We've all heard the horror stories of car shopping. Someone paid too much for a new car because the dealer refused to negotiate. Another person walked away with monthly payments higher than they could really afford. Yet another person settling for a car that had way more features than they wanted or needed because it was the only car on the lot.

While it's true that finding and then negotiating for a new car can be challenging, chances are that if you're prepared before walking into a car dealership, you'll walk out with a better deal. Here are three things that you can do to prepare yourself to get the absolute best deal.

You should know what type of car you're interested in, and how much it should cost before you ever walk into a dealership. The salespeople are paid on a commission, and their objective is to get you to pay as much as they can for your car. Your objective, of course, is just the opposite! Begin by doing some online research to find out the going rate of the car, and then check around in various dealerships. You should know that the "sticker" price that is on the windshield of the car isn't the cost at all--but instead it is the starting price. You will be able to negotiate between 10-20 percent off of that price.

If you have a car that you plan to trade in, don't present it to the dealer until after you've negotiated your best price. In addition, you should be aware--after conducting a lot of research--how much your old car is worth. Many times, dealers will try and pay a fraction of what a trade-in is worth in order to increase the price of the new car. Once you have done your research on the wholesale value of your car, stand firm and don't allow the salesperson to take advantage of you. If you find that you can't get as much trade-in value as you think you should, be prepared to walk away from the deal, sell the car on your own, and then return with the money to use as a down payment. This will take some time, but you will come out financially better for it.

Be aware that the dealer offered financing isn't always the best. It's important for you to compare the interest rates and terms with those of a private lender, and then select whichever one will offer you the best deal. In addition, look closely at how your down payment will affect your loan balance and monthly payments. Remember, a 1 percent change in your interest rate will not only affect your monthly payments, but your overall loan balance as well! Finally, be sure that the dealer hasn't included any life insurance or warranties in your loan balance that you didn't authorize, otherwise you could find yourself paying thousands of dollars that you hadn't intended to. Ask to see a complete listing of all charges before you sign on the dotted line.

About The Author: Mike Cotter has been a professional lender for over 30 years. He began his career in the commercial banking industry in 1972 and steadily progressed to become Vice President of Retail Banking with a major Denver bank. In 1982 he opened his own commercial bank and served as President and CEO for 10 years. In 1992 he left commercial banking for the mortgage banking field. Rocky Mountain Mortgage Rates