LEASING

6 Year-End Car Buying Tips

December 28, 2019 by admin Leave a Comment

2019 Volvo V60

The best opportunities to purchase a new vehicle is during a manufacturer’s transition times, including model changeover, the end of a generational build, and as the calendar moves from December to January. The following six tips can save you money, enabling you to drive off in a new ride with your budget intact.

1. End of Model Year

Car manufacturers used to make the model year transition in October, by updating its full product line across the board. All-new models were timed to release in the fall, putting big pressure on manufacturers to get cars to dealers in time for seasonal advertising campaigns.

These days, new models come out throughout the year, allowing manufacturers to stagger releases. When a new model debuts, manufacturers typically place incentives on previous model year vehicles to help clear dealer inventories. Consumers should learn when the transition is being made and follow the manufacturer’s website to discover what incentives — including rebates and special financing – are in place.

2. Old Design Versus New Design

Car manufacturers usually keep a model for five or six years before a complete redesign is made. In the interim, minor annual refreshes are made along with a mid-product-cycle update that is typically accomplished by the fourth year.

A complete design change signifies a generation shift. Older vehicles are routinely discounted as manufacturers seek to clear out inventory. Discounts may be deeper than with the traditional model year change-over as automakers begin to promote the new model that will cost consumers close to the sticker price.

The all-new Jeep Gladiator (l) and the Jeep Wrangler (r).

3. Black Friday Shopping

There are times during the year when car dealers see a plunge in showroom traffic. One of those days is the Friday after Thanksgiving, the traditional start of the Christmas shopping season. It is called Black Friday, what used to mark the day when merchants began to make a profit for the year, which is represented by going from red ink to black ink on financial statements.

Black Friday has another meaning for car dealers: a dearth of car-buying customers. With fewer customers in dealer showrooms throughout Thanksgiving weekend and with the month about to close, consumers may find dealers are eager to negotiate to meet their quotas. Meeting those quotas means receiving more money from manufacturers for reaching their sales goals, something that would not happen if consumers stayed busy buying Christmas presents, not new cars.

4. From Christmas to the New Year

Just as Black Friday may present a special opportunity to strike a deal, the period between Christmas and the New Year can also be a good time to negotiate a new vehicle purchase. Such deals may last a few days into the new year as dealers and manufacturers will close their books no later than Jan. 4.

Car manufacturers are obsessed with market share and use these sales numbers for marketing promotion. As the year fades, automakers know which models or brands stand the chance of finishing on top and may promote these accordingly. For example, Mercedes-Benz, BMW, and Lexus have an annual battle for luxury vehicle leadership. Year-end discounting usually begins in Nov. and lasts until early Jan. You’ll also find financing and leasing deals.

5. Arranging Your Own Financing

You are in a much better negotiating position when buying a new car if you offer a 100-percent cash (all-cash) transaction. However, most of us cannot afford a heavy cash outlay, instead, we rely on loan financing or a lease to swing our deals. Car dealers offer financing, usually through the manufacturer’s financing arm as well as from banks.

Often, new cars come with incentives allowing buyers to choose between cashback or a low-rate loan. You can also arrange your own financing before you shop for a car. In this case, when you’re ready to buy, give the dealer your loan information and ask to have the rebate applied to your total. Credit unions typically offer the lowest financing rates, making it worth your while to come in with your own loan and take the rebate.

6. Rebates and Dealer Incentives

We already looked at rebates and financing, but there are other rebates available to consumers. Manufacturers like to woo customers with various enticements, but these special offers are generally not publicized. It pays to do your homework by studying the manufacturer’s website.

For example, the Toyota College Graduate Finance Program provides a $500 rebate on select Toyota models and sweetens that offer by writing loans with no money down and deferring the first payment for 90 days. Its program is open to recent college graduates, people that have secured a college degree within the past two years.

Also, the Ford Motor Company awards $500 bonus cash on most Ford and Lincoln products to active duty and recently retired military personnel and their families through its Military Appreciation program. Here, military retirees have up to 24 months after leaving service (separation) to remain eligible for the rebate.

