NEW CAR

When is the Best Time to Buy a Car?

October 28, 2019 by admin Leave a Comment

One goal millions of American consumers would like to attain before the new year arrives is to purchase a new vehicle. There are about 270 million registered passenger vehicles in the United States with an average age of 11.8 years according to IHS Markit. That’s a long time to hang on to a car and for many people getting a new one has become a high priority, especially if their current ride is experiencing significant downtime.

The months of November and December provide very good opportunities for people to purchase a new vehicle. For one, the year-end sales rush is on and brands such as Lexus, Buick, and Mazda are among those making the push right now. For another, the 2020 models have arrived and dealerships are anxious to clear lots of 2019 inventory. If you do your homework thoroughly, you can slash thousands of dollars off the sticker price of some new models before incentives are taken. Yes, this could be the best time to buy a car, SUV or pickup truck.

There is some debate among experts about the best time to buy a car. Manufacturers and dealers usually insist, “right now!” — but that isn’t always the case. With an eye on the remaining weeks of the year ahead, the following dates, days, and even times of the week may help you in your new car shopping decision.

Black Friday

The day after Thanksgiving is known as “Black Friday” or when merchants offer tantalizing deals to help kick off the Christmas shopping season. The day is so busy that stores are packed with customers from Thanksgiving evening to late Friday night.

Pity the poor new car salesperson who looks out at the traffic-choked highway and observes potential customers whose minds are locked on getting a Christmas gift deal and on nothing else. Very few customers venture to dealer lots and that omission may cost them a big bargain.

In 2013, Consumer Reports surveyed the automotive landscape just days before Thanksgiving and found that several older, but still new models had discounts ranging from 15 to 25 percent off the sticker price. For example, that means a $55,000 full-size pickup truck might retail for as low as $45,000 if buyers were aware of the incentives.

Consumer Reports noted that Black Friday could be an especially beneficial day to shop as “dealers may even sweeten the deal further to clear their lots” and the day is also close to the end of the month as “dealers are more willing to negotiate to meet their quotas.” If Black Friday isn’t the best time to buy a new car, it certainly ranks as one of the top days.

Best Days of the Week

You may think that shopping for a new car on a weekend is the ideal time to buy. However, that usually isn’t the case unless it’s the end of the month and dealers are battling to meet their sales quota. Keep in mind that there’s no way to know if the dealership has met its quota. Don’t expect the salesman to greet you as you enter the showroom by saying, “Gee, we’re really glad you stopped by today. If we make a sale, we’ll meet our monthly quota!”

Monday may be the best day of the week to buy a car as most of the business has been conducted over the previous weekend. The lower the foot traffic, the more likely you’ll have increased negotiating power. This may be even more apparent in December when people are stepping up their Christmas shopping. For instance, if you shop on the Monday following the Thanksgiving weekend — also known as Cyber Monday — you may find showrooms are nearly empty.

At Year-End

Some people think that December 31 is the best day to buy a new car, especially as the calendar year comes to a close. Although it can certainly be a good day, the first few days of the new year can be a good time to shop too. Why? Because those days are counted in the previous year’s totals.

Dealer’s work with what is known as a “U.S. Sales Reporting Calendar.” For 2019, the sales month and year cutoff are on Thursday, Jan. 2, 2020. Many dealers are open on New Year’s Day and many will remain open late on Jan. 2, in a bid to get that final sale.

Dispelling Myths

Just as there is the best time to buy a new car there are some myths about timing your purchase that should be examined and dispelled.

For instance, some people believe that shopping for a new car on a rainy or snowy day is ideal for securing a bargain. On the contrary, many dealerships are packed with people whose plans were changed because of the foul weather.

Arriving at a dealership just as your sales associate is ready to leave for the day seems like a great way to snag a deal too. After all, she may have plans and is eager to get home. Don’t be fooled: salespeople are used to working well beyond their scheduled hours in a bid to secure a deal. Besides, it is the sales manager who ultimately approves or nixes any deal.

Get Prepared

Now that you’re ready to buy a new car, visit the manufacturer’s website to identify the vehicle and trim level that interests you. Contact at least three dealerships to obtain quotes. Learn what incentives are available, which is information that is typically found on the manufacturer’s website. You can arrange to finance on your own or do so through the dealership, but with the latter choice, you may forfeit cash back in exchange for cut-rate financing.

Photo credit Pixabay.

