The smart way to buy a car

Everyone loves getting a new car. No one enjoys buying one.

A car is the second-largest purchase most of us ever make, and the buying process tends to be miserable, driven by fear and the mismatched calculus of

dealer-customer negotiation. Dealers do this for a living; you don't.

Many of us get talked into high-priced options and worthless add-ons. Almost everyone feels that someone else got a better deal than they did. Does it have to be this way? Here's a point-form guide to smart car buying.

Start with clear research. Decide which category of car best fits your needs, and list every car in the category. Check out the reliability and service costs of each candidate – websites such as consumerreports.org and

autos.jdpower.com provide good information.

Look up the safety rating of each car on your list. One source is the Insurance Institute for Highway Safety. (iihs.org)

Be fuel smart. Government agencies such as Natural Resources Canada and the U.S. Department of Energy have websites where you can compare the fuel economy of cars you're interested in.

Visit a series of dealers to look at cars that interest you. Test drive each car, but don't buy. Closely inspect each candidate car to see if it meets your requirements – seat comfort, cargo space, ease of entry, etc.

Take extended test drives that include multiple environments. Drive on city streets and a highway. Try parallel parking and driving over potholes.

Make a list of must-have functional features. If you live in a snowy area, a top-notch all-wheel drive system and heated seats may be on your list. Upgraded headlights add safety and reduce the stress of night driving.

Avoid options that increase cost without adding function. Features such as luxury wood trim, high-end sound systems and sunroofs can add thousands to the cost of a car, but provide little if any return on resale.

If value is a major concern, base your car choice on overall cost of ownership. The true cost of a car is the purchase price, plus interest costs and repairs, less the amount you will recoup when you sell or trade it. A car with high depreciation or poor reliability may cost far more than you expect.

Price guides are your friend. Once you have narrowed your choice to a specific car, use online price guides to see what the dealer pays for it and what the average sale price is.

Don't get sucked into the payments game. Car dealers focus on selling finance packages that add to their profit. A low monthly payment often translates into higher overall costs for you, since the loan will have a longer amortization period.

Leasing isn't a good deal for the average buyer. For most, purchasing a car costs less than leasing it once total costs are taken into account. Talk to an accountant about whether leasing is the right choice for you. If your car is a business write-off, leasing may be a good choice, since it simplifies accounting.

Avoid face-to-face price negotiation. Collect e-mail addresses for sales managers at multiple dealerships and send a message detailing the exact vehicle you want, including options and ask for their best price. Specify that the price must include all fees, delivery charges and taxes. After you have received a response from each dealer, you can use the best price you get as leverage for a second or third round of bids.

Once you have negotiated the price, ask the dealer to confirm and to contact you when the paperwork is ready to sign. In your message, make it clear that you don't want any dealer add-ons such as paint and fabric protection, aftermarket rust proofing, or prepaid service plans.

When you go to the dealer to sign the paperwork, confirm that the price and conditions match what you agreed to. If they don't, walk away.

Don't buy a car unless you need to. Modern cars last longer than the cars our parents drove and the biggest depreciation hit is in the first few years of ownership.

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