Before Buying a New Car, Do Your Homework

ByABC News
November 16, 2006, 4:41 PM

Nov. 17, 2006 — -- Fall is always a good time to buy a brand-new car, and this year may be better than ever.

That's because sales have been sluggish this year and dealers -- especially of American-made cars -- need to sell the 2006 models to make room for the 2007s.

A car is the second-biggest thing most of us purchase in our lifetimes. And yet most of us aren't very good at it. After all, we only do it a few times in our lives, and the back-and-forth rituals of new-car dealerships are pretty baffling.

Let me see if I can help.

Once you've chosen the make and model of the car you want, learn the reputations of the car dealers in your area that sell that car.

Check with the Better Business Bureau and/or your county and state consumer protection agencies. Find out the number of complaints against each dealer, the nature of those complaints, and whether they were resolved satisfactorily. Cross complaint-ridden dealers off your list.

Look in the newspaper and see whether the dealerships you're interested in are offering any specials. Call and get the details of these deals. Often you'll find that the ad in the paper only refers to a single car. It's usually a stripped-down model with manual transmission. If that's what you're looking for, you could do very well.

But beware, some dealers advertise a breathtakingly cheap car, but when you call first thing in the morning, they say it's already gone. They may be playing a game of bait and switch to lure customers to their lot. Call them on it. Dealers are not allowed to advertise a car unless they have it in stock.

Now, consult a car-pricing resource like to find out how much the manufacturer charges dealers for the car you want. These guides are incredibly detailed. They give the invoice price for the basic model, and they break out prices for every optional upgrade.

You can also look up any rebates the manufacturer is currently offering its dealers. Say Toyota is offering dealers a $1,000 bonus for every new Camry they sell. That means that if the dealership sells you the car "at invoice," it still makes a $1,000 profit. It also means you've got another $1,000 worth of wiggle room when you start haggling.