Lemon Law Guidance for
New Vehicle Owners

July 11, 2019 by admin 1 Comment

When you purchase a new car, you expect it to operate as planned. However, some models are prone to problems and may require multiple visits to the repair shop. A minor problem here and there is understandable, but the situation persists or worsens, then you may own a lemon car. Worse, are those problems no longer covered by the warranty, requiring you to pay up.

If your car is a lemon, you may find recourse under the federal Magnuson–Moss Warranty Act. (Title 15 Chapter 50 of the U.S. Code). Also, expanded protection may come at the state level as enacted used car lemon laws work beyond the federal requirements. You may be able to manage the process yourself, but if your situation is outstandingly bad, then hiring an attorney who specializes in lemon law cases may be the best approach.

First Step — Review the Magnuson-Moss Warranty Act

The Federal Trade Commission (FTC) enforces the Magnuson-Moss Warranty Act to ensure that consumers are protected.

Specifically, the act “makes it illegal for manufacturers or dealers to claim that your warranty is void or to deny coverage under your warranty simply because someone other than the dealer did the work.” However, if the repair was done incorrectly and caused other problems, such as engine damage, the affected part may no longer be covered under the vehicle’s warranty.

The FTC advises consumers to understand their vehicle’s warranty by reading it and knowing the warranty period. Furthermore, owners should service their vehicles at regular intervals, keep all service records and receipts, and articulate their complaints to service personnel and supervisors if they are not satisfied with the work. Typically, this act applies to purchasers of new vehicles.

Second Step — Contact Your State’s Office of the Attorney General

Every state has an Office of the Attorney General, an individual who serves as the main legal advisor to the government. Also known as “advocates general” and “procurator,” this professional is the chief law enforcement officer in that state. Importantly, existing used car lemon laws are under his or her bailiwick.

Therefore, inquire at the Office of the Attorney General about your state’s lemon law. You will likely find that there is a complaint procedure you must follow before heading to the next step. You should know that used car lemon laws vary from state to state.

Third Step — Review Your State’s Used Car Lemon Law

If after following the two earlier steps you still are not getting your problems resolved or if you suspect your vehicle will never operate as intended, you should examine your state’s used car lemon law. A copy of that law should be available online through your state’s website, otherwise you can usually obtain a copy by visiting the Attorney General’s office.

It is at this point where state laws vary. That said, there may be certain prevalent aspects to consider. For example, you should know when your state’s lemon law was enacted and whether your car is covered under the law. The good news is that all 50 states have lemon laws in place.

If your car is covered, the state will outline the repair procedures and the steps you must follow. Typically, this involves notifying the manufacturer or the dealer within a certain timeframe.

To illustrate, in South Carolina after three unsuccessful repair attempts for the same defect and a cumulative 30 days of out-of-service time, your car would be considered a lemon. In this example, the manufacturer must give you a refund — including the vehicle’s cost, sales tax, license fees, and registration fees. Otherwise, the manufacturer would replace your vehicle.

You should know that if you purchased your vehicle from a private party, you may not be protected by your state’s used car lemon law. In that case, you should consult with an attorney for advice regarding possible remedies. For instance, if the value of the car is under $3,000, making a claim in small claims court is advisable.

Your state may also require dealers of used cars to provide you with a written warranty. For example, in New York, that warranty is usually called a “lemon law warranty” or what spells out your rights, including repairs that will be made at no cost to you. That warranty must accompany your sales contract or lease.

Fourth Step — Consult with an Attorney

If at this point you have not consulted with an attorney and are still not satisfied with the repair process or if you believe your rights are not being protected, then it is time to find a qualified attorney. Reach out to your state’s bar association and ask for the names of at least three attorneys specializing in lemon law and contact each one to gauge how they may assist you.

An attorney may offer an initial consultation for free, explaining what recourse is available to you along with their fee. If you choose to sue, that fee may be paid by the manufacturer or the dealer, but only if you win. There is a decent chance your case will be settled out of court if your suit is a strong one.

Used Car Lemon Laws

In summation, if your car is still under the manufacturer’s original warranty, your dealer will handle those repairs per the warranty. If you are not satisfied with a dealer, you can visit another shop. If your problem is still not satisfied, insist that the manufacturer’s regional representative becomes involved.

For used cars, your state’s lemon law may offer the best protection. Follow these steps carefully to ensure that the repairs are made to your satisfaction, otherwise a full refund or a replacement vehicle may be in order.

