Things to Know Before Buying a New Car

Because of the wealth of information available online, dealers have become more creative in order to make a profit. Aside from more common negotiation and dealer strategies, there are other financial issues to consider when purchasing a brand-new car that may end up saving you money.

The Selling Price

Some people have trouble identifying the manufacturer's suggested retail price (MSRP) sticker, or window sticker, while on the dealers lot. Through no fault of the car lot shopper, some dealers make this as confusing as possible. The window sticker is only one item and is located on one of the new car windows. Watch out for an additional sticker next to it, as these are dealer add-ons. The sticker is called an addendum, and is used for maximum dealer profit. Some dealers stick them on every new car. Start at the window sticker price for negotiations or pricing, not the addendum price. Unless you want to buy the items you see, which are marked up in price, the dealer hopes you assume the list is part of the selling price. Additionally, when looking at the window sticker, you'll see a transportation fee. The dealer paid that amount to have the vehicle transported to his lot, and the price is not negotiable, as some believe it is. The fee is simply part of the new-car price.

Financing

You should obtain a pre-approval before you finance a new car from the dealership. Unless you're taking advantage of a manufacturer's incentive, such as zero-percent, the dealer will offer to provide you with financing. When you apply for a manufacturer's special finance rate, you are either approved or you are not, there is no in between. Other lenders that the dealer uses can approve you, but not everyone is guaranteed the lowest rate. Dealers are paid by the lender for increasing your rate. In fact, the dealer is paid just for using the lender, but even more for adding points to your financing rate. If you have a pre-approval and a rate to beat, the dealer may be more than happy to beat it, and probably can.

Negotiations

Buyers often believe that the price of a vehicle is the only negotiating point for the car buying process. However, plenty of people also successfully negotiate free servicing or vehicle accessories. If you have agreed on price and know you're going to make a purchase, you might tell the dealer you will purchase, if items such as a year's worth of oil changes or all-weather floormats are included. You have nothing to lose by bringing up additional items before you commit to the purchase.