FREQUENTLY ASKED QUESTIONS

Should I buy or lease?

More often than not, buying is best. But in order to make the right decision, you will need to determine the various costs involved and the payoffs. If you're interested in leasing a car, be sure to do some calculating first. Leases are difficult to understand and you can wind up paying much more to lease the car than to buy it. Leasing usually looks attractive for one reason: low monthly payment. A lease payment may be substantially lower than a corresponding loan payment. You might benefit from leasing if: You can write off your lease payment as a business expense; You drive less than 15,000 miles per year; You prefer to trade your car in every three or four years; You want to avoid the hassle of selling your used car.

Is there a way of finding out the best price for a car?

Determine the maximum price you would be willing to pay for the car. This should be based on the dealer's cost plus a fair profit for the dealership. Unfortunately, determining a fair profit is not an easy task. It will vary from car to car and dealership to dealership. Between two and ten percent is common. A high-demand car will command a greater profit margin than a low-demand car. It may be impossible to negotiate below list price on some very popular cars. Once you have set a maximum price you're willing to pay, do not exceed this price.

How do I negotiate with the dealer effectively?

One way is to set what you believe to be a fair price (not your maximum price) and offer this to the dealer. If he knows you're serious, he should be willing to write up the offer, assuming it's a fair price. If he's not willing, then thank him for his time and go to another dealership. The second method is horse trading. Start by offering a bare minimum over dealership cost and see what he comes back with, countering back and forth until you arrive at a mutually agreeable price. This method might result in a lower price, but it's a lot more work. It's all a matter what you feel comfortable with.