How to negotiate for a car or appliance

Buying a new car
What you need to know:
• The manufacturer's suggested retail price (MSRP), the published price, is what the dealer would like to make, but not what he expects to make. If you can get $500 to $1,000 off that price, you may be getting a good deal.

• The dealer doesn't pay the MSRP for the car -- he has a variety of discounts that are applied to that price.

• The dealer cost price. It includes every discount the dealer gets, so you know exactly what he paid for the car he's trying to sell you. (Find it at carcostcanada.com or ask the dealer directly.)

• The dealer's "hold back" incentive. The car manufacturer pays this amount to the dealer to cover overhead for keeping a vehicle. The longer a car stays on the lot, the less of a hold-back the dealer gets (it's an incentive to make dealers sell cars fast), so a dealer may be anxious to sell a car that's been on the lot for a while and ready to cut a better deal.

• Dealers make their money from financing, not the amount you pay for the car. The rust proofing, paint, seat protectors and the extended warranty also put real dollars into the dealer's pocket.

• Extended warranties are probably a waste of money. Most people don't own their cars for as long as these warranties last. And the engine, transmission and driveline are all covered by manufacturers' warranties of between five and eight years. What's more, extended warranties tend to have deductibles, exclusions and exceptions. (Car manufacturers have teams of professional actuaries who've already crunched the numbers -- the warranties cost about $3,000 and the actuaries have already figured out that they don't pay out that amount, on average.)

• Cars that are in demand always cost more. That's true of most things: if you have to have the latest and greatest, it will be priced at, or close to, the MSRP.