Persist Until You’re Successful

With potentially thousands of dollars on the line and in some cases family safety a concern, it is important for consumers to see a lemon car problem through until an equitable resolution is reached.

This may mean taking an unconventional approach, especially if you haven’t yet contacted an attorney. For example, a News 6 Orlando news team investigated one consumer’s claim of a defective Hyundai Sonata SE sedan and was able to help the woman settle with the automaker.

Initially, Hyundai admitted its fault and offered to repurchase the vehicle. However, the settlement did not cover $850 she had paid toward the car. The news team intervened and Hyundai responded by nearly doubling their previous offer.

Photo Attribution: André Karwath aka Aka [CC BY-SA 2.5 (https://creativecommons.org/licenses/by-sa/2.5)]

A Buyer’s Market for New Cars

May 5, 2016 by admin Leave a Comment

How to buy a vehicle in any market.

New car sales remain strong, but one thing we are seeing more of this year than in recent years are deep discounts and other incentives to lure customers. Although most deals aren’t rivaling anything we have seen since the last recession, automakers aren’t all that willing to cede marketshare in good times.

It is a buyer’s market for new car shoppers. Here’s how to find a deal you can live with:

1. Know what you want. Determine the type of vehicle you want and then narrow it to a specific make and model. The narrower your search, the easier it is to do your research. This means choosing the trim level you want, right down to the amenities — power accessories, infotainment system, safety features, you name it. Allow your parameters to guide you and you’ll be satisfied with your new ride.

2. Shop online. There is no need to visit a dealership to make your deal. Save your visits to only test drive a vehicle or to finalize your already negotiated purchase. Typically, you can find what you want by shopping online, negotiating with the dealer’s web sales department to get your price. Next, repeat the process at one or two other dealers, then have the dealers battle for your business. The more competition for your business, the better the savings for you.

3. Arrange your own financing. Unless the manufacturer is pushing 0 percent financing, you can usually find better financing elsewhere. Credit unions are especially good at offering low-rate financing, particularly if your credit is excellent. When you bring in your own financing, you can claim the other incentives instead, such as cash back, a military or student discount, or some other incentive.

4. Discuss new car price, then talk trade-in. Don’t allow a salesperson to attempt to bundle your trade-in with your new car negotiation. These are separate deals. First, negotiate the best price for your new car. Second, when it comes to down payment talk, introduce the trade-in as the down payment. Understand your car’s worth by using a service such as NADAGuides.com or Kelley Blue Book to value your vehicle.

5. Review all fees. You’ll be hit with an assortment of car closing fees, adding hundreds, perhaps thousands of dollars to your final price. Sales tax, title and registrations, destination charge and documentation fee are not avoidable — you will have to pay these. Expenditures you can avoid include a dealer preparation fee, credit life insurance, disability insurance, VIN etching, rustproofing, and paint sealant. Additional dealer markup may be hard to avoid, especially if you’re buying a strong selling model. As for that advertising charge, see if the dealer will waive it. Examine your sales contract carefully to determine what fees are charged. Ask for an explanation for anything you may not understand.

6. Finalize your deal. With your best deal negotiated, financing in place, and a trade-in or cash down (preferably both), you’re ready to finalize the deal. It is extremely important for you to know what your monthly payments will be and whether you can afford those payments. Don’t sign the deal without having a discussion with your auto insurer first — you may be unpleasantly surprised to discover you can’t afford the insurance. If so, you’ll need to look for a different insurer or a different car.

A Buyer’s Market

Timing your purchase can help your cause too, especially if you strike a deal as the month comes to a close. Sales people and dealers rely on incentives from the manufacturer to sell “X” number of vehicles each month. This tactic can work well and might be utilized instead as both the model year and the calendar year come to a close.

See Also — Right Now: Lease a New Car

Right Now: Lease a Used Car

April 25, 2016 by admin 4 Comments

Leasing deals on new cars can extend to used cars too.

Soaring new car prices mean sticker shock is a common occurrence for car shoppers. One way to lessen the blow is to lease a vehicle. Indeed, Experian Automotive found that 28.9 percent of all new vehicle models were leased in the fourth quarter of 2015. That’s up nearly 10 points in just over five years.

Leasing lowers the average monthly payment, one of the most important concerns for new car shoppers. Instead of paying $493 on average for a new car, lessees pay $411 per month for theirs. That’s $82 per month or $984 per year saved, or nearly $3,000 across the average 36-month lease term.