Other manufacturers usually provide similar rebates and may also offer discounts to first responders, credit union members, suppliers, and their employees. These extra incentives are typically on top of other offers and may be applied to the purchase price of the new vehicle.

2019 Chevrolet Silverado LT

Saving Money

It isn’t that difficult to save money on your new vehicle purchase. Study the manufacturer’s website, visit local dealer sites, and keep in mind the special offers listed here when negotiating your price. It is possible to save thousands of dollars, especially on well-equipped models. Don’t allow cash offers to fall to the wayside by not having the dealer apply what’s available to you.

See Also — Care Tips for Your New Vehicle

How to Make a Trade In for a New Lease

July 15, 2019 by admin 1 Comment

Think “trade in” and your mind probably equates that action with purchasing a new car. Although the majority of trade-ins are for a purchase — new or used — you can also trade in your vehicle toward a new car lease.

Just as a trade in can function as a down payment for a purchase, the equity in your car may also reduce your monthly lease payments. Most certainly, there are some relevant points you should consider before you offer your current vehicle as a down payment for a new car lease.

Lease Fundamentals

There are two matters to clear up first about new car leasing. We’ll do this before we examine the subject further. One important aside: contact an insurer, such as Allstate Insurance, to receive a quote on your new vehicle. Your insurance costs are one aspect of the ownership experience.

First, leasing is not the same as car renting. Leasing is based on the vehicle’s value when you sign the contract; it estimates the vehicle’s residual value at contract end. The most significant factor here is depreciation, representing the declining value of new cars over two, three or four or more years.

Car renting is typically a short-term business contract between you and a car rental company. You agree to borrow a car for a certain amount of days or weeks and then you return it. The rental rate is based largely on the rental company’s daily rate, insurance surcharges, and mileage overage fees.

Second, with a lease, you never own the vehicle, unless you opt to purchase it as stipulated in the contract. There are two types of car leases available: closed-end and open-end leases. A closed-end lease is also known as a “walkaway lease,” a contractual agreement that is settled when the lease term ends. In other words, a customer may return the vehicle to the dealership, sign paperwork and then walk away. There may be additional expenditures disclosed, such as wear and tear and mileage overage costs, but the contract ends once all obligations are satisfied.

With an open-end lease, also known as a “finance lease,” you will face a balloon payment at lease end. In particular, this means that you either must come up with the funds to make the payment or you will need to finance the vehicle. As you might guess, the overwhelming choice is for the lease option that lets you walk away — a closed-end lease.

Purchasing v. Leasing

Approximately 11 percent of people pay cash for a new car, according to CNW Market Research. Another 70 percent finance their new vehicles, and the rest choose to lease.

Leasing has grown in significance over the years as the price of new cars continues to rise. That $42,000 sport coupe you have your eye on would cost you dearly to purchase. If you put 20 percent down ($8,400), you are looking at financing $33,600. Finance that amount for five years at a 4-percent APR interest rate and you will be facing payments of about $619 per month. Not too many people can afford a big down payment and high monthly payments, let alone the insurance, taxes, and tags that would increase your effective cost.

With leasing, the amount you would pay per month is based on what the car’s projected worth is at the end of the lease. That same $42,000 sport coupe might drop in value to $26,000 after three years, representing its residual value. Thus, your lease would be based on the $16,000 remaining, not the vehicle’s full purchase price. Without other costs considered, you are looking at a lease payment of $472 per month, which is about $147 lower than the monthly payments in the financing example.

Car lease deals vary, with some arrangements requiring no money down and as much as several thousand dollars required up front before you sign and drive. Even with the majority of no-money-down leases, you will usually be required to make at least the first monthly payment before you leave the showroom.

Lease Down Payment

Now let’s say you have a car you want to trade in and use its value (equity) as a down payment. That’s understandable, especially if a $472 per month lease payment is still a stretch.

