Jason Hulott1 asked:


Buying a new or second hand is always an expensive business and unless you are one of the dying breed of motorists lucky enough to be a cash buyer, then how you finance your new purchase is going to be a major consideration.

So, what are your options?

Basically, you can look at the dealer’s own finance schemes (’schemes’ in most cases, being the key word here!); by taking out a car loan from a loan provider or bank; or, by remortgaging.

Car dealer finance

With car dealership finance, there are many different types available. However, in most cases, they work out the most costly way to fund a new motor. This is because car dealers are in the middle men between you and the finance company who are offering the loan and while the ‘money’ is changing hands, the car dealer likes to take his own little cut.

This will be reflected in the interest rate you are offered by the dealership, which will in most cases be bumped up from what the finance company are asking.

And if you see a 0% finance deal, while it will seem attractive to everyone, even those who could be cash buyer, you need to ask yourself why they are offering such a good deal. Is it because they need to shift this particular make and model of car as it isn’t selling?

If this could be the case, what hope will you have of selling a few years down the line when you decide to get another vehicle?

Or is the 0% finance deal on offer because there are hidden extras that will be added in to the overall costs so that the dealership stills makes a nice little profit, which mans you are paying over the odds for the car?

Also remember that should you miss your monthly credit repayments on the car, it could be repossessed, leaving you literally stranded.

Do your research thoroughly before signing up to a 0% finance deal – everything in life comes with a price tag even if it is hard to see.

Personal loans

By arranging a personal loan even before you set foot inside a showroom, you put yourself in a much better position as you will have a lot more bargaining power. Plus, it means that once you sign on the dotted line for your new car, you own it completely, even if you do have a debt to pay it.

Finding the cheapest personal loan in order to finance a car can be simple. It’s all a case of shopping around for the right deal. Of course the internet makes this easy for you, giving you access to literally hundreds of providers and deals. You can compare interest rates as well as terms and conditions and can even apply online.

Always get a fixed rate loan for a shorter time as possible in order to know exactly how much you are paying out each month and to minimise the amount of interest you will repay.

Remortgaging

Finally, remortgaging is another way to finance a new car. However, do bear in mind that while you may be paying a low rate of interest (mortgage rates in general are lower than personal loan rates), the payment will be spread over a longer period of time – up to 25 years depending on the term on your mortgage.

So, you’ll be paying lots and lots of interest back on it.

You should also ensure that the extra repayment is affordable. Should this extra repayment be a burden on you finally and you start to miss repayment, it will be your home, not your car, that will be repossessed.



ZANE

Albert Medinas asked:


Let’s take a look at the facts: Housing prices are rising at a clip of 10-15% per year, tuition costs are rising by an average of 10% each fall, and energy costs – well, the average rise in prices depends on the week you happen to be looking at, but double-digit increases have been the norm for the past few years. And now, the really depressing fact: Average wage increases have hovered between a measly 3 and 4 percent for the past three years. Now what, you ask, does any of this have to do with car financing?

Hey, as simple as can be stated, it boils down to numbers. Interest rates: These are the hidden little killers that can destroy retirement plans and lifestyles over the course of a lifetime. Car financing is the second most important credit-related decision you will ever make, the first being the mortgage on your home. So, just as an example, let’s say that you make $30,000 per year and are looking to finance a $25,000 car over five years. The difference between attaining approved car financing at 6% interest and 16% interest equals $130 per month if you take the loan out over 5 years! And here’s the clincher – a 3% annual increase in salary will net you an extra $900 per year (and that’s before taxes), while saving $130 per month on your car financing puts nearly $1600 more dollars in your pocket. (And hey, that’s after taxes!) Even a few percentage points difference on your car financing can actually equal or exceed the raise you got from work this year!

I had no idea those tiny numbers could add up to so much money! What is my best option for getting an approved car finance plan – with the lowest interest rates?

In the end, your credit rating, and the interest rates it commands, can make or break you over the course of your life. Car financing is not rocket science, but you really have to be careful with the numbers – or you can end up paying thousands of dollars more than you have to. Your best approved car finance option is probably going to be obtained through a bank or credit union. The great things about getting your car financing through a bank is that you tend to get the best rates, personalized service, and you don’t have to worry about some pushy car salesman trying to shove useless add-ons down your throat every five minutes! However, banks and credit unions have higher car-financing standards, so you need decent credit to consider this as an option.

