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Step 1: Determine the amount
Question your credit union about a loan before talking to a dealer to compare rates. Find out how much cash your credit union will approve. This helps you limit the price range of cars you look at and test drive.

Step 2: Research invoice price
Go online to research the invoice price -- the amount the dealer pays the manufacturer -- before starting negotiations. While you're at it, check out any rebate information and hidden incentives for the dealer. You gain the advantage by doing your homework.

Tip
The minimum dealer profit is usually around 3 percent.

Step 3: Examine four-square numbers
Don't be fooled by the dealer's four-square information -- a worksheet the dealer will present you with when you sit down to negotiate that maps out purchase price, down payment, monthly payment, and trade-in value. Doing your own math prevents them from fudging numbers. Determine the interest rate and loan term before you arrive at the dealership to accurately project your monthly payments.

Step 4: Know what monthly payment means
Resist negotiating based on monthly payments alone, without contemplating the swelling interest rate or stretched loan term. Monthly payment results from the down payment, loan term, and interest rate.

Step 5: Play the game
Play the game as well as they do. Be surprised that they can't give you a better offer, even if the terms and price are reasonable, just to see if you can move them. They want to create pressure to close you now, but you have time that they don't -- use it.

Tip
Don't tell one dealer what another's quote was. You need their respect -- demonstrate that you deserve it.

Step 6: Drive the bargain
Tell the salesperson you will discuss an acceptable trade-in price for your old car, but first must have a satisfactory price on the new car. Drive the bargain when negotiating, impressing upon them you can sell it yourself for more than they'll pay you.

Step 7: Prepare to walk
Prepare to walk out if you are not handled respectfully or the price is too outrageous. In fact, with some due diligence, cut to the chase and play hardball -- tell the dealer your price and expect a yes or no.

Step 8: Expect fees
Expect an onslaught of fees and extras just when you think you're done. Some fees are unavoidable, but many can be easily bargained down or avoided. Virtually all extras are unnecessary and overpriced. Throughout the negotiation process, use your knowledge and the research you've done to get the best deal.

Did You Know?
Preston Tucker started a new car company on the back of his 1948 Tucker model. This company manufactured just 51 cars before failing in 1949.