Consumers in the market for a new car this year may be able to drive some hard bargains.
With car sales down this year, many dealerships will be desperate for any sale they can get, said Danny Chan, CEO of AutoBrag.com, a Web site that compiles price data from no-haggle dealerships.
"Consumers when they don't know what to do, tend to do nothing," adds Philip Reed, of Edmunds.com.
But don't expect dealers to just give in to your offers, says said Bob Schnorbus, J.D. Power and Associates chief economist.
Inventories have fallen and underwriting standards for car loans have gotten stricter, he said.
"I don't think that the auto companies are mentally or financially able to go back to wild incentive days," he said.
That said, they may be willing to accept better deals and lower margins on sales, while heavily promoting their service departments.
That said, here are five tips on how to get a deal on your new wheels:
1Hit the Internet. The Web has a wealth of information that can tell consumers how much they should be paying for a car and what deals they can get.
AutoBrag.com tells consumers how much cars are selling for at no-haggle dealerships, and shoppers can use those quotes in their negotiation. At Edmunds and Cars.com, which is affiliated with the Chicago Tribune, shoppers have access to the automobile's invoice price and the latest incentive offers.
If you know what you want, pick up the phone, ask for a manager and make a deal, said Jim Camp, a negotiation expert and author of the book "Start with No." Going to the manager cuts down on negotiation time, and the quickest way to get to him or her may be on the phone.
Expand your online search to dealers beyond your immediate area, Camp said. Even if the best deal is states away and the automobile needs to be transported to you, it may be worth the hassle, he added.
2Know what you can afford and your loan options. Before negotiating, know how much you can afford. But don't max out, said Michael Royce, a former car salesman turned consumer advocate and owner of the site BeatTheCarSalesman.com. Sometimes people forget about the other expenses that come with a car, including insurance.
Experts also advise not extending the term beyond five years. More manufacturers and dealers are offering seven-year car loans; for a $20,000 car, the loan would add $5,335 in interest, according to LeaseTrader.com.
Investigate loan options before hitting the showroom. Often, credit unions offer favorable automobile financing, Chan said. If opting for dealer financing, know what interest rate you should be paying before signing, he said.
3Consider older model years. With 2008 models on the lot, older new cars can be bought at a decent discount for good reason — faster depreciation.
Two months before the release of the 2009 Toyota Camry, the 2008 was being sold for an average of 5.32 percent less than the manufacturer's suggested retail price, Chan said, But when the new model was released, the 2008 sold for an average 10.39 percent below MSRP.
This story posted by LeaseTrader.com, the automotive service company that lets people transfer out of their Car Leases early. If you're looking to swap a lease or transfer out of your car lease, please visit www.leasetrader.com