An Auto Loan To Buy A New Car

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The average price of a new car has topped $28,000, according to Motor Trend magazine. Second only to your house, buying a new car is one of life's most expensive purchases. Choosing the right auto loan can save you a lot of money.

Buying Your New Car
Research is key. Know the car model and options you want and establish a ceiling on how much you'll spend. You’ll be less likely to feel pressured into making a hasty or expensive decision at the showroom and more likely to get a better deal.

Consider these suggestions:

Check publications at a library, bookstore, or on the Internet, that discuss new car features and prices. Take a look at the Kelley Blue Book, the expert's choice. These may provide real world information on the dealer’s true costs for specific models and options.

Shop around to get the best possible price by comparing models and prices in ads and at dealer showrooms. You also may want to contact car-buying services or even online auctions.

Don't ignore the power of the Internet. You can finance your auto loan online, and get a variety of quotes instantly.
Plan to negotiate on price. Dealers may be willing to haggle on their profit margin, often between 10 and 20 percent. Usually, this is the difference between the manufacturer’s suggested retail price (MSRP) and the invoice price. Don't get so invested in a particular vehicle that you become scared to walk away. This can be a good tactic.

Price is a factor in the dealer’s calculations whether you pay cash or finance your car — and also affects your monthly payments. So negotiating the price can save you money.

Consider ordering your new car if you don’t see what you want on the dealer’s lot. This may involve a delay, but cars on the lot may have options you don’t want — and that can raise the price. However, dealers often want to sell their current inventory quickly, so you can usually negotiate a better deal if you'll accept an in-stock car.

Learning the Terms
Negotiations often have a vocabulary of their own. Here are some terms you may hear when you’re talking price.

Invoice Price is the manufacturer’s initial charge to the dealer. This usually is higher than the dealer’s final cost because dealers receive rebates, allowances, discounts, and incentive awards. Generally, the invoice price should include freight (also known as destination and delivery). If you’re buying a car based on the invoice price (for example, "at invoice," "$100 below invoice," "two percent above invoice"), and if freight is already included, make sure freight isn’t added again to the sales contract.

Base Price is the cost of the car without options, but includes standard equipment and factory warranty. This price is printed on the Monroney sticker.

Monroney Sticker Price (MSRP) shows the base price, the manufacturer’s installed options with the manufacturer’s suggested retail price, the manufacturer’s transportation charge, and the fuel economy (mileage). Affixed to the car window, this label is required by federal law, and may be removed only by the purchaser.

Dealer Sticker Price, usually on a supplemental sticker, is the Monroney sticker price plus the suggested retail price of dealer-installed options, such as additional dealer markup (ADM) or additional dealer profit (ADP), dealer preparation, and undercoating.

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