If a deal seems too good to be true, that probably means you're in the process of buying a new car.
"Don't be dazzled by zero-percent financing," advises Lori Gatto, marketing programs manager at Ohio Motorists Association, the American Automobile Association affiliate in Northeast Ohio. "Some of those offers don't allow you to take manufacturers' rebates."
Are you still ahead after forfeiting the cash the automaker would otherwise have let you take home or roll into a down payment? That's just one of many tough questions you'll have to investigate when new-car shopping, but you'll get plenty of help from the "Automotive Services" section of www.aaa.com from AAA. Most of it, says Gatto, is available to members and nonmembers alike.
You'll learn that the dealership is trying to score in at least three ways: new-car price, old-car trade-in and financing. While most of us are generally aware of the first two methods, it's not so well known that lenders typically pay an incentive to dealers for approved loans. Which explains why that nice young man in the showroom is so eager to help you find a lending source.
Secure financing beforehand and you'll be seen as a more serious customer, the focus will be on the amount — not where it's coming from — and the salesperson won't be "helping" you afford the unaffordable by steering you to a longer-term loan.
"While you'll pay more on a monthly basis for a 36-month loan," explains Gatto, "the total will be a lot less than if you string the payment out for four or five years."
How much less? Gatto directs careful shoppers to www.aaa.com, where they can calculate their monthly and total payments at any interest rate, so you can figure whether special financing fits your needs.
When finally sitting down to talk turkey, Gatto suggests a few ways of not looking like one. "Begin by offering a couple hundred over factory invoice. Try to go no higher than $500 over," she advises.
Factory invoice is what the dealer paid. Don't feel bad if your offer looks pretty puny next to the sticker price. Dealerships often qualify for dealer incentives, various forms of back-door revenue from automakers.
Negotiate the add-ons just as carefully. Your clever haggling could all come undone if you let the salesperson talk you into adding on a bunch of cool options you didn't even know you wanted — even if it is "only a few more bucks a month."
