How to get the lowest price on a new car

Let's face it -- buying a new car is expensive at the best of times. Here's some tips to help you ensure you get the lowest price possible for your new vehicle.

You've done your research on the car's invoice price. If a car isn't the hottest new thing (meaning, the demand outweighs the supply), you should never have to pay any more than $500 over the invoice price. It's just that simple. The salesman won't be happy and the sales manager won't be happy, but know this — they'd rather sell you the car and make $500 than not sell you the car, especially if that car has been sitting on the lot for a month or two. So go armed with the invoice price, and get the best price possible on the car.

The second-to-last thing any car dealer wants to do is lose money on a sale. So what's the last thing he wants to do? Leave inventory sitting on the lot, says an anonymous New Jersey car dealer. This has a direct correlation to the amount of "holdback" money that the dealership gets from the automaker.

"Holdback" is money meant to offset the costs of keeping the car on the lot, usually distributed in the form of interest payments. The more quickly a dealership moves cars, the more of the holdback money it gets to keep. But as months wear on and cars sit on the lot, the holdback money disappears and the dealership is left holding the bag. Oftentimes, just to move inventory, the dealer will sell cars for less than he paid for them.

While there's no surefire way to know how long the dealer has had your preferred car in inventory, it's safe to bet that as the new model year's cars are coming in, last year's models are primed for sale. So make an offer that's a little below invoice, and see what happens. You may end up pleasantly surprised.

Car dealers who lure you into the showroom with the promise of a low-interest car loan hope that you won't take a second look at their paperwork. However, there are a number of factors that could mean the "deal of the century" is not so generous after all. Here are some questions to ask that will expose car-dealer double-talk.

• Does the loan require an enormous down payment or a "balloon payment" at the end?
• Is the price of the car higher for people who accept low-interest financing?
• Are you given an unusually short period of time to pay the loan off — say, just a couple of years?
• Will you be required to buy extras that you don't want, such as an extended warranty?
• Will you have to give up the rebate offered by the automaker?