But wait a minute – the banks always take forever to process a loan, and the salesperson at the dealership can get me approved in minutes!

This is very true. But there is a price for that convenience, isn’t there? The dealer almost always offers you a higher rate on car financing – and be prepared for them to try and sell you every single add-on you never wanted in the hour it takes them to fill out the paperwork! That approved car finance arranged through the dealership may save you a week over financing through a bank – but just a few percentage points difference in interest rates can easily cost you $1,000 more each year for the entire length of your loan. So in the end…how much is that week worth to you?

All right…the dealer can be a bad option for car financing – but what about those online places that can approve me in minutes?

In all honesty, the Internet can be a great place to secure approved car finance. With the ability to hop around and shop the different sites, you can definitely get some decent interest rates, sometimes comparable to those offered by a bank – plus you can get approved in minutes, and be driving your new car in a day or so. So what’s the catch? Well, the Internet has more than its fair share of scammers just looking to get your social security number and other vital information. If that car financing information ends up in the wrong hands…well, you can do the math! Plus, the ‘Net can be terribly impersonal at times – but it is still a viable option for approved car finance at competitive interest rates.

Impulsive and poorly made car financing options can literally cost you the price of an entire new car over the course of your life. Approved car finance is available through a number of outlets, and each has its own benefits and disadvantages. However, if you want to be able to afford actually driving your new car someplace other than home and work for the next few years, you may want to avoid the inflated car financing, AND those useless add-ons, offered by dealerships.



ZORA

Jon Arnold asked:


When most people are looking for a new car, one of the options that they think about is whether or not a car lease would be more beneficial and cost effective for them than purchasing the car. There are many schools of thought about this and many differing opinions, but what it comes down to is that there is no right or wrong answer that applies to everyone, because everyone’s situation and needs are different.

When you sign on for a car lease, it means that your payments are going to reflect the amount of depreciation of the car over the term of the lease. For example, if the car you are looking at has a sticker price of $30,000 and you sign up for a one year car lease, the dealership estimates that this vehicle, after two years of use and about 24,000 miles, can be sold for say $20,000, assuming a modest dealer profit is included there as well. So your lease payments would be based on $10,000.

Granted, this is a very simplistic look at how lease payments are calculated, but this is pretty much the bottom line. Based on this, you can see that choosing a vehicle for your car lease that has a great resale value is going to keep your lease payments much lower than a car that depreciates much more quickly and does not have a good resale value.

The miles that you plan to drive the car that you put on lease is critical, since one of the major factors that influences the car’s resale value will be the number of miles on the car. Most lease programs allow you about 12,000 miles per year. It is very important that you are able to come up with a very good and very accurate estimate of the number of miles you will drive the car over the lease term, since that will have a major impact on the amount of your monthly lease payment.

If your planned usage of the car is to drive more or less than the standard number of miles per year, talk to your dealer about that. If your usage can be committed at 9,000 miles per year instead of 12,000 then your lease payments will be lower because the car will have fewer miles on it at the end of the car lease term, thereby giving it a higher resale value. But if you realistically plan to put 18,000 miles a year on the car, be VERY sure to mention that also. Your lease payment will go up, but that is much better than being assessed for excess mileage at the end of the lease, where excess mileage may be charged at a rate as high as 30 cents per mile!

In a car lease, you do not own the car and will never have title to the car. In essence, you are doing a long term rental of the car. But you still need to make the payments, and you are responsible for car insurance on it. And since you do not own the car, you will need to carry full insurance coverage on the car, including collision coverage. You are also responsible for repairs to the car, including things that are not covered under warranty, as well as “consumable” things such as tires, wiper blades, oil changes, etc.

The beauty of a car lease is that at the end of the lease, you turn in the car and can walk away. You don’t have the hassles of trying to sell it yourself, and can turn right around and lease a brand new car.

A car lease may be right for you but make sure you understand how a lease works and what the restrictions are so that it does not cost you more than a purchase would have!



TERI

William asked:


When you’re trying to find that perfect car, it is easy to fall prey to smooth talking salesman, we have all experienced the Shark and Minnow type feeling, getting smooth talked while having that bad feeling on the inside. It happens everywhere in each state, in each city, generally multiple times. But why is this? We all need a car, but why is the sales model so crappy to be blunt. Where does the root lie? And it is a lie.

