What to Know Before You Go Car Shopping

About You

How Dealers Profit There are three main ways that dealers profit from you. Don't be taken for a ride! The negotiating process for the price of the trade-in. The negotiating process for the price of the new car. Scams in the business office after negotiations are done. Source: CarBuyingTips.Com.

Before you start thinking about fun things like whether you want a convertible or a sports car, you need to do some self-examination. First and foremost, you need to examine your budget. You should set a reasonable price range for the car and begin to eliminate cars that are out of that price range. As a potential car buyer, you need to be realistic, don't fantasize about a $45,000 car when your budget will just barely support a $22,000 price-tag. Also, remember that trying to figure out a way to buy a car that is outside your price range is really not a good idea. After all, it's not much fun to have a car if you can't afford to go places in it.

You also need to know about your own credit history. If there's something that you think the dealer will ask, that's certainly something you should be prepared to answer. Many of the promotions that you see on television are reserved just for people with excellent credit. So having a copy of your own credit report is important. There are a variety of places to obtain a copy of your credit report. All of the three large national credit bureaus -- Equifax, Experian and TransUnion -- offer single reports and packages from their Web sites. A copy of your report costs $9 plus any taxes, shipping and/or handling charges. You can even get 3-in-1 reports, showing your credit history as reported by all three major credit reporting agencies. For example, the 3-in-1 package available from the Equifax Web site currently costs $29.95.

Finally, you need to know what your automobile needs are:

• Do you need to haul heavy equipment? You may want to think about a pick-up truck.
• Do you have a sizeable family or head up a carpool? You may want to think about a minivan, wagon or large sport utility vehicle (SUV).
• Do you live in an area where you need four-wheel drive? You may want to think about an SUV with all-wheel or four-wheel drive.
• Do you travel far or use the car rarely? If you log a lot of miles, you may want to research cars that get good gas mileage, like a hybrid car.
• Do you have a towing requirement -- perhaps you need to tow a horse trailer or a boat? You may want to consider a heavy-duty pick-up truck or an SUV with a towing package.

There's a vast amount of choices for today's car buyer. Knowing what your automobile needs are is the easiest way to begin eliminating some of those options. Eventually, with some additional research, you should be able to narrow the field down considerably.

Photo courtesy Edmunds.com Taken by Scott Jacobs The test drive plays a pivotal role in car buying.

About the Car
When you figure out what car you want (or what cars you want to check out up-close-and-personal -- think "test-drive"), there are some things you want to learn about the car(s) so that you can get the best deal possible when you're ready to buy. You will need to know the average price of the car, so you won't overpay. You can get a good idea of the base price (the price of the car without any special options) by visiting different dealerships and comparing prices and by using the Internet to get price quotes. You should also get an idea of how much the dealer will add on for various options like air conditioning, a cd player or anti-lock brakes. If you can, try to find out what the dealer price is and negotiate up from that figure. According to ConsumerReports, it's actually a lot better to do it that way as opposed to working from the sticker-price down.

In addition to visiting dealerships to do your research, you should also be reading car reviews in magazines and online. You can learn which cars are given high marks for safety, which cars get the best gas mileage, and so on. Once you've narrowed your list down to a few possibilities, you should read as many reviews on those makes and models as you can. Some good places to look for both professional and consumer car reviews are:

• MotorTrend magazine
• ConsumerGuide.com
• Automobile magazine
• Car and Driver.com
• Edmunds.com
• CarReview.com

Another good way to find out about a car is by simply asking your family, friends, co-workers and neighbors. Among all these people, you're bound to find someone that drives or has driven the make or model you're researching.

Finally, if you plan to trade in a car you already own, you want to know the price of your trade-in. Remember that some car dealers make big money paying you way too little for your trade-in. Do your homework and check out what publications, such as the N.A.D.A. Official Used Car Guide, the Kelley Blue Book and the Consumer Reports Used Car Buying Guide, list as the market value of your trade-in. Keep in mind that these estimates are based on cars in good condition with an average of 12,000 miles per year. So, if your car has been driven less than or more than that, the price could go up or down accordingly. If you have enough information, no one will be able to take you for a ride!