Auto loans and purchasing

Dear Friends,
Oh, the headache of buying and financing a car. First, remember that a car is a depreciating item, it is not an investment. Before you go out and do the test drive, do your research. Every possible piece of information about the car is on the internet. Different models lose there value differently. Luxury cars lose the most value the fastest. While Japanese cars hold their value very well, even in the current market. The value of a car is called the Blue Book, which is a guide to the open market on buying and selling cars. The Blue Book tracks
selling, auction, buying and maintenance trends. Remember, it is a guide and it is also based on mechanical and visual condition of a vehicle. There are retail and wholesale values in the Blue Book. Car dealers only deal in the wholesale market and so should you. The Blue Book only rates used cars. Buying a used car is very difficult because of all the possible problems that could come with the car. Always have a car checked out by AAA before you purchase it. They are a non-biased company and they check the car completely. If the car passes inspection there’s still the issue of value. The mark up on used cars is higher than on new cars. Don’t buy a used car without running a CARFAX. CARFAX checks the DMV records of all cars in the US. It can tell you if the car has been in an accident or if it has been salvaged. NEVER buy a salvaged car they are worthless and you can’t finance them.

New Cars go by prices set by the factory. Buying a new car is much easier than it used to be, all the big companies have Internet sales departments now. You can negotiate the deal over the phone, order the color, arrange for pickup, and get interest quotes. Also, dealers have too much inventory right now. They are willing to deal more than ever, and the factories are offering all kinds of incentives. Don’t buy a car emotionally, it always gets you in trouble - like the baby-poo yellow convertible you just had to have. But it’s also important that you enjoy your car, that it’s comfortable, affordable, covers your driving needs, and is economical.

If you have to finance a car try to finance as little as possible. Before shopping for your car, go to a credit union and get pre-approved . Credit Unions are not for profit so they usually have very good rates. Check the factory incentive rates on certain cars, sometimes you can get rates as low as 1.9%, etc. Do not lease a car unless you’re rich, it’s a business deduction, or someone else is making the payments. They are very difficult to get out of and there are mileage limitations, and a host of other hidden things.

Try not to take out a loan for too long on a depreciating item - they are so hard to pay off.
When you go into the finance department of a dealership they will offer you a bunch of aftermarket items. Some are good and some are worthless, depending on the consumers needs.
Be wary of what extra things you are buying. All those items are being offered at a retail price, they are also negotiable.

Later I’ll write about buying a car with a credit problem.