Car-Buying Negotiation Techniques

As a result of the depth and availability of information over the Internet, car buyers have more power than ever before in negotiating with car sellers. The two keys to negotiating a car price are doing your research and avoiding impulsive behavior.
Do Your Research
By consulting the proper resources, you can find out exactly how much a dealer has paid for a new car. Anything above that mark is profit. Your goal is get the best price possible; strategically, you want to minimize the dealer's profit while understanding that the salesperson needs to make a reasonable commission. Investigate manufacturer's special offers before you get to the dealer, and know that the manufacturer's rebates won't cut into the salesperson's commission --- so don't let him convince you otherwise.
Present Your Research
Show the salesperson you know exactly what the car you want is worth. Buyers have a tremendous advantage now with all the information available on the Internet. Print out materials from the Internet and show them to the salesperson. This sets up an objective third-party standard for negotiating terms. If the seller presents you with information she claims raises the prices but is not in your materials, tell her you have to verify that information yourself.
Know the Dealer's Techniques
The classic salesperson technique is, "I have to ask my manager." The salesperson is just trying to set up a good-guy/bad-guy routine, so that you think that she is your friend working for your interests. The fact is, they are partners together and you are your own partner. Don't fall for this play.
"The Feel of the Wheel"
Car salespeople have a saying, "The feel of the wheel seals the deal." Salespeople know that buyers get really excited by the test drive. The smell of the new seats, the brand-new sound system, the tight suspension --- these things get the adrenaline pumping. It's a good idea to take some cars for a spin and go sleep on it so that the adrenaline wears off and you can make a rational decision.
Set Your Limits
It's very easy to get sucked into add-ons --- the extra warranties, the digital radio subscriptions, GPS, the sports performance package. Set your limits before you get there, or else go home with any new information that you might want to process before buying.
Be Able to Walk Away
Cars are a major investment. The negotiating process can easily take an entire day. Trust your research and don't allow yourself to be pressured into anything.
reference Strategies for Smart Car Buyers; Phillip Reed, ed.; 2005
Edmunds Online Car-Buying Resources