It's time to scoop up year-end car deals

Are you looking to score a great deal on a new car or truck before the end of the year?

If so, you picked a great time to shop.

This is the month dealers are anxious to meet — or soundly beat — their annual sales goals.

That means they're more inclined to entertain rock-bottom offers if you're a serious buyer ready to drive a new car or truck off their lot before 2014 arrives.

But you still have to do your homework beforehand and know how to negotiate the best deal. Here are our 5 tips for savvy end-of-year car shopping.

Tip 1. Clear your calendar

Don’t visit the dealership when you’re in a hurry and your mind is on other tasks, like holiday shopping or New Year’s Eve parties. Instead, plan to spend an ample amount of time on the lot. If you’re relaxed and not rushed, you can be patient while negotiating your price for the vehicle.

Let the salespeople be in a hurry instead. Some car experts say showing up an hour or two before closing — when everyone is anxious to get home to their families — is one way to give yourself leverage. The sales manager may be more likely to accept the (lower) price that you offer.

Tip 2. Know exactly how much you have to spend

Average new-car loans grow

Getting a car loan is slightly easier, but they've gotten longer over the past 12 months.

Characteristic Q3 2012 Q3 2013
Amount financed $25,963 $26,719
Monthly payment $464 $458
Loan term (months) 64 65
Source: Experian Information Solutions

Start by applying the 20/4/10 rule.

It says you should put down at least 20% on a vehicle, finance it for no more than four years and not let your total monthly vehicle expense (including principal, interest and insurance) exceed 10% of your gross income.

So grab your pay stubs and determine your household's monthly gross income — that's how much you and your spouse make before any taxes or expenses are deducted.

Then find your most recent auto insurance bills, and figure out how much you're spending per month on premiums.

Take 10% of your gross monthly income, and subtract the monthly insurance premiums.

That is the monthly car payment you can afford to make.

Now go to our auto loan calculator.

Click the circle at the top that says you want to calculate the "Total purchase price."

Enter the monthly payment you can afford, and choose to finance the balance over 48 months, as the 20/4/10 rule suggests.

Put in how much you have for a down payment or trade-in, and use 4.13% for the interest rate. That's the current average cost of 4-year, new-car loans, according to our weekly surveys of major lenders.

Put zero in the fields for taxable and nontaxable fees, and enter the sales tax rate for where you live and license your cars and trucks. Remember that the sales tax rate on vehicles may be different than it is for everyday expenses such as food and clothes.

Hit the "Calculate" button and the "Total purchase price" will appear in the gray box. That's how much you can afford to spend.

Tip 3. Choose the make and model you want before hitting the showroom

Once you know how much money you have to spend, look for cars that fit the bill on auto research sites like Edmunds or Kelley Blue Book.

Do your window shopping at the computer, so you won’t be tempted to overspend on a higher-end car when you go to the dealer.

The auto research sites will not only show you the price the dealer paid for a car, but the average transaction price — what the typical buyer in your area is paying to drive it off the lot.

Your goal is to pay somewhere below the invoice price and the average transaction price for a car.

These sites will also show you all of the year-end rebates and cut-rate financing automakers are offering.

We're particularly excited to see 0% loans are back in a big way this holiday season.

Remember that the best car deals are likely to be on 2013 models.

7 cars people buy again and again

Before you buy, check out some of our favorite cars and trucks:

-- 7 great SUVs for winter

-- 8 best commuting cars

-- 8 great new rides for 2014

-- 7 cars people buy again and again

Tip 4. Line up financing a few days beforehand

Get a loan approved with a bank or credit union before you visit the lot, and you may be able to do better than average national interest rate, especially if you have good credit.

Search our database of current car loan rates from scores of other lenders in your area to see if you can find a better deal.

Even if you can’t, you’ll probably end up with approved financing that’s better than what the dealer financing manager would offer you. With many lenders, you’ll know in minutes whether you’ve been approved, and you can receive funding within a day or two.

When you walk into a dealership with funding in hand, you’re in a better position to negotiate the price of the auto, without worrying that the dealer will add unfair expenses to the cost of any financing package.

Auto loans are incredibly cheap

Interest rates are just off their record lows set this fall, but still incredibly inexpensive.

Term Average rate Record rate
36-month new 4.03% 3.77%
48-month new 4.13% 3.90%
60-month new 4.22% 4.00%
36-month used 4.72% 4.47%
As of Dec. 20, 2013

But the financing manager may offer you a better financing than your approved loan. For example, you could qualify for 0% interest, and free financing is the best discount on most cars and trucks.

If you get a better loan from the dealer, you can go with his or her financing.

Tip 5. Make an offer

When you visit the dealership, let the salesperson know that you’re not just kicking tires. You’re ready to buy today.

When you’ve picked out your vehicle, ask the salesperson how much he or she wants for the car. If the answer is below sticker price, it’s a good sign. Respond with a counteroffer that’s only slightly above invoice.

After some back and forth between you, the salesperson and the sales manager, your goal is to reach the price you decided on in Tip 3.

For more negotiating strategies, read 5 simple tips to the get the best deal on a new car or truck..

If the sales manager accepts your offer, you’ve got a deal and you can ring in the New Year with a new ride. If not, you’ll know that it’s time to politely leave and try another dealer before the celebration can begin.