In addition to price research, it’s smart to remember a few other factors when you start to negotiate:

• If you plan to replace an old car, consider its potential trade-in value, or what the dealer would credit you to offset the cost of your new car. You can research your vehicle’s likely trade-in value — determined by its make and model, age, mileage, condition, and features — at www.kbb.com (opens new window), or Kelley Blue Book, a well-known source of used-car data. (This source so widely accepted that many people refer to a used car’s worth as its blue-book value). It’s usually not a good idea to wait to determine trade-in value until you get to the dealership, although many salespeople will offer to check it for you. You might be so excited about a new car that you overlook your trade-in’s true value — car dealers understand this tendency and might take advantage of it.
• When you buy a car — the time of year, month, and even the week — can affect its cost. Each year’s car model is introduced at the start of the model year, usually August, September, or October, even as early as May in some instances. At that point, dealers are eager to move last year’s models off their lots, and often cut prices. For instance, you might get a break on a 2006 car in September, when the 2007 models arrive. But there may also be deals throughout the year. Some dealerships are anxious to meet monthly or quarterly sales targets, and may slash prices at the end of those periods. And since business tends to be slow midweek, idle salespeople may be more likely to make a deal then. Additionally, if a particular car’s style in the upcoming model year is changing significantly, this may be another reason a dealership is anxious to sell remaining inventories of the current year’s model.
• If you plan to pay cash instead of financing your car, a dealer might be less willing to budge on price. That’s because many car dealers make more profit from their “F&I” — or finance and insurance — departments than from actually selling cars. You might get around this issue by not revealing that you’re paying cash until you’ve settled on a price.