Tips for Buying Your Next New or Used Car

For many people, buying a car is the second most expensive purchase they will make in their lifetime. Unfortunately, the pressures of pricing, haggling and making the decision to own or lease can quickly turn what should be an exciting time into a stressful event. But it doesn't have to be that way.

An excellent car-buying experience, including saving the most money possible, starts well before prospective buyers walk on the lot. It begins with car seekers educating themselves about the buying process, pricing, and how to negotiate the best deal. Here are some tips that will help you drive away happy in your new or used car.

Car buying starts in your own home. If you have a computer with Internet access, you can uncover excellent information that will help you find the best deals from dealers in your area. Truecar.com helps you research new car prices, the best deals available in your area, and what other buyers in your area paid for the same car you are researching. This information helps you save time shopping and gives you accurate information for negotiating price.

Edmunds.com is another great starting point for new and used car shoppers. Visit Edmunds.com to research new, used, and certified pre-owned car prices; the latest incentives and rebates; and top recommended picks by Edmunds.com's editors.

Another stellar site to gather car-buying information is Consumer Reports, which offers many free services, such as buying and leasing advice, safety recalls, and payment calculators. But their best tools for price negotiation and saving money are reserved for subscribers. This includes Bottom Line Price, which takes manufacturer and dealer holdbacks, payments, and incentive information into consideration - typically difficult to find on your own - and suggests a car's reasonable purchase price.

Consumer Reports also offers information on used car deals, lists the most reliable used cars, and names used cars that offer the best fuel efficiency.

Decide what to do with your old car. If you have a car you want to trade-in or sell before purchasing, consider the following:

• Use Edmunds or Kelly Blue Book to get a ballpark price on the vehicle. Also, visit a used car lot or look at classified ads and compare listing prices to similar vehicles.
• Spend some money cleaning your car before showing it to a buyer or a dealer for a trade-in. Make sure you remove all personal items, including car paperwork. Don't give them a reason to say you missed an oil change or performed it on your car a few hundred miles over the manufacturer-recommended mileage.
• When possible, don't oversee prospective buyers or dealers inspecting your car. This gives them the chance to comment on every little ding or scratch. Every time they criticize the car, they expect the price to fall.
• Consider donating the car to a nonprofit organization and taking a tax deduction (talk to your tax accountant for advice first).

Know the basics of good leasing. If you choose to lease a car, once you have chosen the car you want to lease, ask for a lease quote. Edmunds says to pay particular attention to the following four figures:

1. Term: Thirty-six months is the longest you should lease a vehicle, because it will never be out of the bumper-to-bumper warranty. Less than three years is okay but the payments will be higher.
2. Mileage: Most lease payments are based on 12,000 per year (36,000 miles for a three-year lease). If you need more miles it's better to negotiate to have them included up front.
3. Down payment: In lease-speak this is called "drive off fees." Edmunds recommends putting less than $1,000 down. (Make sure to look for lease program specials that require no money down.)
4. Monthly payment: When you get a quote from a dealer, make sure all fees are included. All too often, lease payments are quoted without taxes and fees to make them more attractive.

Keep on the lookout for lease specials, but keep your eye on these four points to make sure there are no hidden or missed costs. Once you have these figures, it will be easy to compare and negotiate other lease quotes you receive.

Know how you want to pay for your car. If you're not paying in cash, experts recommend knowing your financing options before visiting the lot. You can compare auto rates at bankrate.com. Don't forget to contact your own bank or credit union, as well. At the end of the day, you want to make sure that your financing strategy stays in line with the budget you've set for your new or used car.

Haggle the new age way. Haggling, or the art of negotiating price for a product or service, is not a skill that all car buyers possess. So the first step to haggling is knowing whether you are good enough to attempt negotiations on your own. For those who aren't, options include using a no-haggle dealership or finding somebody to do your bidding for you. Another interesting strategy, according to the website The Motley Fool, is to start the negotiation process via email or fax. Their advice is to keep the haggling out of the dealership, where salespeople have home court advantage. If you have been on the lot to test drive the vehicle, address the correspondence to the salesperson who worked with you. Otherwise, use the sales manager's name. Studies show that personalized correspondence gets better results. Also mention a time frame. For example, advise the salesperson that you are looking to buy within a week and will consider bids over the next three days. When you receive bids, check them carefully. Make sure they didn't leave off any accessory you asked for in your original letter.

Finally, for face-to-face negotiations, don't let your guard down, especially after you and the seller have decided on a purchase price. Add-ons and financing can sometimes be more profitable for dealerships than what they make on the cars.

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