How to Save Money on Your Next Car Deal

Research Your Finance Options

Surprisingly, once you've made your decision to lease or to buy, your next step should be the same: Don't go to your dealer yet. While most dealerships offer both loan and lease programs, you're not required to use your dealer's financing for either one. Typically, you don't even lease the car from the dealer, but from the leasing company (on whose behalf the dealer negotiates) and you'll be in a better position to bargain if you've investigated and obtained financing offers elsewhere. Check with your local banks and any credit union to which you belong to find financing options: Many provide both. Leasing is not offered everywhere, but approximately 20 percent of the larger credit unions do make it available, so shop around. Be sure to investigate what fees and extra charges may apply to your loan or lease, as well as which of them you may be able to negotiate to have removed.

This research will pay off when you enter the showroom. "Manufacturers sometimes make more on the financing than they do on the cars," says Amelia Warren Tyagi, coauthor of All Your Worth: The Ultimate Lifetime Money Plan. A dealer may offer you what seems to be a great price, figuring that the financing will compensate for it, especially given that an individual dealer is usually not required to give you the lowest rate his finance company approves for you. That's why you need to negotiate the car price first. And don't even reveal whether you plan to lease or buy, let alone discuss the details of any financing, until you settle on a price.

Most people don't realize that the negotiated price of the car helps determine your monthly lease payment. While other costs and fees factor in, your payment is based upon the cost of the brand-new car minus what the leasing company projects the car will be worth when you return it -- so the lower the price you agree upon for the car, the lower your payments will be. If a dealer realizes you're planning to lease, he may tell you that the car's cost has to be the sticker price. This is not true. So getting a good deal on price is crucial no matter how you finance.

Even after you arrive at a mutually satisfactory price, you want to be sure that your car contract does not include a host of miscellaneous fees that will reinflate the cost of the vehicle. Quiz your dealer on what fees apply and remember that no charges are set in stone -- until you've signed the contract. "My advice is simple: Fight every fee," says Deanna Sclar, author of Buying a Car for Dummies.

Although you shouldn't be discussing financing at all before you've settled on a price, insiders particularly advise against revealing your ideal monthly payment. Almost any total price can be made to work with any monthly payment if the down payment is large enough and the lease or loan term is long enough. What counts is the car's selling price, so that should be your primary focus.