It all starts with a need, or what we think we need. But where does this need come from? As you guess it, I have the answer, status. In America, we are bombarded with constant advertisements of the American dream with the pretty wife and the fit husband and the better than average behaving kid. We see these things and immediately we reference our life thermometer and it just doesn’t seem to match up, almost no ones does. But we want this, we want this dream that has been sold to us, or at least we think we want it, and if we don’t want it, our peers want it and they talk about it and then the need nestles itself into our heart and mind, thus creating a drive for better things. It’s called the Jones’ we must keep up with them, but why? We have been told so, therefore it must be true.

Car salesmen and car companies feed on this imaginary but very real desire and create pristine car commercials with appealing ads that are entertaining to watch. They show pictures of people feeling relieved, happy, satisfied and other good emotions that we crave on a daily basis. But the truth is, happiness is being debt free, not getting into more debt buying a car we don’t need and a payment we cannot afford. I wish sometimes the car commercials would show someone not being able to afford a car payment or repossession, but that is just the Pollyanna in me that would want to create a pefect world.

So now we have a person who cannot afford a car, sitting in it, thinking “This is it!” I have arrived, and nine times out of ten it is only a feeling that has been accepted in society for us to feel. The realism then sets in when they get the car payments that can be outrageous. The sad part is that most of the lower model cars, such a Cavaliers are sold more than any car on the market, they are “affordable” to whose income is under 40,000 per year. I should know, I almost bought one! This article is not intended to be a downer, but more of a wake up call for one to analyze the actually need or want when buying a new car.



DELOIS

Jon Arnold asked:


It is only normal for people to want to save money, and in terms of acquiring a new car, one of the most common questions is whether or not one should buy a new car or lease one. There are all kinds of experts out there who say one way or the other is “always” the right answer, but the problem is that their “right answers” fall on both sides of that fence.

The real answer is that it depends on you and what you want to accomplish, as well as your car habits. For car habits, we are referring to how often you get a new car. Do you get a new car once every couple of years, or only when the wheels fall off the previous one? If you always need to have a late model car and don’t care that it really never gets paid off, then leasing is probably a better option for you.

How many miles do you typically drive over the course of a year? If you are a traveling salesman or a tech support person covering a large geographic area, meaning you put a lot of miles on your car, then leasing is almost certainly not your best option. Leasing programs are getting more flexible these days, allowing you to specify how many miles you will drive over the course of your lease, but if it works out to be much more than the standard 12,000 miles per year, you will probably find that the cost of leasing actually exceeds the cost of buying a new car.

Look at it like this. On a lease, the dealer needs to figure out what he can sell the car for at the end of your lease period, say two years. At 12k miles per year, a two year old car with only 24k miles on it will still demand a decent price if it’s in good shape, and allow the dealer to make a reasonable profit on the sale. But that same two year old car with 50k miles on it is going to sell for considerably less because of the much higher mileage, and your lease payments will reflect the fact that the value of that vehicle is going to be less, and YOU will be paying the difference in your lease payments.

With a lease, you never build up any equity in the car. It is like having a permanent car payment. Yes, at the end of the lease you can buy the car, but at that point you could probably get a better deal on a better used car, so that is an option that very few people take advantage of. On a lease, you still pay for insurance, tires, oil changes, and all the other stuff that you would pay for if you owned the car. In fact, you will always need to carry full insurance coverage on the car, whereas you can drop the expensive collision insurance on a car that you own after you have paid it off.

On the other hand, if you are using the car for business purposes, a lease will provide you with a bigger tax write-off than a purchase, generally speaking. Also with leasing, your monthly payment will typically be less, depending of course on the model of car you choose.

If your credit rating is less than stellar, you may wish to consider purchasing instead. While you can find car loan programs for people with average credit and even bad credit, it is much more difficult to find a good lease program for people with less than good credit because the risk to the dealer and manufacturer is greater.

You need to do your homework and determine which is the best way to go based on your driving habits and car ownership habits. There is no right answer that fits all people, so make the informed decision that is right for you.



