now ready to deal.

Remember: Focus on the price, not the monthly payment.

Otherwise, the dealer tries to blend the issues of price, trade-in, and financing. You get a fine deal on one point, such as trade-in value, but are taken for a ride on another, such as price.

Be polite, confident, and firm.

You can always go back and offer more but not less.

So how do you know if you've hit on a good deal?

According to Bragg, you can feel good about your price if you paid between $300 and $700 over invoice on a car that costs up to $25,000; $1,000 to $1,500 up to $40,000; $1,500 to $3,000 up to $60,000, and a few thousand over invoice above that.

During negotiation, don't be surprised if a dealer turns down your initial price. He might call a day or two later.

If not, you can always go someplace else. A different dealer might have more motivation.

* Have a game plan.

* Buy a book, such as James Bragg's (see story) or those listed to the right.

* Get dealers to compete for your business.

* Find out dealer invoice price.

* Learn about factory-to-customer and factory-to-dealer incentives, as well as "holdbacks."

* Shop for a loan first, but consider the dealer's in-house financing.

* Shop late in the month, late in the day; or at the end of incentive periods - when dealers try to meet quotas.

* Dicker over a price, not monthly payments.

* Settle on the price before suggesting a trade-in or any financing.