Stop and go: Buying a used car in 7 steps

DEALER ROUTE

STOP 5: When negotiating with a dealer, first and foremost, don’t talk about monthly payments. Some focus on monthly payments to get customers to pay more than they realize. Other dealers haul out “four square” work sheets, which condense all aspects of the deal, from trade-in to financing, into a single transaction. But you need to focus like a laser on the total price of the car.

Rob Gentile of Consumer Reports advises buyers to separate every aspect of the negotiating process.

“First talk about price, then financing, then extras like warranties, and then, and only then, talk about the value of any trade-in car you might have,” he says. Otherwise, navigating the price for all of those at once can be confusing at best, and a huge financial mistake at worst.

Since you’re already armed with the current market price of the car, you know where to start negotiating. Experts recommend bidding slightly below market price and working up. Don’t be distracted by a salesman who immediately drops $1,000 or even $2,000 from the sticker price, calling it a “special sale.” These guys are in it to squeeze out every dollar, and you should be too.

Same goes for financing. Since you know what loan rate you’re pre-qualified for, listen to the dealer’s offer and negotiate. Show them your quote and ask if they’ll beat it. Odds are they will, since dealers make money on financing too.

“If you don’t like the offer, you can take the contract on the car and go right to your financial institution and they’ll cut you a check,” says Jerry Neemann, executive vice president of Credit Union Direct Lending, which coordinates car loans for 650 credit unions nationwide.

It’s important to have a maximum price in mind before you begin and, no matter what, don’t exceed it. If the dealer won’t budge, walk away -- you may just find he’ll suddenly be more flexible. And once you work out a price, get it in writing.

PRIVATE SELLER

STOP 5: If you buy on a site like EBay, there’s no negotiating involved, of course. The winning bid is the price you pay. But for all other transactions -- and last year there were 14.5 million private-party sales nationwide -- the biggest trick is getting the seller to face reality.

Car owners tend to think their baby is worth more than it is. Come equipped with printouts from car value websites that show exactly what the vehicle is worth, and whip them out if negotiations stagnate. Most of the time, says Kelley Blue Book’s Nerad, “sellers are eager to just finish the deal.”

Finally, don’t forget to figure out who actually owns the car. If the seller hasn’t paid off his loan, the car belongs to the bank, and odds are that the bank holds the title. Make sure that the original loan will be paid off, or you could have a real problem.