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Buying a new or used vehicle is an experience we all have in common. We also share the desire to "get the best deal possible." The following tips can help you in this important decision-making process. 
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How To Determine A Fair Purchase Price
Once you’ve decided on the specific vehicle just right for you, negotiating the "price you will pay" is the next step. You have far greater control over determining this price than you may think. Knowledge is key. The more information you have about the actual dealer cost vs. the manufacturer's suggested retail price (MSRP), commonly referred to as "sticker price," the more effectively you can negotiate the best purchase price.
  1. First, start with the vehicle’s factory invoice price. Officially, that’s the amount the dealer paid for the vehicle. It includes the base cost of the vehicle and all optional equipment. This information is readily available from numerous sources. Within this Web site you can obtain the factory invoice price information vs. MSRP in the Auto Research Center.
  2. Next, subtract any rebates or factory-to-dealer incentives. Cash-back rebates are often prominently advertised, but factory-to-dealer incentives may be a different story. Unadvertised or “hidden” incentives may be hundreds of dollars (or more) the dealer will receive from the manufacturer when the vehicle is sold. Unless you know about such an incentive and ask for it, the dealer will not readily disclose this information. 
  3. Then add any dealer-installed options, such as undercoating, rust proofing, etc. In addition, most manufacturers charge the dealer a national advertising fee, which is added to the cost of the vehicle. Both the advertising fee and destination/delivery charges typically appear on the vehicle window sticker price. While the national advertising fee and destination cost are typically not negotiable, dealer installed options can be negotiated. 
One final word of caution: watch out for “Additional Dealer Markup” (ADM), or “Additional Dealer Profit” (ADP) as it is sometimes called. This additional fee is just what it sounds like – a baseless charge some dealers add to the price of a vehicle to increase their profits. There is no reason to pay this charge unless the vehicle you want is in such extremely high demand the dealer you’re negotiating with is the only one who has it. Otherwise, if you see this charge listed on the sticker, simply refuse to pay it.

Once you have completed the above calculations you will arrive at a bottom line, in essence what it actually will cost the dealer for the vehicle you want. Recognizing dealers are in a business to make a profit, it is only reasonable that they would not want to sell the vehicle to you for this "bottom line" number. Therefore, you will need to decide how much dealer profit you are willing to add to the bottom line. You can calculate this by adding a percentage (for example, 1% to 5%) to the bottom line or a dollar amount (for example, $200.00 to $500.00). Once you determine what price you are willing to pay, including an allowance for dealer profit, simply make this offer to the dealer. It would be presented simply as, "I am willing to pay $XX,XXX for this vehicle." It is then up to the dealer to decide whether they are willing to accept that price. If not, they will make a counter offer and then it is your choice to decide whether you want to pay their counter offer. If you and the dealer cannot reach agreement, find another dealer that offers the same vehicle. If after checking with one or more dealers and none are willing to accept your offer, the probability is you will need to increase your offer to obtain that vehicle.
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How To Negotiate
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If you dread the prospect of negotiating with a car salesperson, you’re not alone – the popularity of certain dealers’ haggle-free pricing policies proves it. Your best bet is to keep things in perspective. While it’s true that an experienced salesman can easily sell in one day as many new cars as you will buy in your lifetime, you’ve done your homework and determined a fair price for the vehicle you want. The only question is which dealer will agree to that price.
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First, NEVER TELL THE DEALER DURING NEGOTIATIONS ON THE PURCHASE PRICE THAT YOU MAY BE TRADING IN YOUR CURRENT VEHICLE OR HOW YOU PLAN TO PAY FOR IT. ALWAYS NEGOTIATE THE PURCHASE PRICE AS THOUGH IT IS A STRAIGHT CASH PURCHASE WITH NO TRADE-IN.
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Once you have arrived at a price you are willing to pay it is recommended you sleep on it overnight. Then, advise the dealer you have changed your mind and now want to trade in your current vehicle. The question is: "How much will you give me on trade for my current vehicle?" This amount would then be subtracted from the previously negotiated purchase price to give you your bottom line cost for the vehicle.
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In terms of financing, you will be making a cash purchase by having your loan pre-approved at the credit union. Often dealers will negotiate a better price with a customer who is paying "cash." The fact that you are obtaining the "cash" in terms of a loan from your credit union should be no concern of theirs. The check you obtain from the credit union will be like "cash" to the dealer.
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How do you determine a fair value for your trade-in?
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Determining a fair value for your current vehicle, if you’ve decided to trade it in rather than sell it privately, is important. This can be accomplished by visiting the Auto Research Center within this Web site. In addition, the credit union has access to other resources, such as Kelley Blue Book and/or NADA Price guides that can be used to calculate a fair value for your current vehicle. While you’re almost certain to get a better price for your current car by selling it yourself, many members prefer the convenience of trading in. Because the used vehicle market varies so widely, ultimately your vehicle is worth whatever someone will pay you for it or what the dealer is willing to offer you as a trade.
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Each of these negotiations – purchase price and trade-in, is completely separate. Keep them that way, even if the dealer tries to combine them – for example, by asking you to name a monthly payment you can live with. Judging the best possible deal becomes quite a bit more complicated when you’re forced to juggle different issues at the same time. Keep focused on each stage of the process, first the purchase price of the vehicle and then the trade in value of your current vehicle. By taking this "focused" approach, you will ultimately end up with the best deal possible. 
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Beware of dealer or manufacturer low financing offers. 
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When it comes to vehicle loans, the lower the interest rate, the better the deal, right? Not necessarily! Even the lowest interest rates dealers advertise, like 2.9% or 0.9%, can come with steep hidden costs and heavy restrictions. For example, the low rate may only be available…
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On very short-term loans, which means higher monthly payments for you.
For a short “introductory” period. The rate could skyrocket at the end of that period, or even sooner as a penalty for making a late payment.
If you have a perfect credit rating.
If you make an unusually large down payment.
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Typically, dealers offer you the choice between a low rate and a cash-back rebate. Because they will almost never let you negotiate both the vehicle’s purchase price and the interest rate, there’s a good chance you’ll have to take the rebate. But that’s not a bad thing. Taking the rebate, deducting it from the cost of the vehicle and financing the balance through your credit union is probably your best deal overall.

Remember, when a dealer offers you a financing package, he is usually acting as a middleman for a bank or finance company that has partnered with the dealership. The dealer has a vested interest in getting you to accept his financing package, since the finance company is probably paying him a commission on each financing package he sells. In other words, his interest is in making money.

Your credit union, on the other hand, has your best interest in mind. Not only are we in the business of making loans to members, but we are a not-for-profit financial institution. That allows us to offer vehicle loans, which usually provide more savings than those of banks, finance companies and car dealerships.

About the only advantage dealer-financing offers is convenience – accept it and you can drive off the lot with your new vehicle and financing. Unfortunately, this will probably be at a higher monthly payment than if you apply the tips being offered. Of course, if you have your credit union vehicle loan pre-approved before you go shopping, you can have financing arranged even before you drive on to the dealer’s lot! And beyond providing you with shopping convenience, pre-approval lets you negotiate from a more secure position by eliminating any doubts about how much vehicle you can afford.