Used Car Leasing

Used car shoppers are also looking at ways to reduce their costs. Although representing a relatively small segment of the market, used car leasing is available. Leasing a used car provides the usual advantages of leasing — low monthly payments and an easy way to return the car and walk away.

An emerging trend in the industry is leases on certified preowned vehicles (CPOs). CPOs are popular with consumers as these models have passed dealer inspection, are backed by the manufacturer, and include the balance of the warranty, and sometimes include some type of an extended warranty. CPOs cost consumers more, but that’s a trade-off many are willing to accept.

This year, returning leases will increase by 20 percent over last year and will continue to rise for at least the next two years. That presents a problem for dealers as bloated inventories are harder to move. To combat the trend, some manufacturers, including Toyota and BMW as well as Ally Financial, are pushing used and certified leasing in anticipation of an increase in lease returns reports Automotive News.

Toyota’s arrangement covers Toyota, Scion, and Lexus brand vehicles. CPO Toyota and Scion used car leasing will be limited to vehicles no older than three model years and 65,000 miles. Lexus CPO leave vehicles will extend out to four years, but be limited to 60,000 miles.

New v. Used Sales

Of course, any CPO used vehicle program could do something no manufacturer wants — siphon new vehicle sales. Likewise, dealers are being instructed to avoid being as aggressive in pushing used vehicle leasing as they are in selling new. Extra incentives and higher profit margins on new cars also help.

Industry experts are looking favorably on used car leasing, seeing it as a win for customers and dealers alike.

“Certified lease programs are not only inevitable as a result of all the leases coming back into the market, but they can be beneficial as well,” said Scot Hall, Executive Vice President of Swapalease.com. “Drivers today want more flexibility in their lease programs, and a certified lease structure adds more opportunity for an expedited turnaround of inventory beyond just three years of age on a vehicle.”

Consumer Leasing Considerations

Consumers should always keep in mind a few things about any used car. For one, services problems are about twice as high on a three-year old car than on a one-year old model explains Consumer Reports. Also, the anticipated value of a used vehicle at the end of the lease term will impact your rate.

You might do better pursuing vehicles that hold value, including luxury vehicles, sports cars, and SUVs. That’s why Lexus and BMW are aggressively pushing CPO leases, but they’re not the only ones.

As with any used vehicle, obtain a history report. It also doesn’t hurt to have it inspected by a mechanic who can place the vehicle on a lift and give you his assessment. Use that feedback to negotiate your price — the lower the final cost, the lower your monthly lease payments.

See Also — How to Lease a Demo Car

Photos copyright Auto Trends Magazine.

Rip-off Report: $6,391 in New Car Warranties

August 13, 2015 by admin 1 Comment

Buying a new car is a hassle, with more than half of all buyers surveyed indicating that they consider car salespeople “untrustworthy” according to research from DMEautomotive (DMEa). That lack of trust is also higher with women as many ladies believe that they are being taken advantage of when negotiating a new car deal.

Recently, a good friend purchased a 2015 Toyota Corolla from a local dealership. That deal was conducted with her daughter and son-in-law present. No trade in was conducted and my friend managed to save a few thousand dollars by negotiating a lower price and obtaining a few cosmetic upgrades at no additional cost.

It all seemed like a good deal until the dealership’s business department got involved. That’s when said customer was talked into buying no less than five warranties, including a costly extended service agreement that added $6,391 to her final price, state sales tax included.

For the record, I received permission to share my friend’s story with our readers in a bid to warn others what can go wrong when buying a new car. In this case, things went terribly wrong, but there is some good news to report as well: with some special work, all five warranties were rescinded. Yes, there was pushback on the dealer level as each high-profit warranty was contested. It took repeated phone calls and visits to the dealer to get the charges reversed, something you can do if you are similarly tagged with pointless new car warranties.

New Car Warranties

Before we look at my friend’s story in detail, new car shoppers should consider a few points when buying a vehicle.

First, all new cars come with standard warranties. Typically, you receive a bumper-to-bumper warranty for at least the first three years or 36,000 miles, whichever comes first. This means you are covered for anything that can go wrong with your car beyond the general maintenance. Sure, there are a few things that may not be covered and you may still be responsible for some repair costs, but for the most part those expenses are covered by the manufacturer.

Second, all new cars come with other warranties. If your car’s exterior shows signs of rust, the manufacturer will fix the problem at no charge to you. Rust warranties typically last from five to 12 years. Further, most do not have a mileage limit. This means if you drive 200,000 miles in five years, you would still be covered.

