Experts lend advice on buying vehicles

How should you operate in a car market that strongly favors buying over leasing? Experts offered a few tips:

  • Price first.

Attorney Michael Nemeroff always works to get the best price offer before discussing financing, whether it will be a lease or a purchase.

“Don’t be embarrassed about asking for a discount to below invoice cost. What’s the worst that could happen? You have to be willing to walk away and go to the next dealer,” he said.

  • Look for deals.

There may be some attractive leasing deals, especially in the luxury market, where monthly lease payments can be substantially lower than finance deals, said Paul Ballew, director of industry sales analysis for General Motors Corp.

“A decade ago, people who leased cars were the high-end, luxury buyers. Then in the ’90s it went beyond that and became an affordability issue, even in the low end of the market. Now the pendulum is swinging back.”

  • Blend incentives.

Once you’ve researched pricing on the Internet and come to an agreement with a dealer, start talking extra incentives. Ask for advertised cash incentives to be placed on your lease arrangement, said Raj Sundaram, president of Automotive Lease Guide.

  • Buck the trend.

Even though automakers are throwing all their incentives toward purchasing cars, there may be a case for leasing, Sundaram said.

In a low-inflation environment (and especially if the U.S. economy starts to experience deflation), letting carmakers or a bank hold onto the residual risk can make some sense, he said.

Use the sluggish economy and dealer competition to get a price close to invoice cost, then insist on a low interest rate of no more than 4.9 percent in the lease calculation, he said.

Later, if you like the car, make an early buyout offer before the lease termination approaches.

If your bank or finance company has overestimated the residual value, it will gladly take a lower buyout offer rather than selling it dirt cheap at auction.