Sara Routhier, Managing Editor and Outreach Director, has professional experience as an educator, SEO specialist, and content marketer. She has over five years of experience in the insurance industry. As a researcher, data nerd, writer, and editor she strives to curate educational, enlightening articles that provide you with the must-know facts and best-kept secrets within the overwhelming world o...

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He also has an MBA from the University of South Florida. ...

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Reviewed by Joel Ohman
Founder, CFP® Joel Ohman

UPDATED: Dec 6, 2011

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For many, car shopping is among the most miserable of activities. Looking for a new vehicle is a shopping activity unlike any other. It’s not as easy as walking into a mall and picking your favorite one off a shelf. Rather, the weasely car salesmen, haggling, games, and fear of being ripped off are all expected obstacles, and have successfully played a part in ruining the public’s vision of the car purchasing process.


But you don’t need to feel like you’re breaking out of prison trying to rush through the rows of vehicles as quickly as you can before the salesman spots you. Rather, welcome a salesperson’s expertise, but make it known you’ll not fall for any of their tricks.


Prepare Yourself


One of the most important steps a prospective car buyer can do is pre-emptive research. Before stepping foot on a dealership, buyers need to research the vehicles they are interested in. Websites such as Kelley Blue Book are extremely helpful when discovering what the true value of a car is—particularly when it comes to used and customized vehicles.


Consider a vehicle’s qualities you find important: do you want reliable transportation, room to haul equipment, space for passengers, high miles-per-gallon (MPG), a loud engine, high horsepower, or a “green” vehicle? The answers given to each of these options will greatly affect the type of vehicle you should be looking at.


This preparation step is critical because, at the end of the day, there are huge differences in seemingly similar cars. Researching and planning head allows borrowers to figure out exactly what they want and what they can afford. Otherwise, they risk walking into a dealership, being escorted around by a salesman, and persuaded to buy a multi-thousand dollar purchase that they didn’t necessarily want or need.


Get Pre-Approved


Dealer financing is notorious for being shady and without customers’ best interests in mind. Rather than dealing with all of the financing paperwork in a car dealership, visit your local bank and get pre-approved for an auto loan before venturing onto a car lot.


Getting approval for a car loan early allows you to know exactly how much you are permitted to spend on a vehicle. Holding an auto loan also puts you in the same category as a cash buyer, which may result in scoring you a better deal; all businesses prefer the safer exchange of cash over any other form financing, and this fact can be a source of leverage for a buyer.


You may miss out on the enticing zero-percent financing deals that car salesmen offer, but the safer route of obtaining an auto loan early can prove to be a cheaper route when all is said and done.


Develop a Poker Face


Once you know exactly what you want and have a car loan available, you should be adequately prepared to enter the auto-dealership-jungle.


Choose a day you have completely open that you can devote many hours to car shopping. And remember, your goal is to obtain the best vehicle for the best price. It is very important to never lose sight of that goal.


Don’t reveal how much you can afford on monthly payments, as that’s not relevant to the deal if you’ve already got an auto loan. Simply respond to all inquiries about price with, “Show me the car I want at the best possible price you can give me. If it’s not low enough, I’ll have to look elsewhere.” But say such a line not as a threat, but as a promise you intend to keep. If the price offered doesn’t match your research you did earlier, then leave. Chances are the salesman will stop you and offer a better price.


When a price is given that does sound enticing, sit down and push for lower. Car sales operate on the premise of haggling, and the first rule of haggling is never offer the best price first. The Federal Trade Commission says dealers may be willing to bargain between 10 and 20 percent. Consider 20 percent on a $10,000 car—that’s a savings of up to $2,000.


Keep in mind how much your pre-approved car loan affords you, and what kind of price you are willing to close a deal over, then present an offer under that number allowing room to bargain. The salesman will try everything in his repertoire to keep that price high, but don’t go over what your research-driven price-in-mind is. If a particular dealership refuses to meet that price, then leave.


Be the one in control, and keep that cool, business-savvy poker face on at all times.


Achieve Victory


Finally, the buyer and salesman can come to an agreement and shake hands on a deal. The nice thing about being prepared is that this is the only deal that needs to be made. For the unprepared, they would then need to negotiate an auto loan with the dealer. Discussion about car loan rates, approval, and credit scores would take place—extending a borrower’s time in the negotiation phase.


Save yourself the headache, and don’t skip the step of auto loan pre-approval.


When a borrower does research, obtains pre-approval for an auto loan, and walks onto a dealership knowing what they want, car shopping is turned into a process similar to most other shopping endeavors. The games dealerships play with consumers are negated when their sources of leverage are removed. Salesmen can sense when they’re dealing with an educated customer, and won’t even attempt to pull schmoozy tricks.


Ultimately, the informed and prepared car buyer allows both themselves and the dealership to walk away from a transaction happy.