Third, new cars also come with powertrain warranties. Perhaps most worrisome for new car buyers are failed parts. Especially major components such as the engine and transmission. After all, if one of these parts fail, you’re looking at repair bills of several thousand dollars. Fortunately, warranties of five years and 60,000 miles are common. Some manufacturers, such as Hyundai and Kia, offer 10-year, 100,000-mile powertrain warranties.

Beyond the Standard Warranties

My friend had not purchased a new car in 15 years. Her previous ride was a premium Japanese make, a model that gave her no major problem. Typically, said friend drives just a few thousand miles each year — her old Acura had barely passed the 50,000-mile mark when she began shopping new.

But like so many other buyers, she was worried that her new car might eventually cause her problems. That worry became evident once she and her family members were sitting in the business office discussing warranty options. Despite her family telling her to not buy the offered warranties, she went ahead and did so. This was easier to do when the business manager said that she “could cancel at any time.”

Right there, a big mistake was made: although the warranties could be canceled, getting it done required multiple phone calls, personal visits to the dealership, and not a little angst. Had she delayed canceling, her warranties would have been pro-rated. This means she would receive a refund minus the time already used.

Warranty Considerations

Personally, I am not against special warranties completely. Cars that have a so-so repair history might benefit from an extended warranty. But that begs the following question: why would you buy any vehicle with reliability problems? It just doesn’t make sense and it may cost you much in time, money and aggravation.

See Also — 7 Types of Car Warranties

The Typical Fees When Buying a Car

July 14, 2015 by admin Leave a Comment

Ford Fiesta

You have found the car of your dreams, carefully negotiated the final price and are ready to sign the purchase agreement. Pay careful attention here as there are any number of fees, taxes and charges that can drive up your overall cost. Certain expenses, including dealer extras, may be avoided. Here’s what you need to know about the typical fees when buying a car.

1. Destination charge. You usually cannot avoid the destination charge, what represents the cost of transferring a vehicle to the dealership. These costs vary, but typically range from $895 to $1,150, depending on the vehicle. When reviewing your contract, look for secondary charges that may indicate an additional delivery fee. Have that cost struck from your purchase agreement.

2. Title and registration. Fees related to acquiring the title and registering your vehicle with the state cannot be avoided. What you can avoid is doing the paperwork yourself. Let the dealer handle this matter; take note of the documentation fee — the cost of having the dealer handle this step for you. A $100 to $300 charge is within reason.

Hyundai Sonata

3. Sales tax. This will be your greatest “add on” expense when buying any car. Some states calculate the tax based on the final cost of your car. Other states calculate that cost based on your new car’s final cost minus your trade in. In some cases, you may end up paying your state a few thousand dollars in sales tax.

4. Dealer markup. You may have negotiated the best price you could for your new vehicle and feel that you have come out a winner. Then, you look closer at the purchase agreement and see a “dealer markup” charge. That’s an expense a dealer may try to pass on to you, especially for a high-demand vehicle. Contest this fee or at least negotiate for a lowered cost.

5. Advertising charge. Who knew that you might have to pay for an advertising surcharge? Dealer associations may charge the dealership for a local advertising initiative, one that the dealer may pass on to you. You may be able to get this cost removed from your contract, but not always.

Chrysler 300 Limited

6. Dealer preparation. Your dealer may pass on the cost of preparing the car for sale to you. So-called “dealer prep” means removing the protectant and the coverings required to safely transport a new vehicle from the factory to the dealer. This cost should be removed from your contract as manufacturers routinely reimburse dealers for the cost.

7. Disability insurance. Agree only to this type of insurance if you don’t have it through your employer. What it offers is coverage for your car payments while you are unable to work. Chances are you can find this insurance elsewhere for a more reasonable cost.

8. Credit life insurance. If you die, then your survivors can pay off your loan with credit life insurance. It is term life insurance or what expires once you have made your final car payment. Ensure that the coverage is sufficient and inexpensive.

Nissan GT-R

9. Dealer upgrades. There are a number of services and add ons that your dealer will be happy to tack on. For instance, if you request heated seats for a vehicle without them, you will pay that cost. Don’t agree to undercoating, VIN etching, paint sealant or fabric protection. Undercoating is already done at the factory level. The other services you can do yourself and for little cost.

