Buying a New Car

by Cathy Tanaka

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My husband and I recently bought a new car after deciding that we didn't trust ourselves to buy a reliable used car. We are both financially savvy, however, and we took several steps to make sure we got a great car at a great price. And the best part was that it was relatively easy and painless. Here's how you can have a similar experience:

  • Narrow down your choices by getting recommendations from friends, keeping an eye out for cars you like on the road, and reading reviews from sites like Consumer Reports and Test-drive your short list and then leave the dealership. (One good tip I read was to go just before lunchtime, so that you can do the test-drive and then say you need to get lunch before you can think about buying the car.)

  • Once you've decided what car you want to buy, go to a site like and figure out the invoice price.

  • If you are a member of an organization that offers a car buying service, give it a try. A car buying service has pre-negotiated price points with dealerships and sometimes they are stunningly good. AAA and Costco both have car-buying services. I used USAA's service and found that a dealership close by would sell me the car for $100 over invoice. However, another dealership further away would sell me the car for $500 under invoice.

  • Negotiate via email. If you use a car buying service, the service will put the dealerships in touch with you. If you're not using a car-buying service, go to the dealership's web site and find the email address of the Internet sales manager. Negotiating via email puts you in charge and saves you time. One particular tip here is to ask your preferred dealer to match a better price found elsewhere. In my case, the closer dealer agreed to the $500 under invoice price.

  • Decide how you will finance the car before you go in to purchase it. Find out what the dealer's incentives are. I bought a new Nissan when they offered a rebate or special financing. I obtained comparable financing elsewhere and took the rebate. If you won't be financing with the dealer, get pre-approved from another lender before you head to the dealership. Compare rates at your various financial institutions, get pre-approved by the lender with the lowest rate, and then take their paperwork in to the dealer with you when you buy the car. USAA gave me an electronic check to give to the dealer, which made things very easy.
  • Compare auto loans before you car shop.

  • Make sure the dealership has the car on the lot. My husband and I had a bad experience once where we completed the paperwork, and then were told by the dealer that they could not find the car that we wanted, even though their computer system said it was available. They offered us a different car that cost $800 more. We refused, obviously (and will never do business with that dealership). We learned to make sure that the salesman we are working with has confirmed that they are in physical possession of the car we are buying and that he knows exactly where it is.

  • If you are going to trade in a vehicle, don't mention it until you have agreed on a purchase price for the new vehicle. That way, the salesman can't try to get back the trade-in value on the purchase price. To figure out the trade-in value of your vehicle, visit Kelly Blue Book or Expect the dealer to offer you the low end of the trade-in value, particularly if your car is over five years old. You can negotiate the trade-in value, but be prepared to walk away if you feel the dealer is being unfair.

Be prepared to walk away if you're unhappy with the deal. But if you follow these steps, you should be well on your way to an easy and hassle-free new car purchase.

updated: July, 2014

Take the Next Step

  • Reduce the cost of your gasoline with a 'gas card'. Compare them now to find the best one for you.
  • Make sure you are not overpaying for auto insurance. See how much you could save with just a few clicks. Fast, free quotes and online comparisons.
  • Get all the facts before you buy or sell a vehicle. will give you what you need to know to make a confident deal.

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