LISE

Joseph Kenny asked:


One of life’s joys is buying a new car. The excitement of looking through those glossy brochures, choosing the brand, model, colour, plus the features is incredible. Ask most men and I’m sure they’ll tell you it’s one of the things they enjoy most in the world. And these days, with women reported to be involved in over 80% of all new car purchases, women are getting hooked fast on the pleasure of buying a new car.

However, if there is one thing that can detract from the enjoyment of buying a new car, it is the finances of the whole deal. This is not just speaking about the price of the new car, although this can be considerable. There is also the issue of all the hidden, and not so hidden extras that you have to pay for. For example, before you finalise the price of the car, you have to find out what features come as standard, and if you want to have any additional features, be they for safety, power, style or any other reason, you have to make sure that you calculate the extra cost of them into the price of the car.

Then, added to this is the delivery cost if there is one. Plus any other hidden dealer fees for whatever reason. Then you have to deal with financing charges. You may be one of the lucky people who can pay outright for their car, but most people will be using some style of financial product to cover the purchase price of the car. Either they’ll be leasing it from the dealer, or they’ll be relying on the dealer’s financing offers, or maybe you will have arranged a separate loan from your bank or other lender. Frequently there will be associated costs with the financing package and they should not be overlooked when calculating the cost of the car.

Add to this the cost of road tax. Road tax is calculated based on the size of the engine of the car. Then you will also need insurance. You should make sure you shop around and get the best possible price for your car insurance. You can choose between different levels of coverage depending on whether you want your own car to be covered or just third parties.

By the time you have added all of these extra expenses on to the purchase price of the vehicle you will be closer to knowing the true cost of the car. Make sure you can afford this figure and your car buying experience will be far more enjoyable.



FRANKLYN

Jay Moncliff asked:


Buying a vehicle is one of the most important decisions you can make. You may already know which automobile you want and there is no debate about the color. The decision-making lies in finding a good new car loan. You don’t need to do much research to find what you like. However, you need to do quite a bit of research to finance what you like.

I immediately knew that I was going to buy a PT Cruiser. This is my favorite vehicle ever designed in the history of auto manufacturing. Once I saw the great little vehicle I knew that I had to have one. I started looking into various ways to finance the Cruiser and found a few surprises in it. Many of these surprises were pleasant.

The first thing that surprised me about financing and automobile is the benefit of buying a brand new car rather than a used on. I immediately started to browse the used vehicle section and was guided by a friendly salesperson to the latest selection. The salesperson explained that it is actually easier to get it than it is to get a loan for a used vehicle. This came as shock.

Cars that come right off of the showroom floor are more expensive than used cars. One would think that a new car loan would be more difficult to get. However, older cars are more difficult to finance because the lenders look at the overall value of the purchase. If you buy a used vehicle, the bank has less collateral, in a sense. It insures that the lender will get a newer, and more valuable, automobile if the loan goes into default.

This is a bleak view of the situation but is does work in the favor of those of us who want showroom-young automobiles. Getting it is easier and there is nothing better than being the person who puts that very first mile on the odometer. However, the ease of getting it versus one for a used automobile can work against us, too.

Many of us know that the vehicle depreciates once that precious first mile is accumulated. The largest percentage of depreciation occurs in the first two years. You are going to make payments on a new car loan during those first two years. The ideal would be to buy a car that was two years old. This way, you are not making payments for a depreciating vehicle.

Proponents of it would say that this argument is moot. The vehicle will depreciate in value no matter what. That is the nature of automobiles so enjoy your young vehicle and relax.



KANDI

Robert asked:


According to the AA, the average cost of running a small family car over 10,000 miles per year was £5,611, up from £5,534 in 2006. Depreciation is the main cost issue to consider, accounting for around half the annual running costs.

Fixing your annual costs by renting a car for up to two or three years is becoming more and more popular, according to Ling Valentine (34), the extrovert Chinese immigrant owner of LINGsCARS.com.

This method of financing a brand new car, (commonly referred to by the catch-all phrase “leasing”) avoids increasing interest rates and APRs, by fixing the monthly rental of a new car in a simple, clear figure. This monthly payment can then be compared on a like-for-like basis across a wide range of new cars, something that is almost impossible with the many different “offers” surrounding traditional finance.