10. Extended warranty. Should or should you not buy an extended warranty? Consider getting one if you plan to keep your car for many years or well beyond the time limit for the bumper to bumper and powertrain warranties. What you should know is that the best warranties are backed by the manufacturer directly or through a third-party source approved by the manufacturer. You also do not need to rush your decision here — you can sign up for a warranty later. Review your contract options and choose the warranty plan that is best for you.

Chevrolet Colorado

Fees and Considerations

If you lease a new vehicle, obtain GAP insurance. GAP or guaranteed auto protection insurance will protect you if your new vehicle is stolen or totaled. It fills in the gap between the vehicle’s residual value and the payments you owe on the vehicle. This is a worthwhile expense that can save you thousands of dollars.

Credit Clean Up Before You Buy Your Next Car

February 25, 2014 by admin 2 Comments

You are ready to buy your next car and have set your eyes on something new. Sure, you know that new cars lose a lot of value during the first year of car ownership, but you have a long-term ownership strategy in place and plan to drive your next car until it gives up the ghost.

Paying cash for a new car is the ideal way to go, but with the average price of a new vehicle now topping $32,000, few of us have that much money available. Likely, you’ll join the overwhelming majority of people that will put some money down and finance their purchase with a 48, 60- or 72-month auto loan.

Before you seek new credit, the following points should be considered.

Obtain Your Credit Score

Your credit score is a three-digit number that has a huge impact on not just the loan terms, but on whether you receive loan approval or not. Your score is based on your credit history including your personal credit reports compiled by Experian, Equifax, and TransUnion, the three consumer reporting bureaus.

Your credit score should be above 700 to enjoy favorable loan terms. Some creditors require a score of at least 740 before giving you their best loan rate. You can get a free monthly credit score by signing up with Credit Sesame or you can pay for your credit score by visiting MyFico.com. The higher the score the better for you: you can save hundreds of dollars in interest costs if your rate is low.

Establish a Budget

Here is where a lot of people run into trouble: they set their eyes on a vehicle they want, but cannot afford. Before you begin shopping for a new vehicle you need to determine how much of a loan payment you can swing.

One of the best approaches here is to use an affordability calculator such as one provided by Edmunds.com please go here. Once you determine a payment amount you will have to figure out if you have enough money to make the monthly payment, pay for your car insurance, registration, taxes, fees, and in some states property taxes.

Trade In or Private Sale

Ideally, your car dealer will fall in love with your trade and offer you big bucks for your vehicle. The reality is usually something far different: your trade won’t come close to the value you think that it would fetch if you were to sell the vehicle yourself.

So, why not sell your car instead of trading it in? Well, for many people, the trade-in is their down payment or a significant part of it. They have to trade it in or they wont have enough money for a new car. If you’re able to use cash as your down payment, then you have more flexibility here. Sell your car privately and you’ll end up with more money.

Claim All Incentives

Car manufacturers love to entice consumers with a great deal. Generally, no one pays the sticker price for any car on the dealers lot unless it is a speciality or exotic model. Typically, you can shave thousands of dollars off of the sticker price, walking away with a decent deal.

Beyond the general discounts, you may be eligible for other incentives, but only if you ask for them. Some manufacturers offer loyalty rebates, applying upwards of $1,000 toward the price of a car if you bring repeat business. Other incentives include rebates for military personnel, recent college graduates, retirees, and so on. Find out what incentives apply to you.

Lease or Loan?

You have been thinking about taking out a loan, figuring that the rates will be good. They should be good and at least no where near the rates that are being charged on some dubious websites. You can still find zero percent or very low rate financing, but keep in mind that by taking those loans you may give up a valuable rebate.

Another option for consumers is to opt for a lease. Sure, you will only have the car for a few years (usually three) and then will need to give it back or purchase it at lease end. And, you will need to abide by the lease terms or pay extra for mileage overages or wear and tear.

What leasing does is make it possible for consumers to get behind the wheel of the car that they really want. Monthly lease payments are generally much lower than finance payments, making that unattainable vehicle affordable. Just keep in mind that when the lease term ends you wont have a vehicle to show for it you’ll either have to lease again or buy another vehicle.

New Car Deal

No new car purchase should be done apart from careful and thorough research. It is easy to be swept up in emotion when buying a car, but those feelings will cost you. Once you settle on a car you like and can afford, then get quotes from three or four dealers to find the package that is right for you.

