Be a Smart Consumer

The first time Alva Foster bought a car, she negotiated a price on the sales lot, took the dealer financing and, at the salesman's suggestion, purchased clear-coat protection for the paint job and waterproofing for the interior.

"I went for all the extras, and I know now that I paid thousands more than was necessary," says Alva, who works as a paralegal at the Pentagon in Washington, D.C.

That was several years ago. More recently, when she went to buy a sport-utility vehicle, she brought along on her shopping trip a binder filled with pricing and product information, safety reports from the National Highway Traffic Administration, preapproved financing from her credit union, and, most importantly, a firm and fair price of what she wanted to pay. A few hours later she drove away in her vehicle of choice -- purchased on her terms, with no expensive extras or add-ons.

What made the difference was the Internet.

Like tens of millions of Americans, Alva invested time in online research, becoming a well-educated consumer before ever kicking a tire. She learned about invoice prices and hidden rebates, and she received several price quotes from dealers before she ever left home. Although she did her own negotiating at the store, she could have even avoided that, too, and purchased through an online referral/broker service.

E-commerce has changed buying a car in America, though not to the degree envisioned a few years ago. Back then, experts predicted the demise of dealerships and a future where consumers bought direct from the factory.

Most buyers still want test-drives, still want to touch and smell the car before driving it off the lot. Dealers who feared being marginalized by the Internet pressured car companies and state legislatures to strengthen franchise laws, even outlaw direct-buy Web sites. As a result, you cannot buy a car direct from the factory, and dealers are part of any Internet purchase, even if you're going through a broker.