Cars
Wheeling and Dealing
To be on sound footing when you shop for a new car, you need to know how the process works -- how dealers make their money, how much they paid for the model you want and the kinds of deals other buyers in your area are striking.
By Mark Solheim, Senior Editor, Kiplinger's Personal Finance
May 2005
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CAR BUYER'S TOOL KIT
Information is the Key to Driving a Great Deal
To get a great deal, approach the dealership armed with all the numbers -- what you want to pay for the new vehicle, what you want for your trade-in, the lowest loan rate you qualify for. Here's where to look.
Initial research. Your goal is to narrow the field to a single vehicle by the time you're ready to contact dealers. Our annual car buyer's guide (published each December) lists vehicle prices and offers stats on performance, value and safety -- including hard-to-find resale values three and five years down the road. Terrific resources on the Internet include Cars.com (read reviews from major newspapers), CarsDirect.com (use the illuminating "car compare" tool) and Intellichoice.com (see its picks for best values in various categories).
New-car prices. Vehicle prices are widely available. Edmunds.com is a gold mine of data. Besides invoice and sticker prices, the site offers what it calls True Market Value transaction prices by region. Edmunds also lists dealer holdbacks, although it takes a bit of searching (start out by entering "holdback"). Easier to navigate is Kelley Blue Book. Its "new car blue book" values are similar to Edmunds's TMVs.
Incentives. Edmunds.com has the most comprehensive information, including data on incentives and rebates, such as rebates for buyers, cash for dealers, low-rate financing and subsidized leases.
Trade-in values. Kelley's numbers are widely used by dealers. Also check the Web site of the National Automobile Dealers Association.
Financing. If you belong to a credit union, check its auto-loan rates. For average rates in your area, go to Kiplinger.com. You'll also find links to E-Loan and Capital One Auto Finance, where you can fill out online applications. It's always a good idea to check your credit report for errors and to know your credit score before you apply for a loan. About half of U.S. consumers -- mainly in the West and Midwest -- can now get one free report every year from each of the three major credit bureaus (the free reports will be available nationwide by September). Visit www.annualcreditreport.com.
Shoppers for hire. You don't have to deal with a dealer. CarBargains, the buying service from the nonprofit Consumers' Checkbook organization, will solicit bids from at least five dealerships in your area on the vehicle you specify. The service costs $190, or $335 for leases. Kiplinger's has teamed up with CarBargains to make it easier for readers to use the service. Go to kiplinger.com/links/carbargains or call 800-475-7283.