Photo Courtesy of ToeStubber

After posting my article, "
When Buying A Car (and in Life), Knowledge Is Power", several people left comments and sent emails asking for more details regarding the negotiation with the car salesman. I left this part out of the original post because it would have made the post extremely long and boring.

There are several key tips to remember before you step on the car lot to search for your next vehicle. You don't want to go into a dealership "without a clue". The car salesman will see it and probably use it to make a sale of a car you probably didn't need to buy. (
I want to make it clear that I am not saying that all car salespeople are bad but they are there to earn a paycheck. The majority of their paycheck is earned by the commission they make from selling you a car).

Tip #1: Know What You Are Looking For
. If you don't know what kind of vehicle you are looking for, the salesperson may point you to a vehicle that is in their best interest and not in your best interest. My cousin and I researched different vehicle types and we narrowed it down to two vehicles (a Honda Civic or a Nissan Sentra).

Tip #2: Know Your Price Range
. My cousin and I sat down and discussed the maximum amount he could afford to pay for a car. This is usually easier once you've done Tip #1. Don't just look at the monthly payment. You also need to consider insurance and maintenance costs.

Tip #3: Arrange Financing in Advance
. Once you know what you are looking for and the price range you are willing to pay, the next step is to arrange financing. Of course, being a personal finance blogger, I have to say you should not finance a depreciating asset and save until you have enough money to pay cash. The rational side of me realizes that paying cash is not possible for everyone due to different circumstances. If you are going to use credit to finance the purchase of your new car, the best place to start is your local credit union. Most credit unions offer low cost auto loans. Check this website to see if you are eligible to join a credit union. If you aren't able to join a credit union, the next place to check is an online website like Bankrate to compare interest rates among various lenders.

Tip #4: Know the Value. Searching websites like and can help you determine a fair market value of the vehicle you are looking to purchase. Once you know what the the fair market value, you can be in a better position to negotiate with the dealer.

Tip #5: Negotiate, Negotiate, Negotiate
. Once you know what vehicle you are looking for and the fair market value of the vehicle, you are ready to make your purchase. The price on the window is not set in stone. The posted price is set allowing room for negotiation. Car dealers know that the educated buyer is aware that the window price is just an asking price and not what the buyer will ultimately pay. If the salesperson is not willing to be reasonable, don't be afraid to walk away. There are plenty of car dealerships out there and alot of them are hurting for business.

Hopefully, this post will help you make a better deal on your next vehicle purchase. If you've recently purchased a vehicle and used any of these tips, feel free to share your experience.

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  1. Anonymous // October 22, 2008 at 11:12 AM  

    Thanks for the tips.

    We are currently looking at getting a new (used) car. We need something bigger than what we have (2 door hatchback) because we have two kids to deal with now, and the hatchback just isn't cutting it.

    We will definitely use this advice! :D

  2. Anonymous // October 22, 2008 at 9:49 PM  

    Since I was one of the people requesting this, thanks a lot SGM for responding. Appreciate the tips.

  3. Anonymous // October 23, 2008 at 2:06 PM  

    Do you know who could REALLY use this advice? Teenage girls!

    I recently got drug along to go car shopping for my 15-year old sister's first set of wheels. My mom tried banging some of these principles into her head, but it wasn't doing much good. Instead of acting like a knowledgeable buyer who wasn't afraid to walk away, she acted all giddy and hyped up when she found a car she liked. Preying on this, the salesman got a couple hundred more out of her than we were targeting, knowing that she fell in love with the car. Ugh...

  4. Anonymous // October 23, 2008 at 9:14 PM  

    Kelly Blue Book ( is also a good place to go to find out the fair market value of a car.

    For anyone looking for a used car, I highly recommend going to to JD Power and Associates ( to research the dependability of the car. Once you've settled on a used car, go to Auto Trader ( and research which dealerships near you have the car you're looking for and the listed price. Purchasing a one month subscription to Car Fax ( to check the history of any of the cars you're interested in before you go to the dealership.

    I recently purchased a used car. I did all of the above, including printing out the fair market value of the car, the ad for it on Auto Trader, and the Car Fax history report. I took all of my papers with me when I went to the various dealerships to look at the cars. Having this information (especially the printed ads) helped tremendously. When the salesperson at the dealership I went to saw how much research I had done, he dropped the cost of the car down to a hundred dollars or so above fair market value.

    Another great tip is to go car shopping in the week before the end of the month. The salespeople have quotas they need to meet every month. As the end of the month approaches, they start striking better and better deals in order to get the cash bonus for meeting their monthly sales goal.

  5. Anonymous // October 24, 2008 at 10:37 AM  

    Do you think buying used car is better than new car at this moment since now is econmy crisis?

  6. Anonymous // November 1, 2008 at 12:33 PM  

    This is really a great post suggesting tips and I am sure many of us will get guidance before making Used Car Buying decision.

    Keep up with the good work

  7. Anonymous // November 1, 2008 at 4:16 PM  

    The post is quite interesting, but I enjoyed the comments. Enought that I could not keep my self away from writing on the comments that I am enjoying your writings.

  8. Anonymous // November 2, 2008 at 1:05 AM  

    I have very bad experience while buying used car. This is a very important post that contains tips, I definitely consider it while purchase my next car.

    Thanks buddy

  9. Anonymous // November 2, 2008 at 10:12 AM  

    We are currently looking at getting another. And at the nick of the time this post is quite interesting before making purchase decision.

    Thanks for the tips...

  10. Anonymous // November 5, 2008 at 10:48 AM  

    Thanks for sharing nice tips. I am sure it will be of great help for many who are gonna buy car.

  11. Anonymous // November 5, 2008 at 11:02 AM  

    All the tips are quite workable. I mean for buying a second hand car if one follow all the five tips I can assure one can be saved a lot.

  12. Anonymous // November 7, 2008 at 10:59 PM  

    Thanks for sharing the tips, very logical and helpful..

  13. Altax // July 27, 2009 at 2:21 AM  

    Actually when buying used car check whether it had hit any Pigs before.Because any vehicle which had hit a Pig does not stay for long time. This is a tradition in our country. As soon as it hit a pig the vehicle is sold without knowing and the buyer gets many accidents and finally decide to sell and there will be another buyer to buy it, keeps for a while and sells it later.. So this process goes on....

  14. mano // October 9, 2009 at 3:47 AM  

    Thanks for these valuable suggestions..
    we have planned to buy a used car.. hope these tips will really help me to make a better deal.

  15. Virtual Bookkeeping Services - Accounting Outsourcing - Outsource Bookkeeping // December 8, 2009 at 10:08 AM  

    Excellent post...I wish I had read this before purchasing my car. I just purchased it.