New Car Purchase

 // will use Toyota corolla/camry as an example

where to get info

• Edmunds for new car prices (MSRP, average price paid, invoice, etc.)
• price promise from Edmunds.com might be a good tool.
• Price on any car site or edmunds price promise is INCLUDING all available rebates sometimes just to lure the customer in. They will say what rebates are included in the small print.  So you'll see a car for 15k, but then that's including 1000 military discount, 750 college grad discount, and 500 nissan discount, then the real price you're really getting is 17250.  So you have to make sure to read the small print so you know exactly what you're getting. -- Jon/Rica
• invoice price from Edmunds.com explained 
• all the prices are location-sensitive, so make sure you key in the right zip code.
• internet 
• some dealerships may give a discount if you log into the dealer's website, so check online to see if there's any printout you can use.  My discount was pretty small (just 100$), but any discount is useful. -- Jon/Rica

timing

• when not hard pressed by time, i try to follow this.
• never go for a 2015 car if they still have the 2014s.  There's a negligible difference, but you can save more than a thousand by going with an older model. -- Jon/Rica

what to do with the old car

• if the car still runs, ck kelly blue book for its trade-in or retail values.
• trade-in returns less money, but saves you quite a bit of work.
• get more money with retail, but you have to find the buyer yourself, takes time and energy.  so if there is not much difference, i usually do trade-in.
• sometimes, for trade-in, when the dealer can not lower your price any more, then they will up your trade-in value a little just to close the deal.  in this case, for you, the total is the same, for them, it is the accounting.
• if the car does not run, donate to a charity (google for the local ones), then get the tax credit when filing tax.  when ask them to come, do the following
• give them the title, key(s) and manual (if any)
• ask for a receipt/donation certificate for tax purpose
• when giving up the car, regardless for donation/trade-in/retail sale, do the following
• take out all gps/ezpass/garage door opener
• check the trunk/glove compartment/under the seats/behind the sun visors, make sure nothing left behind.

before you go to the car dealer

• find out the car make/model and do the model comparison.  for example, Toyota.
• find out its options and ask yourself to see if you want/need them.  you can find the invoice price of each option from Edmunds.  to reach here, you have to select the "build and price" button.  then it will give you a list of options and its invoice/MSRP prices.
• find out the dealer hold-back, scroll down and you will be able to find its value for your make, like Toyota is 2% (as of 09/19/2014.)
• find out the incentive/special loan interest rate by click the "View Incentives" tab in the Edmunds make/model page; a info window will pop up.
• call the dealer up, or google it, to see if there is any rebate at the time.
• put all info into a spreadsheet.  because the car they have might be a bit different than the one you have in mind.  so put all info in the spreadsheet, then you can always refer to it when the need arises.

your target price is ...

• base invoice price
• PLUS invoice price for each option 
• MINUS incentive (sometimes it comes as a form of lower interest in loan, you have to compare them)
• MINUS rebate
• MINUS dealer hold-back

about processing fee(doc)/destination/tax

• can not negotiate about the tax.
• doc fee (include the registration fee) should be <$300
• destination fee (not sure if this is negotiable.)
• New Car Delivery or Destination Charges Explained this article is from autotrader, so i will not trust too much, more for info only.
• 7 Car Dealership Fees and Services to Avoid.

lease or buy 

• i have never leased before.  but from my understanding, leasing makes more sense for business, not for individual.  but you have to do more research.  the bottom line is to find out what the total cost is going to be then starts from there.  for more reading ...
• lease/buy explained
• lease/buy calculator
• by the way, if leasing, ask the dealer about "money factor", multiply that by 2400, that is your interest rate for leasing.  compare that with regular loan interest rate.  you have to ask for this info, they will not give it to you.
• but regardless lease or purchase outright, the procedure is mostly the same, i.e.
• bargain as hard as you can to lower the price.  because all payments, principle and interest, are going to be based on that.
• sometimes, the incentives for leasing and purchase are different, put that into consideration when you calculate the total cost.
• try to bring up the leasing only AFTER the negotiation is done.  because you don't want the leasing to cloud the issue.  divide and conquer, one step at a time, first negotiate the total price, then see if leasing make dollar sense.  if they ask you before that, then just respond that you have not decided yet, you would like to see what the difference first and leave your options open for now.  because leasing could be good (they make money on car and loan/interest) or could be bad (they don't get the money up front), so it could be a iffy situation for them too.

when to test drive the car

• best during the day (enough light is important.) 

cash or loan

• sometimes, they have 0% interest rate.  take that, if no other cash incentive.  if they do, take the cash incentive.
• sometimes, if they say you can take $500 incentive or 1% loan for 3 years(assume the normal car loan rate is 3%).  then take the cash, because if taking the loan, you pay $155 in interest, and assume your investment return is 3% (equals to the normal car loan rate); the net gain is $314 (469 - 155 in the chart below) as compared to $500 cash.  but if the cash incentive is $200 instead of $500, then taking the loan make sense money-wise, since $314 you save is great than $200.  but in that case, you have to make sure your investment return is at least 3%.
• total loan interest payment.  in the chart below, the rates go from 1% to 5%, and the terms are either 3 years or 4 years.  the numbers in cells are the total interest payment.  the values are for per $10,000 of loan.

                                  1%           2%          3%          4%          5%
          -------------------------------------------------------------------------
          36 months       155           311         469          629         790
          48 months       205           414         624          838         1054

in car dealer

• ask if they have the car you want in the lot, if not -> walk (you can call to find out first).  if the car is in the lot, the pressure is on their side, you have the upper hand in negotiation.  since they have to move the car, even it means making less off the car.
• test drive it.
• check when was the car delivered.  if now is september and car was delivered in february, then it meant it has been sitting in the lot very long.  avoid the car.
• check the mileage on the car, should be less than 100 miles.
• ask to see if they have any rebate (might get a pleasant surprise) ... redo your target price quickly
• start to negotiate ... they will give you a price, then you counter the offer by giving a couple hundreds off your target price.
• or you can just say you offer $100 over your target price, then that is it.

prepare mentally

• always prepare to walk ... with info
• before you walk, make sure you have a price quote in hand.
• you can tell the agent that they are the first dealer you visit, you want to check with other dealers also before you make your final decision.  by then, they usually know you are a serious buyer, they will not let you go easily.  from this point on, you have a upper hand in negotiation.
• 2-3 dealers later, you know the price.