7 Questions to Ask Yourself Before Going to a Car Lot

So you think you might want a new car or a good looking low mileage used one? Good for you. Now stay home for a couple of days and do a little bit of research.

Here's why:

If you go out and stop at a lot and meet a good salesman you're going to lose thousands of dollars! I'm not kidding you, so listen up.

If you are even contemplating doing that; ask yourself this question:
If I'm going to piss away several grand, do I want to do it on a car lot or in Tahiti? If your answer is Tahiti, then I can help you!

Here's the questions you MUST answer before going anywhere near a dealership:

1. What's my credit like? If you don't know, you can get a one time free credit report on-line (maybe it's once a year). Anyway, find out. It makes a difference whether you decide to use dealer financing or not.

2.What's my Budget? Most people think of this in terms of monthly payment. DO NOT! Of course the monthlies are important but there's stuff like down payment, trade value, and interest and term too. So think about the big number first. New cars start in the high teens and go to the mid thirties for just a regular mid-sized sedan or SUV. If you must think in terms of monthly payments you can quickly convert by using this rule of thumb; for every thousand dollars financed it will take about $20 a month in payment.

3.What's my present car worth? If you do not have a car to trade, skip this question! If you're smart and able to sell your car on your own you will be money ahead and ahead in lack of hassle and heartache as well. Get in contact with the bank or whoever has the loan on your car and find out the payoff; this amount will be added on to the price of the new car! But if you must trade, at least do yourself the favor of finding out what your car is worth. Go to Kelly Blue Book on the web and put in your cars details, be honest about the condition and the equipment. That number for trade in value that comes up will give you a goal to shoot for. Remember, most dealers make as much or more on the car you trade in as they do on a new car sale!

4.Do I have any money for a down payment? If you're saying to yourself now, hey this guy's nuts, I don't need a down payment; don't. You want to put what you can afford down for a couple of reasons, both of which will help you reduce the overall amount financed, the interest rate and the monthly payments.

5.Have you researched the brands, styles and types of cars or vehicles you have in mind? I can not emphasize this enough. You would be surprised how many people come to the car lot unclear on what they want or need and find themselves leaving with the wrong car. It happens more than you think. The way to overcome this is twofold; ask your friends who have a vehicle like the one you're interested in or rent a vehicle for weekend and test it that way. While doing this you must go on-line and learn the invoice price of the new vehicle with the options your want. When it comes to negotiating price the dealer will start with the sticker and you want to start at or below invoice.

6. Are you prepared to go on a lot and deal with Dealership practices, salespeople and all the junk that comes with it. If you are OK, if not there's another alternative. Remember when you get to a car lot that the people who work there are convinced you came to buy a car if only they can match your needs, budget and their inventory. You must be prepared to walk away when it's clear they don't have what you want. This is usually messy, cause they and their managers are going to do everything possible to keep you there; the theory being that time equals commitment.

7. Have you investigated buying over the Internet or through a broker. This is the other alternative I spoke about. This is only available really for new cars, though some national used car chains are attempting to promote web sales. Check in your area, if it's used you're looking for you'll probably have to use one the national chains to buy on the web.

OK, you've answered all these questions? Great go forth and energize the economy, only just do it on your terms. There are a number of sites that give a great deal of information about negotiating. It's a pretty long read, but I recommend the one on the Motley Fool website. Take the money you save and have some fun with it.

Happy motoring!