Buying a car, new or used, is a big expenditure. Unfortunately, most people go to the car dealership thinking they have to pay the full sticker price of the car, not realizing there are many ways to save money. It's also important to know how the dealers make their money on each car sale. Such knowledge will help you get the very best price on your next vehicle.

1) Find out the value of the car.

Do your homework and research your car choices before attending a new car sale or purchasing a used car. You'll want to know the true value of the car you wish to buy as well as the value of your current car if you wish to trade it in.

Check out the car maker's website to research the factory list price for the model of car you're interested in. For example, Ford's website (http://www.ford.com/) offers an online vehicle showroom where you can choose your next new car and pick the price range.

Go to several different dealers and research different deals on the same car before purchasing it. A lot of dealers' prices will differ on the same make and model. Check out the wealth of information on http://www.carsguide.news.com.au which offers price comparisons on your new or used car as well as tips to help you when you purchase.

The Red Book (http://www.redbookasiapacific.com/au/) is an excellent resource to see how much a used or new car is worth. Car dealers make money by marking up the price, as do private sales. Knowing that a car is unfairly priced will help you to save hundreds, if not thousands of dollars.

2) Get the proper financing.

Car dealers can make a bundle of money selling you more car than you can afford by offering you financing for a longer period of time. You can also expect to pay more for lease options if you're not careful. Banks and finance companies typically offer a lower interest rate than car dealerships. You can also look into financing from the manufacturer of the car for saleyou'll pay much less in interest than on a loan from the dealer.

Banks take longer to grant approval than finance companies, which can often approve your loan online in minutes.

Never pay for a new or used car on a credit card, as you'll be paying lots more in interest rates. One of the very best tactics is to get pre-approved for the purchase of a used or new car at a financing institution before you go car shopping. When you're shopping, don't tell the car sales associate. A lot of times the car dealer will cut the price of your car, thinking they'll make money on the financing later. It will be too late to change the price on the car once they realize you already having financing.

3) Buy at the right time of the month.

Most car salesmen work on commission and get incentives for selling the most cars. By the end of the month they know if they need to up their sales and they'll be more persuasive and aggressive to get that one last sale. However, you can use this need to sell to your advantage.

Visit a car dealership at the beginning or first of the month for an initial visit, but not to buy. This takes some of the pressure off because the salesmen aren't going to be as persuasive to have you purchase something you can't afford or don't want.

Visit several car dealerships to inspect the assorted car sales and take plenty of notes. Then return to the car dealership of your choice at the end of the month when dealers are eager to make a quick car sale. Chances are you'll get a great deal on a fantastic new or used car.

4) Skip the extended warranty and extras.

You don't need an extended warranty, though the salesman will make you worry and fret until you shell out the extra money to pay for the warranty. Most of the time, if you care for your car properly and maintain it according to the factory specifications you won't need an extended warranty.

If you really think you should purchase one, wait as long as possible. Most companies allow you to wait until you're close to the end of your regular warranty to purchase one. By then you'll know how much maintenance your vehicle needs. If it's a lemon by nature then an extended warranty might be a good idea in the long run.

You don't need most of the extras offered, like rust-proofing, paint protection, tinted windows and life insurance. Educate yourself about what you need and what you don't to keep from paying unnecessary charges.

Verify how much you're paying for hidden charges such as shipping and preparation charges. Most of the time you can negotiate these charges down in your car sale.

5) Consider Used vs. New

New cars depreciate quickly the first two years of ownership. In fact, expect your $20,000 new car to cost you almost $7,000 in depreciation and interest rates alone (with a 6.9% loan) during that time. When you buy a used car the original owner has already absorbed the depreciation costs, leaving you with a good car that's worth every penny.

However, the car sale market may be so slow that good deals can be had when buying a new car over a used car. The important thing is to know how much you can afford to pay and make sure you don't get suckered into buying more car than you can afford.

Used Car Purchase Tips:

The uncertainty about a cars history--whether it's been well taken care of or possibly damaged by an accident--can make some people leery about buying a used car. When buying used, it's important to look for a car that has been properly maintained and an owner who has the records to prove it.

When buying used consider forgoing the financing and instead buy outright. Financing is a way car dealers to make money off of used car sales. Opting to pay for it in full puts money in your pocket.

Don't be afraid of high mileage. A car driven by Grandma on weekends could actually have more problems because an idle car usually has problems associated with sitting around, such as plugged lines or rusty breaks. Consider spending the money to get a vehicle inspection from a reputable garage if you're unsure about purchasing a used vehicle.