Good stuff! We are in the market for a new car here in the next couple of months and I've been reading everything I can to better educate myself before we walk onto the lot.
Here are my recommendations which I have used myself to success. (My DH has told me, his plan is to not say anything and let me negotate because I always get the price I want)
If you are buying a new car it is easiest if you go to the dealership already knowing what make and model you want. If you don't, then see if you can narrow it down to a few makes and models you are considering. Before you ever set foot in the dealership, get on the internet and do research. Go to the Edmunds website, Kelly blue book, or I think there are a number of others (I usually do a couple to make sure the numbers match up). Price the cars with the options you want. There will be invoice, wholesale and retail numbers. Pay special attention to the invoice amount (never believe a factory "invoice" the dealer gives you- they are dummies and aren't accurate). Then you go to the vehicle manufacturer's website and see what rebates and deals are going on. (i.e. if the dealer is getting a $1000 rebate, then you know they paid $1000 under the invoice for the car) Once you have a decent idea of the dealer cost, then you figure out what you want to pay for the car. You know the dealer has to make some sort of profit. I have seen websites that say you should shoot for an additional 5% of the dealer cost. I have also seen websites that suggest offering $500 over invoice (minus any rebates etc. )for cars under $20,000, $1000 for cars between $20,000 and $30,000 and $2000 for cars over $30,000.
Me, my number on a new car is usually to give them $1000 profit- and I have done that on cars over $30,000 with success. Don't tell them you have looked at the invoice or anything like that..believe me when you play hardball they will figure it out. Also, they will push you for what you want to offer for the car or for what you want your payments to be. NEVER fall for the "what do you want your payments to be line". As far as what you want to offer, I ALWAYS make them put forth the first number. I tell them, I want to know what you are going to sell it to me for. You tell me a number and I don't like to play the negotiation game for hours to lets cut to the chase. They always try to push me to give the first number, and I always hold out until they do. More often than not, I get a number that is not too far off from what I'm wanting to pay, because they have already figured out by me acting that way, that I'm not going to be a pushover. If I get a salesman that gives me a ridiculously high number, I usually give him "the look" and say something like "really?" and "yeah- no. I know that isn't in the ball park" and if I'm really irritated I might even say "If that is the way you want to play it then maybe I need to look elsewhere because you and I both know that number is way too high for this car". You just kind of have to play it by ear from there. If they really sense you mean business, they might even give you the number you have in your head right away. If they give me a decent number not too far off from what I want but too high, I might flat out say- "Well here's what I want to pay- if you can do it for that, I'll buy it right now." If they come back with a different number I tell them "I gave you my number. If you can do it for that great, we have a deal. If not, I'm not buying today". If they insist on giving me ridiculously high numbers, I either counter with ridiculously low numbers or walk out because that salesman obviously doesn't know how to make a deal. You can't ever be afraid to walk, even if it is the only dealership in that town for that model car. If you are walking out and they are the only dealership in town for that model, as you leave hint that you think you can get a better deal on the internet from a dealership in a different place for the car etc. Don't specifically mention what town or what dealership.
For a used car, it is harder because you never know what they have paid for it. Again, you need to go in knowing the possible makes and models and you need to price them out with options on the internet before ever walking into the dealership. If you have no clue what make or model you want and are just shopping around, then once you find a car you are interested in, don't even start to work on making a deal until you have left and done your internet research. When you price them you will see trade in, wholesale/private party, and retail prices. You are shooting for around the wholesale/private party price. Again, know what the car is worth and what you want to pay before you start negotiating and then go through kind of the same procedure as above (don't ever fall for the payment line, and try to get them to make the 1st offer so you know what kind of salesman you are dealing with). Don't be afraid to walk if they are not going to give you the price you want. Even if you love the car, you will find another car you like just as much. Also, even if you walk, if you have gotten to the point where they have your contact info it is not unusual for them to call you the next day and lower the price. One good option is that many dealers have their used car inventory on line where you can search it. You can get quotes E-mailed to you for the specific cars. In my experience, the quotes are generally pretty decent because they know if they aren't, you won't ever set foot in the dealership. Also, always have them run a car fax on the car at their cost and get a copy- that is kind of a history of the car and sometimes it has enough information to see if there are any major problems. We once found out a car we were looking at had been serviced due to flood damage. We no longer were interested in that car.
Good luck!