1. Get pre-approved for your auto loanBefore you go shopping, visit your bank, credit union, or online lender and find out what you qualify for, as well as the interest rate you'll be paying on your loan while building a budget for the new car. Getting approved in advance allows you to negotiate at the dealership as a confident cash buyer and keeps you within your budget.
2. Know what your trade-in is worthWhether you're trading in your old car or selling it on your own, it's important to know how much it's worth by getting its Blue Book Value. If you're planning on selling your old car, you want to price it right. If you're trading it in, you want to make sure you're getting a fair deal.
3. Get several price quotesIn order to be a good negotiator when it comes to the price of your new car, get Internet price quotes from local dealers. Print off a hardcopy of the quotes and take the lowest one with you. If the dealership wants your business, chances are they'll meet a locally advertised price of a competitor.
4. Review car feesIn addition to the cost of the new car, you'll have sales taxes (depending on what state you purchase the vehicle in), registry fees, and a documentation fee. Before you sign the contract, ask the dealership to provide you with a breakdown or worksheet of the fees. It's to your advantage to carefully review these figures to be sure you're not incurring any type of hidden fees.
5. Check out the dealership financing
Even though you did your homework and have been pre-approved by your lender, it's not a bad idea to see what the dealership can offer you as far as interest rates go. Ask the dealership to run a credit report and see if they can't beat your currently approved rate. It's a few extra steps, but could make a difference in your monthly payments.
Additional resources used in this article: Consumer Reports.Org.