To get a new car dealer’s perspective, Auto Trends turned to Rob Lombard, owner of Lombard Ford, Inc., in Barkhamsted, Conn., to get his take on trading in the car you currently own outright and using its equity as a down payment for a lease.

Lombard says the first matter any reputable dealer should address is to qualify the customer for the lease, which means verifying whether or not a lease is a good option for the buyer.

“If a customer comes in and says that he puts 50,000 miles per year on the vehicle, the likelihood is that person cannot afford the monthly payment,” says Lombard. Lease payments are based, in part, on the amount of miles per year a lessee plans to drive. The higher the mileage limit, the more the customer will pay each month. Moreover, if a customer underestimates his or her mileage, an overcharge will be assessed at the end of the lease for each additional mile driven. Therefore, it is critical to make an accurate mileage estimate.

When asked about down payments, Lombard remarked, “We try to talk people out of large down payments as they do nothing on leases, but camouflage the real cost of driving that car.”

Still, if customers want to trade their vehicle in for a lease, no dealer, including Lombard, is likely to refuse them. Further, customers should do their homework and know the value of their car and negotiate with the dealer just as they would if they were financing.

The Final Analysis

Leasing a car allows consumers to get behind the wheel of a newer and more expensive vehicle than what they might be able to obtain through financing. On a final note, dealer Lombard warns that consumers should read the fine print prior to signing a lease contract, to ensure that they are aware of all costs related to the transaction.

See Also — How to Get Out of a Car Lease Early

How to Lease Your Next Car

July 10, 2018 by admin 1 Comment

Finance, lease, subsribe or buy — here’s what you need to before you jump in.

New car leasing is similar to renting a car, but in this case your rental term lasts for two, three or more years. You never own the car you lease and if you end your lease early or exceed the allotted miles, you will pay some costly penalties.

With these things in mind, why would anyone want to lease a new car? For several reasons, including:

1), you want to drive a more expensive car,

2), drive a new car every few years or

3) you simply don’t have much cash to plunk down for a down payment.

If you fall under any of these three reasons, then leasing’s appeal may be strong for you.

Just like buying a car, you should do your research to find the vehicle you want and the best leasing deal possible. Leasing deals are negotiable—you’ll want to put out the least amount of cash up front while limiting your monthly lease payments.

1. Know your credit score.

If you have a good credit, then a high credit score should provide you the best leasing deal. Obtain your credit score from at least one of the three credit reporting bureaus — Equifax, TransUnion and Experian — to see where you stand. A score of 700 and higher reflects “good credit management” according to Experian.

2. Choose your car.

Find the type of vehicle you want and narrow your list to about three models, each of which you should test drive. Buy the car you know you’ll be happy with for the next several years. If you settle for something that you’ll tire of quickly, you’ll either be stuck with a car you dislike until the end of the lease term or be forced to pay hundreds, perhaps thousands, of dollars to break your lease.

3. Compare lease deals.

Most leasing plans are offered through your new car dealer, although arranging a lease privately is possible. Avoid being pressured by any dealer offering a “take it or leave it” deal on auto leasing—shop several dealers for the best terms.

4. Negotiate the price first.

Consider not telling the new car sales person that you want to lease your vehicle until after you negotiate your best price. Your lease is based on the final agreed upon price, so try to lower that price to hold down your overall costs and reduce your monthly payments. You can find out what a dealer paid for the car by buying a new car price report from Consumer Reports and using that information to negotiate.

5. Calculate your lease.

Before signing your lease agreement, you must calculate your costs; use a lease calculator such as one found on leaseguide.com. Your negotiated price is your base capitalization cost, which should be lower than the car’s sticker price. Be mindful of other costs including acquisition fees, a luxury tax, state sales tax and lease insurance. Adjust this figure by the amount of money you put down and any trade-in credit. Your dealer has a residual value in mind, which is what the manufacturer determines what your car will be worth at the end of lease term. In addition, leasing companies use a “money factor” or interest rate to determine costs—include that number and your term (months) to determine total lease costs and your monthly payment.