“The monthly cost depends on several factors”, says Ling, from her Gateshead ‘World Headquarters’. “First I take the discounted price of the new cars I get from ordering in bulk, often from dealers who need to shift volume to hit targets. Then, I check around a dozen different contract-hire finance providers, who will each value the residual value differently, guessing what the car will be worth to them at the end of the lease term. Finally, I package this together, making sure my own overheads are dramatically less than those of other providers, including the franchised car dealers and car companies themselves. I do not have dozens of expensive glass-palace showrooms to run.”

The result is that LINGsCARS provides, at the touch of a button on a web-browser, a price list of over 400 different brand-new makes and models of cars, all with an easily comparable monthly rental figure. Ling even does something which is unheard of in the new car trade, and lists every car in price order, allowing visitors to her website the ability to compare cars from a £111 a month Chevrolet Matiz to a £735 a month Range Rover. No car dealer in the UK allows that “street-price” comparison, across such a wide range. She lists prices based on annual mileages of 10, 15 and 20,000 miles, suiting most peoples’ use; “You are rewarded for driving less, a very Green way of doing things”, she claims.

New car dealerships often require you to put down a large deposit and then take out a finance deal on a brand new car, or the alternative is to take a loan and write a large cheque. Ling’s argument is why tie up large amounts of your capital or borrowings in a car? “I only ask for three-months rentals as an initial payment, followed by a direct debit payment every month. For a nice new car costing around £300 a month, such as a SAAB 9-5, or a Kia Sorento 4×4, or an Alfa GT or the latest Honda CRV, that means you only have £900 invested, and you are paying the rest month-by-month as you use the car. At the end of the agreement, the car is simply returned to the finance company, you can’t keep it. You have just paid for the use of the car. It is impossible to fall into negative equity, and there is no lump sum to pay at the end.”

“I would suggest you put your spare cash into your house or your savings, not into a big deposit on a new car, which is a depreciating asset”, says Ling.

The necessary oil and filter servicing is cheap, Ling insists, as the cars are brand new and never fall due for an MOT and are unlikely to need major items like brakes and tyres. She says road tax is fully included for the term; “I deliver these new cars to your door, all you have to do is insure them, service them and put fuel in them”.

Breakdowns, which are unlikely on new cars, are fully covered by the manufacturers’ warranty. Some AA or RAC type cover is included for at least the first year. A big benefit is safety; …new cars have the highest safety ratings and the latest safety equipment built in, an important consideration for families.

Talking about traditional new car ownership, the AA says: “As most owners come to pay their motoring bills, each is more expensive than last year’s – undermining claims that cars are getting cheaper to run.”

Ling insists she can change that; “As long as you are credit-worthy and you look after the car like it is your own, you can release the equity in your current car and get into the cycle of changing your car for a brand-new one. You can do this very cheaply, every two or three years”, Ling says.

It is no wonder that in 2007, LINGsCARS rented over £28m of new cars, and that Ling has been awarded “Best non-franchise motor industry website of the year*”. In this Beijing Olympic year, this is one Chinese who is already winning medals – in the UK!

* Automotive Management Awards, Feb 2007.



ARIEL

Jon Arnold asked:


Shopping for a new car when your old one is about to give up isn’t most people’s idea of a good time. It’s not deciding what kind of car you want that’s the problem. Most people are able to think seriously and be realistic about what kind of car they can afford to own. They’ll happily settle for a sedan, even if they dream of a sports car.

However, your credit might get in the way. If you’ve got less than great credit, car dealers can make you feel like a second class citizen. They don’t want to take the risk of selling you the car you need, so they steer you towards other, less desirable models. They don’t want to waste their time on you if you are not going to qualify for financing.

Very few people have perfect credit these days. There’s always an occasion where you miss a few payments on a credit card or other bill, or get laid off from your job and have to put off the least vital bills. However, even if things are now different and you can deal with your financial responsibilities, you’ll still have that black mark on your credit.

Credit bureaus can keep the information about those missed payments on your record for a long time. When you start investigating your options for financing your new car, they’re sure to turn up. This means that you’re on the defensive, and have to relive the period when you weren’t able to live up to your responsibilities. It’s necessary for you to explain to the dealership what happened, why you weren’t able to make those payments, and to justify your ability to make them now. Here’s some information to help you do this more easily.

The first thing you should do is realistically figure out how much you can afford for your new car payment. Don’t make the mistake of being too optimistic about your ability to save money or reduce expenses. Buying a new car shouldn’t affect your quality of life. If it’s necessary to stretch your budget that thin, you should put off getting a new car until things improve.

