Deals on wheels: Part 2: you've calculated dealer costs, taken your test drives, and mapped out your payments. Now you're ready to deal

Tools of the Trade, Sept-Oct, 2005 by Michael Springer

In Part 1 of this feature (July/ August 2005, page 32), we outlined how to gain control of your next truck purchase, including knowing models and options, understanding dealer costs, and choosing your best payment options. Now, here are some tips for negotiating like a pro and closing the deal.

NEGOTIATING

Don't expect to drive off in your new truck the day you go to the dealership to talk money. Locating or ordering the exact vehicle you want, shopping your offer around to several dealers, and taking pricing and negotiating data home to decide your best deal all add time to a transaction. And certainly don't wait until you are desperate for a vehicle before you decide to shop. Having the ability to walk from a dealership at any time empowers you.

Tactics. Negotiating with the dealer is a two-pronged attack. First--and most important--negotiate and determine the vehicle price, regardless of how you're paying. Don't mention a trade-in or financing. Second, remember that you're in control of the proceedings. Don't ever feel forced to stay longer than you had intended to or to have the negotiation steered away from the topics you want covered to your satisfaction. Stay on point. Keep things simple. Have all your information handy Only negotiate one item at a time.

How to Determine Your Offer. Start by outlining the exact vehicle and options you want along with the price you're willing to pay. Determine your offer based on the rebate-adjusted dealer cost you've already calculated. Consumer Reports suggests adding 4 to 8 percent above the adjusted dealer cost or starting at just above cost if the model is a slow seller in your area. It might help to check dealer inventories online at the dealer's Web site and start at the place that has the truck you want.

Let your salesperson know that you're presenting your offer to other dealers and that you're shopping for the lowest price. Don't dicker yet. If you have a reasonable offer, someone should bite before you have to make a second round of offers. While you're at the dealership, find out if you qualify for their low-rate finance deals. They might not run your offer amount in the application if they're declining it but make sure any higher number they run is not, from then on, assumed to be an increased offer amount. If you're accepted for the special low-rate financing (and not just some financing), get offers in writing.

Now take all the rate and term information home to calculate if it will save you money on the total vehicle cost. Don't be rushed into talking about trade-in or financing details. Save your time and wait until your offer is accepted by one of the many places you faxed, delivered, or e-mailed it to.

Crunch the Numbers. Do the math to calculate your best overall deal, generally a combination of the best price you find plus the quickest comfortable payoff. Figure it by adding total vehicle cost plus total interest due. Don't try to calculate this at the dealership. Take your time and use an Internet calculator at home.

Apples-to-Apples. Finding the overall cost of a loan and its monthly payment amount is simple using an amortization schedule calculator offered free by the hundreds on the Internet. Your bank probably has one online, but www.consumerreports.org has the best worksheets and calculators where virtually every truck-buying financial question can be answered for you by plugging in the interest rate, loan amount, and term. Using this tool, it's easy to find the bottom-line total cost for every buying strategy and payment option available to you--and compare them apples-to-apples. Your best deal will be determined this way and keep you from being an under-informed consumer--a consumer who buys an affordable payment rather than learning the total price of the vehicle and making the most informed purchase possible over the long term. It can be said that under-informed consumers are buying payments, rather than buying a truck (see "Best Payment Option," page 40).

Take all the manufacturers' rates and terms that you qualify for and plug them into the loan calculator for the amount you'll be financing. Then do the same for any outside lenders that you can borrow from, figuring the loan amount at the same terms. (Remember, sometimes the loan amounts will be different based on lender down payment requirements and rebate amounts applied toward your down payment.) Figure your interest costs for each, and add the cost of any rebate amounts you lose on manufacturers' deals to make accurate comparisons. Also add any loan application or title fees to make sure your numbers are accurate. Make the largest possible down payment and pay the quickest way your budget will allow for overall economy. Or, look at the monthly payment amounts to find your best scenario for a payment affordability strategy. With your numbers in order, you now know the financing you should get to make your best deal.

READY TO BUY

When your offer is accepted and your vehicle is in stock, be ready to buy. Have your loan secured if using outside financing, and be aware that there will be some payments to make when taking possession of the vehicle that you cannot put on the loan draft, such as the down payment and sales tax. Your thorough research should make the closing negotiations a breeze. And, you can use Kelley Blue Book or Consumer Reports to determine a fair price for your trade-in if you have one (keep in mind that a private sale may make you more money, but take more time).