Step 3 of 10 Steps to Buying a New Car ; - Pricing the car

By: Philip Reed, Senior Consumer Advice Editor

Car salesmen will usually point to a car's "sticker price" as the amount you have to pay. However, the price the dealership is willing to sell a car for is often well below the sticker price. How do you know what to pay? Edmunds.com has created a valuable tool for car buyers called True Market Value (TMV®) pricing. Based on actual sales figures, TMV is the average price buyers are paying (also known as the "transaction price") for a certain type of car in your area. The TMV figures, found on Edmunds.com, are adjusted for many factors including options, geographic region and color.

To calculate TMV, begin by looking up the car you want to buy on Edmunds.com. Follow the prompts to arrive at a final TMV price with options for the exact car you are buying. Keep in mind that this price includes the destination charge, which is levied by all manufacturers. (However, the invoice price might vary in certain regions where advertising costs and other fees are included. Edmunds recommends paying the fees listed on the invoice, but questioning any advertising fees that appear on the purchase contract.)

Now it's time to factor in the incentives and rebates you researched and printed in the previous step. Take the final TMV price and deduct the amount of the cash rebate. In other words, you create your best deal based on TMV, and then lower it by whatever the rebate is. If you are going to use low-interest financing, calculate your final buying price, then use our payment calculator to find your monthly payment.

Print these figures — the TMV, the incentives and the monthly payment — and carry them with you for reference as you continue the car-buying process.

Source: edmunds.com

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