Should you tell a car salesman how much you owe?

Don't let the dealer take out a credit report for you. Once the dealer knows your credit score, it can affect negotiations for the car you're interested in buying. It's best to tell the seller that all they care about is getting the best price for the vehicle. This is the biggest mistake a buyer can make.

Often, the dealership focuses on a monthly payment scheme, insisting they're getting a great deal, but at the end of the day they won't really know what they paid, Gentile advises. Even though the monthly payment is the most important factor for many buyers, you should never discuss this with the dealer during negotiations. If you live near a Carmax, you can take your car there and see what they will offer you in a direct purchase. Car dealers have tried to condition the public to give that information naturally because it is a big advantage for them.

The other pitfall is that if the dealer knows they owe you a certain amount for the trade-in, it might be more difficult to get them to give up the MSRP of the car they are buying. It's also natural for a car salesman to ask a buyer what they do for a living during the course of a conversation. If I spend six hours with you and you're not realistic (at the end of the day there are so many people out there who don't understand simple mathematics) and I don't sell you a car, it's another day that I don't earn anything. Keep in mind that people may be in a position where they owe more money for their current car than it's worth, and then they need to add that amount to the price of the new car.

It can be a pain to have two cars for a while, but the thousands more you could win will make up for it. You wouldn't negotiate with a car salesman without the average car price; nor should you negotiate a car loan without information. But for now, they will dance the numbers and show you how much they would pay for the new car as part of their negotiations. They'll need to know before the deal ends, unless you're going to pay for it before you change the car (in which case you can make things easier if you go ahead and pay for it).

Car dealers expect you to fall in love with a vehicle, the logic being that if they know you love the car, you could overrate it in your head. There are times of the year when certain incentive programs tend to be quite generous, so look for them, especially when you're looking for a new car. I generally advise my friends to buy from Hyundai, Toyota, Lexus and Mazda, and avoid cars from Italy and the UK at all costs. Dealers often include monthly payments in negotiations to confuse the buyer about what they are actually paying for the car.

Don't use KBB, it can be tremendously imprecise and people ALWAYS think that their car is in better condition than it actually is.