The Art Of The Deal - buying a car

Homework and a good dealer relationship can save you money.

Ready to buy a new set of wheels? You'll probably head out to your local dealer, let him guide you to models that fit your budget and then take them for a test-drive, right?

If you answered yes, you're practically begging to be taken for a ride, according to Pamela Rodgers and Shirley Gross-Moore. They should know; both sisters are owners of large auto dealerships. Price, while undoubtedly a major factor in your decision, is only part of the equation. And most people calculate the price of a car incorrectly.

Rodgers and Gross-Moore say that before you even set foot inside a dealer showroom, you should know basically what kind of car you're looking for, which features it must have and the absolute maximum price--including taxes, license and fees--you're going to spend. Even then, you're not ready to shop for your car until you've shopped for the right dealer.

"There are plenty of dealers who would love to have your business," says Gross-Moore, owner of Barrington Dodge in Barrington, Illinois, near Chicago. Pamela Rodgers of Rodgers Chevrolet in Woodhaven, Michigan, just outside Detroit, agrees. "Our dollars are our power," she says. "We should not support those dealerships who would take advantage of us based on our race or gender."

Indeed. A study of Nissan Motors Acceptance Corp. conducted by Howard University business professor Debby Lindsey-Taliafero, Ph.D., concluded that on average, Blacks paid as much as 90.9 percent more for car loans than their White counterparts.

If you do your homework ahead of time, you can be in the driver's seat when it comes to buying your next new car. Begin by analyzing your needs and figuring out what your new ride should cost. Rodgers and Gross-Moore recommend that you answer these questions to ease the process.

1. What can you honestly afford? Include maintenance, insurance and registration, which most folks forget when they do the math.
2. What are your driving habits? If you'll be putting lots of miles on the car, fuel efficiency is a major concern. Will a compact pop-up trunk hold the kids' sports gear?
3. What features are most important to you? If you need four-wheel drive, for instance, don't assume that you must buy a sports-utility vehicle. Lots of smaller cars can give you that.
4. Which current models fit your needs? This should be obvious, but a lot of us choose a car based on its looks rather than its functions.
Narrow your choices down to three vehicles, and then do your research. There are many resources you can consult that will help you gather all the data you need to make informed choices. Use the library, newspapers, magazines and the Internet, as well as advice from friends and family who own similar cars.

All of this research may seem tedious, but until you've put in the time and energy you won't know a good value from a bad one. You could get the best price imaginable, but if the car doesn't fit your lifestyle, it just isn't the right car for you. And if the car doesn't serve your needs, you got a bad deal.

Once you figure out what you need, then, and only then, should you visit dealerships--but only to test-drive, not to talk numbers. You might consider taking along a friend who can help rein you in if you get caught up with a fast-talking salesperson. You need to test all the cars on your list before you make a decision. If you feel the salesperson is pressuring you to make a decision right then and there, you've got reason to be distrustful. The best time to test-drive cars is on a weekday when dealerships are slow; you'll find the salespeople are more relaxed than on a weekend.

After you decide on a particular make and model, Rodgers suggests you "shop at least three dealers for price, basing your comparison on the exact same model and options." It is important to note that you are not only looking for a car at this point, you are also looking for a dealer you can feel comfortable working with.

Buying your vehicle should be a pleasant experience, and whom you do business with should be a major part of the equation. Does the salesperson treat you with courtesy and respect? What type of services does the dealership offer?
When you find the car and the dealership, Gross-Moore suggests you wait until the last two weeks of a month to make your deal. Dealers are always anxious to get rid of "old" new cars to make room for "new" new cars. "You will find your salesperson more willing to negotiate at the end of the month to make their numbers," she says.
You should also be aware that like a hot fall wardrobe, new cars have seasons. "The best time to buy is at the end of the model year; that means August through December," says Gross-Moore. So if you can keep your clunker running for a while longer without endangering your safety, it's best to shoot for that window of time. Also be on the lookout for special rebates and incentives. (Web sites such as edmunds.com list them.)

Another major consideration is the relative popularity of the car you're interested in. Rodgers says, "The price of a vehicle is often driven by market demands and fluctuations." If a particular vehicle is in high demand, it may not, be as negotiable as a model that's less popular. Got your heart set on a Corvette or a PT Cruiser? Expect to pay the sticker price. On the other hand, if you're looking at a Malibu or a Neon, you'll find dealers willing to negotiate.

In the house: buying a home before you're thirty

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I became a true believer the day I sold my first home and walked away, at age 32, with more money than I thought I'd make in a lifetime. This is the answer! I shrieked to myself, suddenly aware of the true magic of real estate.

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The check was for four times the price I had paid for my one-bedroom apartment when I had bought it four years earlier at age 28. Before then I had been audited by the, IRS three years running. I was single, with no dependents or other deductions, and it seemed the little extra money I made freelancing always ended up being owed to the government at the end of the year. "Buy something," my boss at the time simply told me one day. He was male, White and rich and knew a thing or two about American capitalism. The main thing, he pointed out, is that it's a system that's set up to benefit property owners.

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For starters, as a home owner you can deduct proctically all of your mortgage costs from your income, thus reducing the amount of income on which you will be taxed. You can build up equity (value), or you can hold your property and leverage it (borrow against it) for additional capital to do anything from going back to school or putting the kids through school, to renovating the house or starting your own business.

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Once I became a home owner I got tax relief almost immediately: For three years in a row I had owed money to the government; the first year after I bought my house I got a $7,700 tax refund. Furthermore, with the tidy profit I made four years later, I was able to buy a larger apartment and a vacation home, and I financed my own real-estate business. As I said, I became a true believer.

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Unfortunately, though, buying a home is something too many of us believe can be done only when we're older, married or more financially secure. Yet property ownership is the sure route to financial security--with or without a mate--and today it's easier to achieve than ever before, thanks to a number of first-time home-buyers' programs.
Buying a home is the biggest investment you're likely to make, but the potential for immense profits makes it more than worth taking the plunge.