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Best Car Deals: 7 Money-Saving Steps

When shopping for a car, it's easy to get hung up on sticker price and, of course, your lust for a particular model. But there are other important factors that you should consider. If 2011 will mean a new set of wheels for you or someone in your family, resolve to follow our check list for car buyers.

Car buying has changed since the days when dealers held the upper hand and you had to endure marathon haggling sessions to get a good deal. Now a diligent buyer can research vehicles carefully, discover a good target price for your chosen car and get competing dealer bids before ever visiting a new car showroom.

To make sure you find the right car and the best price, follow these steps:

1) Think function before form. You may have an image of what you'd like to see in the driveway, but ask yourself if that fantasy car actually fits with your transportation needs. Will you use the car mostly for commuting? Do you often haul a lot of passengers? How important is gas mileage? has a search tool that lets you sort vehicles by features large and small. For instance, you could look for SUVs with seating for more than five that also -- if this is important to you -- has an input for your iPod. From there, you can narrow the list down by price.

2) Be Flexible. Don't be too fixed on one brand. If, for instance, you are looking at small SUVs and need all-wheel drive because you live in a snowy area, compare prices carefully. If you had been looking at an all-wheel drive Ford Escape, priced at $25,565 in the XLT version, consider a Subaru Outback (left). All-wheel drive is standard, and the list price is $24,375. In addition, Subaru has top ratings for safety and resale value.
3) Consider all costs. In addition to the purchase price, gas, insurance and maintenance will determine your total cost of ownership. If you plan to sell or trade that vehicle within a few years, then resale value becomes very important. An tool called True Cost to Own includes all those factors. For instance, the Subaru vs. Ford Escape comparison above still favors the Subaru in five-year total cost -- $40,965 vs. $41,679 for the Escape (right). Much of that difference is in the stronger Subaru resale value.

4) Consider leasing. If you typically get a new car every few years, you may be able to cut your monthly payments sharply by leasing. And you avoid any hassles about selling or trading in your car at the end of the lease. Recently, many of the best promotional deals from auto companies have involved leasing. (See New Cars: 5 of the Best Holiday Deals). On the other hand, if you are comfortable owning a car for many years, buying is the most economical choice since you will have several years with no payments.

5) If you buy, get financing in advance. If have good credit, try to get a pre-approved car loan from your bank or credit union. Then, after agreeing on a price, let the dealer try to beat your bank's financing offer. Otherwise, you might negotiate a good purchase price on a car only to give back your advantage in the cost of dealer financing. If your credit is dicey, however, high rates at the dealership might be your only financing option.

6) Know your target price. Once you have decided on your target car, find out your target price. Statistics such as True Market Value, or TMV, show you the average price paid for that vehicle in your area. Similar data is available at In addition, TrueCar features a Best Local Price, which is not only the lowest price in the area but an offer to sell the car at that price by a specific dealer.

7) Get several price quotes and negotiate. Try to deal with the Internet manager at a dealership, who will give you less sales pitch and more specifics. Ask for his best price offer. Compare it with your target price and quotes from other dealerships. Take your best offer and counter with a slightly lower price. You may just get it.

If you follow these steps, you will wind up with the car you need at a price you can afford without having undergone too much hassle.

Photos courtesy of the manufacturers.

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