Take Your Time

New car leasing sounds complicated, doesn’t it? That’s why you should take your time to come up with the best deal to find the car you’ll be happy driving for several years. If you rush the process, you’ll pay hundreds, perhaps thousands of dollars more on your lease.

Gap Insurance May Save You Thousands of Dollars

June 28, 2018 by admin 1 Comment

Here’s an unpleasant thought: you buy a new car and within months it’s stolen or totaled following an accident. You believe that your insurance coverage is excellent, but are soon rudely awakened when your finance company sends you a bill for thousands of dollars. Had you chosen gap insurance, your finance company wouldn’t be demanding payment. That is if you knew about such coverage in the first place.

car crash gap insurance — Is your auto insurance sufficient for protecting you against total loss?

What is Gap Coverage?

Gap insurance, also known as gap coverage, pays the difference between what you owe on your vehicle and what your car is worth. Gap coverage is especially important if you do not put enough money down on your new car and its value has slipped below what you owe on it.

For instance, you buy a new car and pay $27,500 for it, putting $2,500 down. You take out a loan for $25,000 and five payments later your outstanding balance falls to $23,500.

Unfortunately, you get into an accident that destroys your car, which soon reveals how vulnerable you really are. You file a claim with your insurer and the insurance company sends your finance company a check for $19,500, representing the value of the car minus your $500 deductible. The difference here is $4,000, an amount that your finance company says that you still owe on the loan.

That gap represents the difference between the loan balance and your insurance payment, monies that you must repay.

Going Upside Down

Many car shoppers are “upside down” or “underwater” with their auto loans, a term that also describes some homeowners.

Typically, borrowers are upside down for two reasons:

1), they do not put enough money down, and

2), the car loses a significant amount of its value within the first few months of ownership.

Indeed, it is not uncommon for a new car to depreciate rapidly with Edmunds.com noting that a new vehicle loses on average 11 percent of its value the moment it drives off the dealer’s lot. Several months later the car’s value may fall by 25 to 30 percent, making it entirely possible that you owe more to your finance company than what your insurer says it is worth.

Gap Protection Coverage

You may not need gap protection if you put 20 percent or more down and your loan term is short, such as for 36 months. Some consumers make the mistake of rolling their related fees and taxes into their loan and perhaps adding extended warranty coverage as well.

One way to make sure that you are not buying a car that will immediately put you underwater is by using an auto loan calculator such as the one that’s available online from Bankrate.com. Then, compare that number with what Kelly Blue Book lists as your vehicle’s depreciation rate.

As long as you owe less for your vehicle than what it is worth, then you are okay.

Buying Gap Insurance

Before you run out to buy gap coverage, you should review your loan purchase agreement as you may already have it. Such coverage is more common if you lease a vehicle than if you were to finance one. In any case, your finance company may have added that coverage with your agreement.

Indeed, some lenders require gap coverage because they know you may find it difficult to settle the difference later on.

Your current insurer may offer gap coverage, a small cost that’s added to your auto insurance bill. Contact your insurer to get a quote for the gap or actual cash value insurance.

Keep in mind that you will still have to pay a deductible and may receive less money if your car has high miles or is in poor condition. You can cancel gap coverage once you determine you are no longer upside down.

Avoid a Financial Catastrophe

Gap coverage may save you from financial calamity, enabling you to get back on your feet quickly. Without such coverage, you may find yourself unable to afford a replacement vehicle, worsening an already serious problem.

See Also — 7 Ways to Trim Car Insurance

Photo credit: La Cara Salma via Wikipedia. This file is licensed under the Creative Commons Attribution-Share Alike 3.0 Unported, 2.5 Generic, 2.0 Generic and 1.0 Generic license.

How to Turn in a Leased Vehicle Early

July 17, 2015 by admin Leave a Comment

leased vehicle

Accentuate the positive when taking pictures of your leased vehicle.

You leased a new vehicle and now have regrets. Or, perhaps your needs have changed and you want a different vehicle. Regardless of your reason for wanting to get out from underneath a lease, you may find that the lease contract isn’t exactly written in your favor. Even so, there are ways you can turn in a leased vehicle early and without losing your shirt.