Money Saving Strategies for Auto Loan Shopping

September 18, 2013 by admin 1 Comment

If you are shopping for a new car, more than likely you will take out an auto loan. Such loans are common to 90 percent of new car buyers, individuals that do not have enough cash on hand to afford a purchase. Auto loan rates vary and can cost you hundreds of extra dollars if you jump in without thinking. Employ several money saving strategies when shopping for an auto loan.

Don’t break the bank to buy your next car.

Shop for a Loan

Loan rates vary and one lender may offer a half-percent lower than the next. You won’t know this unless you compare offers from at least three lenders. Better yet, consider five or six lenders including your own bank or credit union.

Know that loan rates change based on the length of the loan. For instance, a 48-month auto loan will typically have a lower rate than a 60-month loan. At 72 months, your rate will be higher. Go with the shortest term loan you can manage.

Put More Money Down

Lenders want borrowers to have skin in the game. Although it is possible to swing a “no money down” loan, you will pay for it with a higher interest rate.

When you have money to put down, including much more than the customary five to 20 percent down, then you can ask for a lower interest rate. If you do not get it from one lender, then go on to the next.

Fix Your Credit

Know that advertised auto loan rates are for customers with excellent credit. That means you need to have a credit score of at least 720 to 750 to get the best rate. Lower credit scores mean a higher interest rate.

If your credit is low, especially if it is in subprime territory, then your interest rate will reflect your bad credit. At this point, you night want to put off applying for a loan until your credit improves. Pay your bills on time, clean up your credit reports and avoid opening up new accounts until after you receive your auto loan.

Rebate Versus Loan Rate

So, should you take the generous rebate or should you go with the low-rate dealer financing? That’s both a question and a dilemma customers face and often do not know how to resolve. You can figure out what option is best for you by inputting your information on the Bankrate.com finance calculator.

The best deal for you may be to go with your own financing company and keep the rebate. That rebate or cash back offer can be used toward your down payment, supplementing the contribution you planned to make. For instance, if you planned to put $3,000 down and the rebate is for $2,000, then you only need to finance $20,000 for your $25,000 new car purchase.

Avoid the Extras

When you are preparing to sign your auto loan contract, pay special attention to the fees charged. Everything should be put in writing and fees should not be added after the fact.

Some of the fees you can expect to pay are destination, property tax and your state sales tax. What you may also discover are special dealer prep, department of motor vehicle license delivery and undercoating charges. Such “junk” fees should be eliminated before you sign your sales purchase agreement.

Related Reading — What Your Dealer Won’t Tell You About Car Financing

New Car Affordability and Your Finances

April 5, 2013 by admin 2 Comments

Those new car ads have been enticing you for months and you are about to do something you have not done in more than a decade: buy a new car. Like many Americans, you have been holding on to your current ride for at least 10 years, but just like these same people you are ready to get behind the wheel of a new ride. The appeal of modern technologies, better fuel efficiency or something as simple as a new car smell is beckoning you.

Before you head out to the car dealer, indeed even before you begin to search what vehicles are out there, you will want to determine how much vehicle you can afford. There are a number of factors in that determination, each one we will explore right here.

Your Credit

First things first: you need to know what condition your credit is in before shopping for a new car. That information is freely available in your three credit reports, data that is assembled by the credit bureaus: TransUnion, Experian and Equifax.

car key You can obtain your reports from AnnualCreditReport.com, a website that has been set up by the three bureaus to provide that information to you at no charge. You are allowed to get one copy free annually of each report. Obtain all three, check each one for accuracy and if you find mistakes, ask the bureaus to correct that information. Once you are certain that the information about you is current and correct, then head over to MyFico.com to obtain your credit score. That three-digit number will have a huge roll determining your loan rates and may have a bearing on loan approval.

Know that if your credit score is 700 or above, that you are in a good position to obtain favorable financing rates. However, the lowest interest rates are always reserved for people with excellent credit, a number that comes in around 750 to 780. If your score is low, let’s say below 580, then you are considered a candidate for a subprime auto loan. In this case, expect to pay a higher interest rate which may mean putting more money down on a new car or choosing a more affordable model. Yes, there are consequences that come with your credit score!

New Car Calculators

Many people advise consumers to sit down and work on a complicated formula to figure out just how much car they can afford. This process can take some time and usually leaves people frustrated. Instead, head over to of one of the websites that offer an auto loan calculator and get to work. Bankrate.com is as good a place to fiddle around with one as any other.

You probably already know how much money you can afford to pay out each month in loan payments. Add in your insurance costs, gas, maintenance and related fees and your total vehicle expenses will show up. If you can afford to pay $300 per month then you have a good basis from where to determine your loan amount.

