Killer car deals out there...somewhere

In today's new car market, a little shopping around could save you thousands.

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By Peter Valdes-Dapena, CNNMoney.com senior writer

dealership.ce.03.jpg
Lots packed with unsold cars mean big dealer discounts on top of hefty manufacturer incentives. But not all dealer discounts are the same.
Prices may vary
Average prices in December at highest-cost vs. lowest-cost dealers.
Model High Low Difference
Audi A6 $53,638 $39,472 35%
Ford Escape $28,208 $21,661 31%
Honda Accord $28,966 $22,036 31%
Toyota Camry $26,665 $20,360 31%
BMW 5-series $55,950 $47,480 18%
BMW 3-series $47,459 $40,924 16%
Source:Edmunds.com

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NEW YORK (CNNMoney.com) -- With auto sales at their lowest levels in 26 years, getting a good deal should be a breeze. But even with deep discounts and generous incentives, what one dealer will charge - compared to another - would still surprise you.

Since July, the typical price variation on the same make and model of car between dealerships has increased substantially, according to research by the automotive Web site Edmunds.com. Back in July, prices varied from dealer to dealer by about 17.4% on average. In December, average variability had increased to about 28%.

The recent average price paid for a BMW 3-series at one dealership was $40,924, according to Edmunds.com. At another, it was $47,459. That's a 16% price difference. For the Honda Accord, prices averaged between $22,036 and $28,966, a 31% difference. And on an Audi A6, average prices ranged from $39,472 to $53,638, for a difference of 35%.

"The risk for consumers is that they just don't happen to shop at the dealer who's selling the car for less," said Jeremy Anwyl, Edmunds.com chief executive.

There are several reasons for those big spreads. One dealer may simply have older cars in inventory, which puts on the pressure to cut extreme deals. Dealers borrow money themselves to buy cars. After about three months, the lender that financed the dealer's own purchase of the car can start demanding payments.

Another reason is that one dealer may simply have a different strategy than another for getting through tough times. While one may try to drum up as much business as possible by offering deep discounts - and taking a lower profit on each sale - another may want to maximize the profits on every unit sold by holding firm on the price, Anwyl said.

Wild differences are also appearing in other places. Auto finance rates are showing huge spreads between dealers, according to Edmunds.com. Shoppers with excellent credit ratings are being offered interest rates anywhere from 4.5% up to 8% on five-year loans, which could mean a difference of thousands of dollars down the line.

It has to do with the different lending institutions, said Anwyl. Some finance companies offer competitive rates; some don't. A good dealer will probably draw on a broader range of financing companies, banks and credit unions, providing more opportunities to get a great rate.

Working the price

The obvious bottom-line here is "Shop around." Healthy competition between dealers will get you the best offer, and the more dealers, the better. It pays to recognize your own value as a customer in the current climate.

"You're a pretty rare commodity right now," said Jack Nerad, managing editorial director for Kelley Blue Book's KBB.com Web site.

Keep that in mind, he said, and you should be less susceptible to "buy now because we might not have this car tomorrow" pressure tactics. Odds are these days that the car will still be there tomorrow, and for some time after that.

By the same token, appearing flexible also helps, suggested Nick Gidwani, chief executive of auto Web site CarZen.com.

"There are some specific configurations of cars that they tend to have too much inventory of," he said. For instance, the manufacturer may have misjudged demand for a particular engine size, leading to big rebates and discounts on V6-equipped cars versus 4-cylinder versions.

Even if you really do want a very specific set of features and color on your car, you should act as if you don't care so much, Gidwani said. Even if you really do want precisely the car this dealer has, try not to let on. When all is said and done, you'll get the car you really want at a better price by making it seem like you're ready to buy some other car somewhere else for less money.

He recommends starting at least three or four negotiations with different dealers before you accept anything

And don't be afraid to make the first move. After you've done your homework - checking various Web sites to find out what other shoppers are paying - use that to come up with a reasonable offer of your own.

"They're going to accept your deal instead of the other way around," Gidwani said.

Working the money

It's always a good idea to shop for financing before you shop for your car, even in good times. Now it's even more important, given that good financing is harder to find.

Start by checking with a local credit union or with a bank you already have an existing relationship with, Gidwani suggested.

Ultimately, you may not want to take the loan - a dealer may still be able to arrange something better - but it helps to have a loan approved before you walk in. If nothing else, it gives you more negotiating power. To top of page

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