When you are realistically figuring out your budget, remember that cars do not drive on air. You will need to put gas in them and it would be a good idea to set aside money every month for maintenance like tires, oil changes, etc.

Also, it’s important to retain a good sense of reality in regards to how much you’ll get when you trade in your car. You probably won’t get the blue book price. For instance, if your car is worth $6000 as a trade in, realize that this is only $6000 off the sticker price of the new car. If you receive a discount on the sticker price (rarely do people ever pay the sticker price!), you probably won’t get as much for your trade-in. Sometimes the amount that the dealer discounts your trade in turns out to be the same as if you’d paid the sticker price in the first place.

However, should you be able to work things out with your dealer and arrive at a fair price, you still need to shop for a new car loan. Even if you’re getting a good deal on your trade in vehicle, you’ll almost certainly need to borrow money to buy a new car. What kind of loan you get is almost as important as picking out the car.

If you happen to have a good credit rating, you can often get a good deal on your new car financing through the dealer. They’ll use the manufacturer’s lending resources to help find you the right financing. The best deal you can get is a zero percent finance rate. There’s no interest with a zero percent rate. You can also get one point nine or two point nine percent interest rates, which are a lot better than you can get through most other lenders. Therefore, if you can get a good deal through the dealer, you should probably go for it.

However, those with less than perfect credit may need to look at other options for their new car financing. You may be able to find attractive loan programs through other lenders. These programs are designed for people with a few credit problems. You can even get loans designed for people with very poor credit or even those who’ve filed bankruptcy. However, you should be careful with these kinds of loans. Slipping up with them can put you in line for lots of fees and penalties, and the interest rate is going to be higher because they will consider you a higher risk.

Remember, when you buy a new car, shopping for the right car loan is just as important as picking out the perfect car. If you go with the first financing you’re offered, you may find yourself paying several thousand dollars more than you would have if you had bothered to shop around. Don’t underestimate the value to you of getting the right financing. There’s an option available for you, no matter what your credit history looks like.



ALFREDO

Tom O’leary asked:


Purchasing a new car extended warranty can be expensive. Yet, they can be a financial life-preserver should anything ever happen to your car or truck. Here are eight scenarios that detail whether you should purchase an extended warranty the next time you buy a new car, truck, van or suv.

SCENARIO 1: If you are Single, with no family obligations, make less than $40,000 per year and plan on keeping your new car or truck at least 5 years – Consider an extended warranty. Why’s that?

Well, I’ve found that most in this scenario are either recent college grads just starting out on there own or those that work in a specific trade.

The recent graduates are still trying to pay off huge student loans and deal with all the other normal expenses associated with life on-their-own. That situation severely limits their expendable cash resources.

For those in a specific Trade – most enjoy a comfortable lifestyle and a large, unexpected, out-of-warranty repair can put a painful cramp in that lifestyle.

SCENARIO 2: For those single folks with no family obligations that make more than $40,000 per year and plan on keeping your new car or truck at least 5 years – Skip the extended car warranty. For most in this group, a large, unexpected repair is affordable. The only exception to this scenario are those stuck in a week-to-week paycheck mode – you might want to consider a warranty.

SCENARIO 3: If you are married, with no family obligations, make less than $60,000 per year and plan on keeping your new car or truck at least 5 years – Consider an extended warranty. Why? For the same reasons listed in Scenario 1.

SCENARIO 4: If you are Married, with no family obligations, make more than $60,000 per year and plan on keeping your new car or truck at least 5 years – Skip the extended warranty. Why? For the same reasons listed in Scenario 2.

SCENARIO 5: If you are married, with kids, make less than $60,000 per year and plan on keeping your new car or truck at least 5 years – Consider an extended warranty. Most folks in this situation are stretched to the limits already. Family obligations usually limit expendable cash and an expensive repair will be financially painful.

SCENARIO 6: If you are Married, with kids, make more than $60,000 per year and plan on keeping your new car or truck at least 5 years – Skip the extended car warranty. Why? Typically these folks do have some expendable income and can handle the cost of a large out-of-warranty repair. However, if this scenario fit’s you, and you’re over-your-head in Credit Card Debt and other bills….it might be wise to look at a warranty.

