Buyers should shop around

CHICAGO — Consumers in the market for a new car this year might be able to drive some hard bargains with auto dealers.

With car sales expected to be down, many dealerships will be desperate for any sale they can get, said Danny Chan, chief executive of AutoBrag.com, a car-shopping comparison Web site that compiles price data from no-haggle dealerships.

"Dealerships are hungry," Chan said.

The slow conditions could prompt many of them to accept better deals as they struggle to keep their doors open, he added.

J.D. Power and Associates is predicting that fewer than 15 million new cars will be sold this year, said Bob Schnorbus, the firm's chief economist. More than 16 million were sold in 2007, according to the firm's data.

For many, economic conditions and low consumer confidence largely have put car purchases on hold.

"Everyone is kind of in a holding pattern," said Philip Reed, Edmunds.com's consumer advice editor. "Consumers, when they don't know what to do, tend to do nothing."

But even though dealers might be hungry to make a deal, don't expect that they'll give in to offers without a fight, Schnorbus said.

In response to the cutback in demand, manufacturers have curtailed production to reduce supply, which is a factor working against the consumer in search of a bargain, Schnorbus said. Dealers also are cutting their orders to manufacturers, reducing the amount of inventory they have on the floor, he said.

That said, they may be willing to accept better deals and lower margins on car sales, while heavily promoting their service departments. But consumers had better do their homework before entering the showroom and be prepared to shop around.

"Buyers are in a reasonably good position to negotiate," Schnorbus said. "Competitive pressures over the last five years have made vehicles more affordable than they have been in decades."

If it's time to retire the old clunker in the garage and you're considering the purchase of a new car, you'll need to prepare before browsing the show floor. Here are tips on how to get a good deal on your new set of wheels:

-- Hit the Web.

The Web has a wealth of automobile information that can help consumers know 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 actual no-haggle dealerships, and shoppers can use those quotes during their negotiations. At Edmunds.com, shoppers have access to information including the automobile's invoice price and the latest incentive offers.

Deals also can be found by expanding 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 might be worth the hassle, he added.

-- Know what you can afford and your loan options.

Before negotiating, it's also important to know exactly how much you can afford.

But don't max out your budget, 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, and it helps to have a cushion.

Experts also advise not extending the term beyond the standard five years to bring down monthly payments. More manufacturers and dealers are offering seven-year car loans; for a $20,000 car, the loan would rack up an additional $5,335 in interest, according to a calculation from LeaseTrader.com.

And investigate loan options before hitting the showroom. Often, credit unions offer favorable automobile financing, Chan said. If opting for dealer financing, make sure you know what interest rate you should be paying before signing, he said.

-- Consider older model years.

When the 2009 models come out and with 2008 cars are still on the lot, the older new cars can be bought at a decent discount for good reason: Their age will cause them to depreciate faster.

Two months before the release of the 2009 Toyota Camry, the 2008 model was being sold to consumers for an average of 5.32 percent below the manufacturer's suggested retail price, Chan said. But during February 2008, when the new model was released, the 2008 model was being sold for an average 10.39 percent below MSRP, he said.