Sell the leased vehicle. You don’t own the lease vehicle, but if you find someone willing to buy it, then you can take the proceeds from that sale to cover the lease buyout. As easy as this sounds, it is also difficult to do, especially if you only recently began to lease the vehicle. In this case you may have to cover the deficiency to end the lease contract. It may be worth it to you if you don’t want to be saddled with monthly lease payments and maintenance costs.

Buy the leased vehicle. If selling the leased vehicle and using the payment from the new owner to pay off your loan sounds a bit complicated, another alternative is to simply buy out the vehicle yourself. Once you take ownership you can find a buyer apart from the leasing company’s involvement. Again, you may take a financial hit here, especially if you cannot find a buyer to match what you paid the leasing company.

Nissan Altima leased vehicle.

A three-quarters view of the front should be included in your ad.

Trade the leased vehicle in for another one. It is possible to get out of a lease by agreeing to take on a lease for a new vehicle. Or to purchase another vehicle. In some cases, the manufacturer will work with you, allowing you to trade your vehicle in to step up to another model. For example, if you own a sexy sport coupe and need to buy a crossover to accommodate your growing family, you may be able to make that transition without penalty. Just make sure that there are no fees charged for the early turn in.

Find someone to take over payments. You can get out from underneath a lease if you find someone to take over your payments. This may be possible if your lease amount is reasonable and someone needs a car for the short term. You can try to find someone on your own or use a service such as LeaseTrader.com or SwapALease.com to list your vehicle. This service is not free — you will have to pay an ad charge, a listing fee or both. Furthermore, your leasing company may charge you a transfer fee.

Return the vehicle to the dealership. Quite frankly, you have had it. You haven’t been able to sell your vehicle or find someone willing to take over payments. As it stands, you cannot afford the car and you worry that you will fall behind on payments and that it will be repossessed. In this case you can return the vehicle to the dealer, pay the early turn in penalty and make your outstanding payments. Doing this will help preserve your credit. That’s better than incurring a repossession or experiencing some other adverse action will harm you.

Hyundai GDI Engine.

Lift the hood and show buyers your beautiful engine.

Leased Vehicle Marketing

Prior to marketing your vehicle for sale or for lease take over, you want to make it look as pleasing as possible. If the tires are worn, then replace them. Nicks and scratches should be addressed, something that can be accomplished through detailing. It may be a worthwhile investment to employ the services of a professional to whip your car into shape.

Lastly, take pictures of your car, including three-quarter front and rear views as well as a profile picture. For the interior, concentrate on the seats, the dashboard and other cabin highlights. Lift the hood and capture the engine bay. Likewise, focus on the trunk. These photos will be included with your online advertisement.

Certainly, getting out from underneath is not an easy task. But with determination you can find the best option for you.

How to Lease a Demo Car

July 15, 2015 by admin 3 Comments

Buick LaCrosse — Make sure that the demo model you want is free of scratches.

Savvy car shoppers know that if you want to save big bucks on a newer car, then buying a certified pre-owned (CPO) vehicle is a wise strategy. Certainly, the first year of car ownership brings with it the most significant drop in depreciation. Suddenly, that new car bought for $33,000 new, may be worth less than $25,000.

You may not have to wait a model year to enjoy the perks of a used vehicle and the depreciation cost absorbed by someone else. Indeed, cars with just a few thousand miles on the odometer are routinely sold by new car dealers, vehicles that served as demo models for a few months and are now ready for sale.

Buying a demo (demonstration) car is easy, but can you lease one? Yes, you can. In fact, just as most any new or late-model vehicle can be leased, so can a demo car. But before you sign on the dotted line you must perform due diligence. So, then do the following:

Inspect With Care

Just as you would do with any used vehicle, examine the demo car very carefully. Likely, it is as shiny and appealing as any new car on the lot, but it could possess a few flaws that might be revealed through careful inspection. Keep this in mind: scores, if not hundreds of potential buyers may have tested the vehicle.

