Don't Ever Negotiate Based on Monthly Payments

Surprisingly, many car shoppers will go to a dealership and the first thing they'll ask a salesman is "Can I get this car for $500 per month?", or "Which cars can I get for $500 per month". These poor saps have no idea what's in store for them - mainly being ripped off to the extreme.

The truth is, car dealerships don't make much money on the sale of a new vehicle. Their profit usually comes from financing, trade-ins, and add-ons such as warranties and service contracts. If you're only focused on the monthly payment, the dealer can adjust the purchase price, the interest, terms on the financing, and the trade-in allowance to get you the exact monthly payment you're looking for.

The problem is, you'll get ripped off. It's easy for a dealer to get you practically any monthly payment you want - all they have to do is extend the car loan or low-ball you on the trade-in, or any number of other tricks.

Always remember one thing: You need to separate the negotiation of the car price from all the other related transactions. If you have a trade-in, you need to negotiate that separately. If you take out a car loan, you need to negotiate that separately. If you want add-ons, you need to negotiate that separately - you get the idea.

If you separate everything into its own negotiation, there's no room for the dealer to play shell games. While you should have a good idea of what your budget is, do not discuss monthly payments with a car dealer - EVER!