Look for buyer incentives and deals at crowded car lots

NEW YORK (9/17/07)--Despite higher interest rates and tougher credit standards, now is a terrific time for people with good credit to negotiate prices on cars at crowded automobile lots (The Wall Street Journal Online Sept. 11).

Industrwide sales have plummeted throughout the year, leaving leftover 2007 models on dealer lots just as 2008 models start rolling in. Bottom line: You win--as long as you do your homework, take advantage of your strong negotiation position during the current glut and watch out for secret markups.

Edmunds.com offers tips for buying a new car:

• Don't get swept away by the incentive. Some dealers offer the best incentives on slow-selling cars, which may not include the model you really want.

• Watch for caveats on financing offers. The best financing incentives often are reserved for car-buyers with stellar credit. If you don't qualify, plan on paying a much higher rate.

• Beware hidden markups. If the dealer arranges your car loan through a finance company owned by the car manufacturer, you may wind up paying a higher rate than the one you qualified for, with the dealer and the finance company--in cahoots--pocketing the difference. These hidden markups could be as much as $5,000 over the life of the loan, according to a recent Consumer Federation of America report.

Finally, get preapproval for a car loan before you step foot on the dealer's lot. Don't give that dollar figure to the dealer until after you've completed price negotiations, and don't be swayed by 0% financing. You may be able to get a better deal by taking the rebate and getting a loan through the credit union.

Printed Thursday, November 26, 2009

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