Look for nicks or scratches that may have been touched up. Look closely at the seats, the dashboard, and the carpeting for signs of wear and tear or discoloration. Lift the hood and verify that the oil, transmission fluid and coolant is clean, the connections are secure and that the battery is in top condition. Examine the trunk for signs of water intrusion by lifting the floor cover. Having your own mechanic examine the vehicle can be a wise decision too.

Obtain a Vehicle Report

The dealer’s maintenance records may be detailed, but you should also be supplied with a vehicle history report even if the car was only used for two or three months. This report should be automatically supplied by the car dealer and at no cost to you.

Most dealers will supply a CARFAX report outlining information about the vehicle’s title, ownership and mileage history. It should also include service information and if there was an accident that was reported, that detail will be included. A minor fender bender may not be much, but anything greater could be a deal breaker.

Warranty and Related Information

What sort of warranty coverage is the dealer offering with the demo model? It should come with the balance of the new car warranty as well as powertrain and rust protection. For manufacturers offering new car maintenance for the first two or three years of ownership, the demo vehicle should assume same. (Here is an excellent article that details the limits and sometimes the pitfalls with vehicle history reports — Limitations and Problems with Carfax or any Vehicle History Report).

If you’re interested in purchasing an extended warranty, your demo vehicle should be eligible for a plan. You can purchase a plan through the dealer our buy one independently. Shop around and compare offers and prices.

Find a Demo

New car dealers may have demos in use, but that doesn’t mean that one is available for sale. Here, you will want to call several local dealers and ask if they have demos available. Those cars may be included in the dealer’s online inventory too.

Take your time shopping for a demo and you may come up with a like-new car at a bargain price. Once you find a car that meets your criteria, then discuss your leasing options with the dealer. You should bargain the best price for the car and ensure that the warranties run as long as the lease.

See Also — Where Can I Find My Car Paint Code?

Affordable Leases For Under $4,000 Per Month

May 12, 2015 by admin Leave a Comment

Leasing deals cover models such as this Aston Martin Vantage GT.

$4,000 per month for an automotive lease? Surely, you jest!

For well-heeled shoppers, $4,000 is the top-end cost of leasing a late-model used car, something few of us common folks can afford. Indeed, if we choose to lease most of us attempt to keep our monthly payments under $300 in a bid to acquire a late model BMW 3 Series or a beloved Dodge Challenger, Ford Mustang or a Chevrolet Camaro.

A tempting lease deal could put you behind the wheel of a Maserati Quattroporte.

Your Leasing Options

We may allow ourselves to push slightly above our budgets to acquire the car we truly want — what leasing makes possible — but to get behind the wheel of an Audi S8 or a Maserati Quattroporte, you’ll pay at least $1,600 per month in lease payments for that privilege.

Thanks to a news tip from Swapalease.com — the world’s largest automotive lease marketplace — we have learned that Aston Martin is now offering lease deals on several of its popular models.

Leasing may make this Bentley Continental Flying Spur attainable.

Current Lease Deals

Those deals range from $1,400 to $2,300 per month and include a Vantage GT for $1,400 per month, a V12 Vantage S for $1,900 per month or a Rapide S for $2,300 per month as reported by Forbes. Aston Martin is working with Ally Financial to handle its US leasing deals.

Swapalease.com parsed the data and found 11 additional high-end lease deals that are available today, as in RIGHT NOW:

2014 Rolls-Royce Wraith ($3,925 per month)
2014 Porsche Panamera ($2,750 per month)
2012 Porsche 911 ($2,474 per month)
2014 Mercedes-Benz S-Class ($2,600 per month)
2013 Mercedes-Benz SL-Class ($2,415 per month)
2013 Maserati GranTourismo ($2,990 per month)
2012 Maserati Quattroporte ($1,626 per month)
2014 Bentley Continental Flying Spur ($2,435 per month)
2013 Bentley Continental GT Speed ($2,875 per month)
2014 Audi S8 ($1,829 per month)
2013 BMW Alpina B7 ($1,685 per month)

Incidentally, the leasing company says that the Rolls-Royce lease deal “is the most expensive lease that they’ve ever had on the marketplace.”

