Buying your dream car can be nerve-wracking. With the proper preparation and some basic know-how on negotiating, you can drive away satisfied with the car of your choice.

Avoid coming to the car dealership with only the idea of what car model you want. Clarify for yourself early on which options you are open to, and those you are not. Decide what model, make and year, engine, accessories, etc. you want. If these are not available, what are acceptable substitutes? Often, consumers have been talked into vehicles they do not want in the first place. It also gives you a clear idea up to what point to stay and keep on negotiating, or when to walk away and look for a better deal elsewhere.

Additionally, you should determine how much cash you can let out for a one-time purchase, or for monthly payments. After this, you can research your ideal car's price. This is the price that the dealer actually paid for the car. This information can be taken from several reliable internet sources. You can then setup your own estimate price that is fair for you and reasonable for the dealer by adding up the cost and estimate dealer service cost, then subtract the rebates.
With this initial price in mind, seek out dealers and compare costs. Phone the dealers to give you a feel of how to talk to sales personnel. Write down your list of specifications and questions to facilitate ease of inquiry.
Also consider obtaining a pre-approved car loan. With it, you have a definite price of how much you can afford and do away with worrying about getting a fair loan at the dealership.

When you set foot in a dealership, your preparation can help you feel confident about your potential purchase, making you less susceptible to the often coercive or slick sales talk designed to lead you beyond your car buying budget or expectations. Prepare to give your lowest price and work up. It is easier to ask for a higher price than lowering it down.

Jane Flaherty, a communications expert, suggests several tips when negotiating a car price. One is to reject the first offered price. Sales people throw in some allowance for negotiating. Present the prices given by other dealers and ask "Can you do better than that?" or, "Is that your best offer?" Use non-verbal gestures to aid you. A well-timed facial expression or pause can help get your desired price.

If you do not want to resort to this, at least identify that these gestures may also be used to convince you of higher charges. Also, wait for the sales staff to go first in lowering the price. When you volunteer increasing your price, you give the sales person more power to control the situation.
Negotiating the price you pay for a car does not happen on the day that you venture into the dealership. The negotiation process starts on day you prepare. The more knowledgeable you are about what you want, the more likely you will succeed at negotiating successfully.

References

Federal Citizen Information Center of the U.S. General Services Administration. Consumer Focus: Buying a New Car.
www.pueblo.gsa.gov/cfocus/cfnewcar05/focus.htm

Flaherty, Jane. Have I got a Deal for you! http://negotiatingguide./negotiation/negotiatingyournextcar.htm

Orange County Teachers Federal Credit Union. How to Negotitate a Better Deal on Your New Car.
http://www.octfcu.org/articles/howtonegotiate.asp