There are 3 parts to the automobile deal; the purchase of the car, the trade-in, and the financing. Many people get caught up with a professional salesman and can’t tell where one starts and the next ends. I don’t blame consumers for not being aware since they usually do this once every 3 or 4 years.

The dealership knows this all too well and tries a number of tactics to roll all three into one. The end result can be confusion, over payment and horrible feeling that they’ve just been had!

1. The Purchase – The purchase of the vehicle should be just that, how much is a dealership willing to sell the car to you for. You should know ahead of time what vehicle it is that you want, how much the options cost and what the invoice price is as well as the Manufacturer holdback.

Never ever pay Manufacturer Suggested Retail Price (MSRP) or sticker price for an automobile unless the dealer can’t keep enough cars to meet the demand. Some catch phrases that a salesperson will use to confuse things are “How much did you want your payments to be? Home much were you thinking of spending? or What price range are we working with here?”

The above is the real deal, these 2 may be options!
2. The Trade-in – You never discuss the trade of the vehicle before you have a bottom line from the salesperson. If they ask you “will you be trading anything in at this time?” Say, “I’m not sure or just say no”. You can always change your mind as I’m sure the salesperson will do when you mention that you have a trade.

If you are going to trade your car in, get an idea of how much your car is worth. This you can do from Kelly Blue Book or Edmunds, the 2 authorities on car pricing. Negotiate the price of the trade without inflating the bottom line price of the car. My advice is to skip the trade-in and sell this on your own. You can not get a good deal on the trade since the dealer is only willing to offer you a wholesale price. You see the dealership make much money on reselling your old car versus selling you the new one.

3. The Financing – The third part of the deal is the financing. After you negotiate a deal for the car and throw in your trade (if you get a good price) the last part is how you’re going to pay for it. The best way is to have your check in hand before you walk into a dealership. That way you only have 2 parts of the transaction to worry about. If you let a dealer work on financing you may end up paying much too much for the financing and cold be working on picking up the cost of dealer reserve.

The bottom line is that you want to keep the 3 transactions apart from each other and don’t let the salesperson in on how much your payments are or what you want to spend. You should be the only one knowing that information.