Three Things to Never Say at a Dealership When You're Buying a New Car

When you're negotiating for a new car, watch what you tell the sales person. I've been writing about personal finance for 6 years and have purchased 10 new vehicles over the years, gaining more skill each time. One of the things I've learned is never to say anything that gives more power to the dealer. An experienced car sales person picks up on certain phrases and uses them to wring more money out of you. Here are three things you should never say when you're at a dealership:

1) Wow, I love this car! It's exactly what I want. Most car models are available in abundance. If you don't come to an agreement on the vehicle you want at a particular dealership, you can most likely find a similar car at a dealer down the road. Car salesmen don't want you to know this. They depend on emotional decisions, so they lick their chops in eager anticipation of a hefty commission when you fall in love with a certain car.

You might already have designs on a certain model based on your initial research, and you can't contain your glee when you finally see the car in person. Or maybe you fall in love during the test drive, just as the sales person hopes you will. Smart sales people know they can squeeze more money out of you if you really, really want that car. They'll play on that desire, and they might even imply that someone else is interested in that same vehicle to push you into a snap decision.

Offset this by narrowing down the type of car you want and searching dealer inventories online. If you're looking for a common model and you live in a well-populated area, you'll probably find plenty in stock at several dealers. When you visit the first dealership, play it cool. Instead of gushing over the car, make neutral comments like, "Yes, it has some nice features. I could live with this model if the price is right."

If the sales person won't negotiate and you know the price is too high, head out to another dealership. Chances are you won't make it to the door before you're intercepted with a better offer. If not, the other dealer might be more willing to give you a fair price.

2) I want to spend $199 (or $299 or whatever) on my monthly payment. As soon as you let a sales person know how much you can afford to spend, he or she will make sure that you pay that full amount. Many sales people will ask how much you can pay, and when you say an amount, they'll add, "And up to?" as a ploy to get you to go a little higher.

Avoid this pitfall by refusing to discuss payments until you've agreed on a bottom line price. Better yet, have a pre-approved loan elsewhere before you start shopping around. This allows you to pit the dealer against the credit union for the financing. Go with your pre-approved loan if the dealership's finance department can't give you a better interest rate.

3) I have bad credit, so I really, really hope you can help me. Making this statement is like painting a target on your back and heading out to a shooting range. It takes away your bargaining ability because the sales person will act like he or she is doing you a big favor and that you need to take whatever vehicle you're offered.

Bad credit gets in the way of financing a car, so fix it up as much as possible before you start shopping. You're entitled to free copies of your three credit reports every year, so order them from www.annualcreditreport.com before your car search begins. Look for mistakes that are making your credit worse than it needs to be, like on-time payments marked as late. Dispute them for free on the credit bureau websites. The law requires removal if the bureaus can't verify the negative information, according to the Federal Trade Commission.

Once your credit report is cleaned up as much as possible, approach your credit union or the bank with which you normally do business and see if they'll give you a pre-approved. They might not be able to if your credit score is still too low, but it's worth a try. Having that pre-approved loan takes away the dealer's ability to hold bad credit over your head.

If you can't get your own financing, don't let the sales person act like he or she is doing you a favor by working with you. Many people have dings on their credit histories caused by rough patches in the bad economy. Take your business elsewhere if you're not treated like a valued customer.