Now let’s get down to practical matters of looking at specifics. For instance, you have your eyes on a Ford Fiesta SE Hatchback its starting price is $16,200 and with popular features added (minus a $500 rebate) your total is $17,500 including taxes and fees. Your current car is worth $2,500 leaving you with $15,000 to finance. Your credit is good, not great, but you still qualify for a 5 percent car loan for 60 months. Good news! With these terms you will pay $283.07 per month. That’s within your budget, so you are ready to buy.

Loan Shopping

We touched on your loan rate, but that number may vary depending on the lender. You should shop around for a loan as the interest rate and other terms can vary, saving or costing you money. A logical place to start is your bank or credit union, places where you already have an account established. As an account holder, you may qualify for a better new car loan deal especially if you agree to have your monthly payments deducted from your checking account.’

You car dealer may offer a great deal on a loan too especially if that loan originates with the manufacturer’s financing arm. Know what your total cost will be before signing a loan agreement. If you come in under budget, then you are good to go and will soon find yourself behind the wheel of a new car.

About Your New Car Extended Warranty Plan

March 30, 2013 by admin Leave a Comment

You have just concluded a deal to buy a new vehicle when the salesman’s talk turns to something you had hoped he would not bring up: a new car extended warranty. Your purchase already includes a bumper-to-bumper warranty, a powertrain warranty, a warranty against rust and even roadside assistance. New car extended warranties are not cheap and you think that you can do without one. Your thinking is probably right.

Extended Warranty

Before you sign on the dotted line for a contract that may not worth its price, consider the following points:

1. The warranty may be redundant. An extended warranty is really a service contract, what covers the cost of certain parts and repairs on your vehicle. What you might not know is that the warranty may kick in right away, overlapping your current coverage. If it does, you may be paying for something that you are getting anyway.

warranties 2. An extended warranty may be offered for the wrong reasons. Be careful if a car dealer insists that you need to buy a service contract as a condition for new car financing. That assertion is usually a false one and can be disproven with a call to your lender. Check your sales contract, too, as a dishonest dealer may tack on a service contact without your knowledge.

3. The company that holds the warranty may not be the manufacturer. Some car manufacturers offer extended warranties and back these just as they do with their other warranty coverage. Some contracts, however, are held by third parties or administrators, companies that pay out claims. If your administrator goes bankrupt, who will pay for the service? You may also want to contact your states insurance commissioner to learn if the contract is underwritten by an insurance company. If so, find out if complaints have been made against the insurer and whether it is solvent.

4. The service contract may cost you a mint. When offered a service contract, you may discover that there are several levels of coverage available. Compare each plan and learn if deductibles apply. Some plans charge a deductible for each part replaced while others deduct only for the entire service order. Quite easily, you may find yourself agreeing to a service contract that will cost you thousands of dollars. Consider how long you plan to keep your vehicle, whether the contract is transferrable or if it would simply be more cost effective to bank your repair costs as you go along.

5. The quality of parts used. Replacement car parts can be terribly expensive. They can also be of varying quality too. You want to find out if the car parts offered are new or reconditioned. You may also want to consider how reconditioned parts may be treated by your manufacturer should something go wrong. Parts should be readily available too — you don’t want your car to sit in a shop while you wait for an overseas delivery to come in.

6. Know who can and will fix your car. You buy a service contract through your dealer and the fine print reveals that you are restricted where you can take the car for service. Okay, fine. On further inspection you learn that those places are limited to the dealer and his network, but that does you little good if you need service while out of town. Moreover, if you should move away and take your car with you, then what? If an extended warranty is restricted by geography, you may want to look elsewhere.

Personal Considerations

There are a few more matters for you to consider when exploring your extended warranty options.

First, what are your responsibilities as a consumer? You still need to follow the owners manual when maintaining your vehicle.

Second, can you buy the service contract later on? It can be easy to get pulled into something that you do not want or need only to find it difficult and costly to cancel the contract later.

Third, are you getting roped into a scam? Most such scams happen away from the dealership as third parties learn that your current coverage is about to expire or may think that you did not opt for a service contract. Hang up on those callers and shred posted solicitations.

When all is said and done, do you still need an extended warranty? Maybe not. Understand what coverage you are getting with your new car and, if you want long-term coverage, you may be better served to shop for one when your new car warranty is about to expire.

See Also — What to Look for in a New Tire Warranty

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