How do I negotiate the best deal on a car?

To negotiate your best deal, there are a number of strategies you can utilize:

• After you determine which make and model you want to buy, take it for a test drive. Decide which accessories you really need and those you can live without. Visit several dealers to compare prices on the same make and model with similar equipment.

• Stay organized. As you shop around for the best price on the make and model you want, you need to keep thorough notes on what terms each dealer is offering.

• Be patient. Don’t snap up the dealer’s first or even third offer. You shouldn’t be afraid to leave if you’re not getting the terms and price you want.

• Know what features and options are important to you. Extras drive the price of a car up, so only pay for those features you want and need.

• Extended warranties aren’t necessarily a good deal and may not cover the mechanical problems that are likely to occur.

• Make sure you know what promotions you’re entitled to, such as those offered to first-time car buyers of a particular make and model. The car manufacturer also gives incentives to dealers. Visit the car manufacturer’s website, or KKB.com (Kelley Blue Book), for promotions.

• Negotiate the price of your new car, trade-in and financing separately.

Should I buy or lease a car?

There are different schools of thought on leasing. Advocates of leasing say this:

• You drive a nicer car for a lower monthly payment than if you bought a cheaper make and model.
• You don’t have to worry about a trade-in when your lease ends.
• You always drive a newer car and can trade automobiles every few years.
• You’re not buying a depreciating asset.

Advocates of leasing argue it’s the right choice, especially if you don’t drive many miles per year.

When you lease a car, you may still owe:

• Money due at signing
• Refundable security deposit
• Acquisition fees
• Disposition fees
• Insurance, maintenance and repairs
• Excess wear and tear

If you go over the allotted mileage, you’ll pay a steep charge. For example, you may pay 20 cents for each mile over and above 10,500 miles per year.

A number of financial experts believe that you’re better off buying a car rather than leasing, especially if you plan to keep the vehicle for a long time and you drive a lot of miles. They contend:

• Leasing encourages you to drive a car you really can't afford.
• You owe sizable penalties if you need to terminate a lease before it ends.
• You'll owe money at the end of the lease if the car isn't returned in pristine condition.
• Lease agreements are extremely complex and you may not realize you're paying more than you should.
• You never own the car and will always be making payments.

If you buy a car instead of leasing one, you might enjoy several years of driving without owing a monthly car payment.