SCENARIO 7: Those who are leasing or plan on getting rid of the car, truck, van or suv before the Manufacturer’s Warranty runs out, skip the extended warranty. Why pay extra for coverage you don’t need.

SCENARIO 8: Those who plan on “driving-the-car-till-the-wheels-fall-off” – Consider skipping the extended warranty as well. The Cost vs. Benefit just isn’t attractive for folks who keep cars for a very long time.

I’ve found that 99.9% of all new car buyers match one of these scenarios – just use the one that fits your particular situation.



INGE

Jon Arnold asked:


Let’s face it, you love cars. You love to drive a new or late model car, the smell of a new car, the feeling of new and untapped power under the hood. It is exciting. But one of the problems is that your financial resources are a bit more limited than your dreams are, so you may want to consider a car lease instead of going out to get a car loan for a purchase.

The first thing you need to understand is exactly what is a car lease. When you lease a car, it does not mean that you own the car. Rather, it is more like renting the car, although there are still many very important differences. For example, you still need to pay for the insurance on the car. This is critical because you need to carry full coverage on the car, including collision insurance, which serves to protect the risk of the owner of the car while you have it out on lease. This insurance is typically more than what you might normally have if you had purchased the car outright, so be sure to figure the cost of insurance into your overall cost of driving the car.

One of the big bright spots with a car lease is that you do not worry about depreciation of the car, since you paid for that up front. You see, the cost of the lease is figured based on how much the car will be worth in resale value at the end of the lease. For example, if the car you want to lease cost $40,000 and at the end of a two year lease, assuming you have put about 24,000 miles on the car, the resale value is about $25,000 then the lease payment is figured based on the difference, or $15,000. This is exactly the reason that you can get a much better lease deal on a car that has a great resale value, instead of a car that it pretty much shot after two years.

Another reason that a leased car can be considered a better deal is because the payments are typically lower than if you had purchased the car. Again, as described above, this depends on the estimated resale value of the car after the lease period, but generally speaking, your payments will be less. However, since you are driving more of the car as an asset or resource with less of your commitment to the vehicle, your credit needs to typically be a bit better than it would for a purchase or a car loan.

The real beauty of a car lease is that at the end of the lease, you can just turn in the car and slide into a new lease on a brand new car. This is assuming of course that you have not put too many miles on your leased car. You should have a good feeling for how many miles you will drive. Standard lease agreements state about 12,000 miles per year although that can be adjusted up front if you know you will drive more. Be very conscious of how many miles you are putting on the car, since all miles in excess of what you agreed to when you turn in the car are assessed a pretty hefty charge, like 30 cents per mile or even more.

On the downside of a car lease program, you never own the car. You have replaced tires, wiper blades, paid insurance on it, but since you are leasing the car, you will never own it and will therefore always have a monthly payment. Contrast that with a car purchase, where after the car loan term, you own the car and can still drive it but you are not making car payments anymore.

Consider which option is right for you. A car lease can be a great deal and keep more money in your pocket, as long as you can live with the restrictions and limitations.



ADOLFO

David Neehly asked:


A new car is a major expense in anyone’s language. You only have to consider that what we now spend on an average priced new car is roughly what our parents spent to buy a new house a generation ago. A five or ten percent difference in the price on a purchase of this size can prove very costly.!

So, it’s clear that a new car purchase needs to be properly thought through. It’s imperative to do your research to ensure you get a great deal. Here are a few tips to help you get that great deal!

Tip #1 … Take your time. Car dealers thrive on making you think “todays special” will be gone tomorrow. Not true. Make it obvious that you have “all the time in the world” to buy a car. That gives you the upper hand in negotiations right from the start.

Tip #2 … Do your own research. You have to know a cars real value “before” you go shopping. The internet is a wonderful resource for finding out true car values. You can find out the average retail and wholesale costs of a specific make and model. These two pieces of information are vital to assess a good deal from a dud.

Tip #3 … Leave some profit for the dealer. They need to make some money on the deal, and you want to pay a fair price. This is where knowing your values are vital. You can often negotiate a price that’s maybe only $500 above dealer cost. Any dealer would sooner sell 3 cars a day and make $500 on each than sell one per day and make $1000 on each. You have to know how far you can squeeze them.!

