Tuesday, February 14, 2012

How to buy a car

How to buy a car

Many people view buying a car with a certain amount of dread. They assume that every car dealer is "out to get them", and they approach the negotiation process as if they were going to war. But in reality, all you have to do is educate yourself, then getting a good deal becomes quite simple.

Lesson 1: How a car dealer works

An ugly plaid suite, a bad haircut, and a pushy sales pitch. That's the image that many people have of car dealers. But that's usually just a cliche. If you do happen upon a car lot like that, you should probably...run.

Most car dealers have a lot of money invested in their business, and it takes a lot of money to keep their business running. On average, used cars have a 20-30% markup, and new cars have just a 9-15% profit margin. Things like overhead, commissions, and reconditioning costs have to be subtracted from their profit margin. And don't forget, your car salesman doesn't get paid unless he sells a car. So there's a lot riding on your purchase decision.