In two years this 2015 Mercedes-Benz S-Class may be attainable.

Offering his comments about the high-end leases was Scot Hall, Executive Vice President of Swapalease.com. Said Hall, “Even the affluent are focused on monthly payments today. It’s easy to understand why consumers with tight budgets would want a lease, which in many cases makes the auto budget more affordable on a monthly level. But when affluent audiences also look for monthly pricing it has become obvious that even the most distinguished car enthusiast is fixated on the payment, not the price.”

Behind the Wheel of an Exotic Car

And leasing may be more attractive than buying, especially for people who demand top-of-the-line models. Indeed, if conspicuous consumption is your thing, then acquiring a hot car, keeping it for a year or two, then moving on to the next conquest may be de rigueur for you.

Photos courtesy of Aston Martin, Rolls-Royce, Maserati and Mercedes-Benz.

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.

Automotive Leasing and Lending Continue to Rise

September 4, 2013 by admin 1 Comment

Most consumers finance a new car deal, relying on car leasing or a personal loan to close their purchases. With credit much looser than it was during the recession, consumers are able to find expanded financing opportunities as well. Confirming this trend is the just released State of the Automotive Finance Marketreport issued by Experian Automotive. That report underscores how the surging automotive market is being aided by improved consumer financing choices.

leasing and loans

Experian Automotive Report

The Experian Automotive report reveals that 84.5 percent of consumers who acquired a new vehicle in the second quarter either leased it or obtained a loan. That number is up from 82.5 percent one year earlier and from 79.7 percent five years earlier. Notably, the 2008 figure is just before the last recession kicked in.

Said Melinda Zabritski, senior director of automotive credit for Experian Automotive, “Loans have become more accessible in recent years, and we’ve seen a steady growth in the percentage of consumers financing their vehicles.” Zabritski noted that consumers are more confident about taking out a loan as evidenced by the corresponding reduction in delinquencies.

To obtain financing, consumers need not have excellent credit, but it certainly provides better financing options when they do. Loan and lease terms are set according to a number of factors with the consumer’s three-digit credit score playing no small part in that equation. Consumers had an average credit score of 760 for new vehicle leases and 749 for new vehicle loans according to the report.

Leasing and Lending

bad credit loans and leasing Lease payments typically average lower than financing, something the latest report confirms. Monthly lease average payments of $408 were nearly $50 less than the $457 for new vehicle loans. Lease terms averaged 35 months and new car loan terms averaged 65 months in the second quarter of this year.

Consumers with less than stellar, even bad credit, can often qualify for a lease or a car loan too. For new cars, 27.45 percent of loans were categorized as nonprime, subprime or deep-subprime. For used cars, 57.31 percent of loans were similarly categorized.

The average price of a new vehicle is more than $30,000, thus the average amount financed for a new vehicle was $26,526 and $17,913 for used. Interest rates have been tracking higher lately, but the average interest rate on a new car loan was 4.46 percent and 8.56 percent for used. Used car loans are also not too far behind new car loans in loan length, averaging 61 months to the 65 months for new cars.

Your Personal Credit

Consumers on the hunt for a new car can find a vast trove of information on the Internet. Just as you would shop and compare vehicle offers between dealers, you can do the same with lenders for loans. Banks, credit unions and new car dealers are among the places to look for a new car loan. Your dealer most likely will arrange your leasing although there are other leasing options available.

You can help your cause by reviewing your credit reports and obtaining your credit score before you shop for a car. Free copies of all three of your credit reports (Experian, Equifax and TransUnion) are available through AnnualCreditReport.com You can obtain your credit score through this site for a fee or by visiting MyFico.com. Experian Automotive is, by the way, part of Experian plc, one of the three major credit reporting bureaus serving American consumers.

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.