Tip #4 … Only pay for the options you want. You may have to wait a few weeks for delivery to get exactly what you want, at the price you want. This is much better than “getting $5000 worth of extras for only $2000″ if those accessories that are of no use to you.

Tip #5 … Go car shopping near the end of the month. Most dealerships, and their salespeople, have sales budgets to meet. They’ll be much more likely to sweeten the deals near the end of the month to make the months figures look a little better.

Tip #6 … Negotiate your trade in value seperately. Dealers will always try to cloud the figures by offering you a “cash difference” figure. This just confuses the value being given to each vehicle. Keep it simple, and settle on the new car purchase price first, then negotiate the trade-in value. That way there are no tricks, and each car has a direct value you can assess for yourself.

Tip #7 … Stick to you assessment of car values. Salespeople undergo a lot of training to enable them to convince you that they are experts and you aren’t. Research doesn’t lie, but salepeople often do. Back yourself, and walk away from any salesperson that thinks they are smarter than you, or tries to “pull the wool over your eyes”.

Tip #8 … Make sure the car has a great warranty. New cars these days are backed by some outstanding factory warranties. An extra year or two of warranty can be worth both, a lot of money and a lot of peace of mind. You never get a second chance to get a new car warranty, so go for the best you can get. Dealers with top quality cars aren’t afraid to warranty them.

Tip #9 … Ask all your questions up front – even the silly ones. Whatever you do, always read the fine print of the sales contract before signing it. If anything is unclear, ask. Contracts usually contain legal jargon, if you are in any doubt at all about what something means, ask to have it explained before you sign.

Tip #10 … Take the car for a good, long test drive. Get the feel of the car before you take it home. If you aren’t a particularly “mechanical person”, get someone who is, to come for a ride with you. Most new cars a in near perfect condition, but if yours isn’t, you want to know now, not later. The dealer wants to clinch the deal now, so they’ll fix any minor defects immediately. Make sure they do.

I’m sure if you follow these 10 simple tips, you’ll have a very pleasant new car buying experience. In short, do your research, know your stuff, and you’ll walk away with the car you want, and the deal you want.!



SEBASTIAN

Jon Arnold asked:


Since you are reading this, I am going to assume that you are looking into the lease options for your next new car instead of purchase options. A new car lease MAY be a good deal for you but it is something that you should examine very carefully, since you may end up in a much worse position.

On the up side, a new car lease is almost certainly going to have lower monthly payments that a purchase, compared with the same amount of money out of pocket at the time of signing. You can usually get a good deal on a car lease for less than a couple thousand out of pocket. The monthly payment is going to be determined by what the estimated resale value of the car will be at the end of the lease. So a car with poor resale value is going to have higher monthly payments than a car with a much better average resale value.

But on the down side, you are still responsible for the maintenance of your leased car – gas, oil changes, tires, tune-ups, insurance, and all the other things that normally accompany car ownership, but you are NOT building any equity in the car. In other words, you are in effect RENTING the car, except that you also have the responsibility for the maintenance of it.

Not all new car leases are created equally. You should definitely do your homework as far as what leasing programs are available, what they include and exclude, and most of all, what is it going to cost you. One big thing in almost all car leases is a mileage cap, where a typically mileage cap says that you will put no more than 12,000 miles a year on the car. So at the end of a three year lease, you can have no more than 36,000 miles on the car. You do not get any extra brownie points if there are fewer miles on it, but if there are MORE miles than that on it, you will pay through the nose for it, something like 30 cents per mile. So in this example, at the end of the lease you have 40,000 miles on it, it is going to cost you an additional $1200 to turn in the car. Ouch!

Over the course of a lease, you may want to terminate the lease early. If this might even be a remote possibility, know what your options are up front. In most cases, there is an early termination fee. Sometimes if you leased your car from a large dealership, they will allow an early termination fee without penalty if you are within about 6 months of the end of the lease, but only if you sign another agreement on another new car lease.

I would strongly encourage you to do a fair amount of homework before you sign on the dotted line. Even if the lease being offered by the dealership on your new car lease appears to be incredibly good, you can almost always be assured that there is a better program available. Sometimes the payments might be the same, but other programs may allow a higher mileage cap, might have lower or no early termination fees, and a variety of other subtle differences that could make a huge difference to you and your intended use of the new car.



BRIDGET