Once you know which car you want to buy and how much you can spend from your budget, you are ready to begin negotiations. Do your homework to find out how much the dealer paid for the car, or the dealer invoice, the rebates that are available, how much the holdback from the manufacturer is, the amounts of the total markup, and the MSRP.

Start your negotiations at the dealer invoice. If the company you are working with won’t share the dealer invoice, go someplace that will. Most car dealerships will share this information with you. Often you can buy a car for invoice plus $100–$500, and sometimes you can negotiate for even less.

The dealer’s inventory often impacts how much of a difference there is between the invoice price and the price that the dealer will sell the vehicle for. The fewer the number of available cars and the more people who want those cars, the more the dealership will charge—this follows the basic principle of supply and demand. The calendar date may also affect how willing the dealer is to work with you on price. The end of a month or year is a particularly good time to buy because salespeople have quotas they want to reach, and they are therefore more willing to negotiate.

Remember that no matter what price you negotiate, there are many other fees that you will be expected to pay on top of the sale price. For example, if you and the dealer agree on a price of $30,000 and a trade-in credit of $5,000, the difference is $25,000. But in addition to that $25,000, you will need to pay for state tax and documentation, registration, and licensing fees. You will either pay for these costs in cash or finance them along with the price of your vehicle. In addition, if you lease a vehicle, you may also have to pay an acquisition and termination fee. Know that most of these fees—except for title, documentation, and licensing fees—are negotiable before you purchase or lease the vehicle.