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Autos
The new-car business is in turmoil, and that's likely to continue well into the new year.
So what should a savvy buyer do if a new car is on the list of things to buy in 2008?
Here's a rundown of the strategies you should pursue to make sure your next purchase is a financially sound move:
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| Smart moves for your next car purchase |
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1. Pay off your existing car loan
It may sound ridiculously basic, but the No. 1 thing that trips up many new car buyers is that they trade in a vehicle on which they still
owe money. Dealers make it seem so easy, and will all too often offer to "pay off your car no matter how much you owe.''
Don't be fooled. That payoff,
if it's more than your car is worth, will
be rolled over into your new car loan, which
will put you in a deeper financial hole the
moment you drive off the lot.
2. Save up a down payment
Again, something that seems basic. But in these days when there are "zero down'' financing offers, the smart buyer should put at
least 20 percent or more down, whether it's in cash or trade-in value. That often will improve your loan rate and will mean that
you're less likely to owe more than that new car will be worth in a year or two.
3. Check your credit score
If you've ever seen the fine print on those low-rate finance offers, you'll likely see the phrase "for well-qualified buyers.''
That usually means someone with a credit score of at least 700.
Make sure you know what your
score is before shopping so you won't be bamboozled
by the dealer's finance guy into a higher-rate
loan you don't deserve. If your credit score
is below 700, try to raise it by paying down
some credit card balances and avoiding too
many credit applications before you go shopping
for a new car.
4. Arrange financing in advance
The best way to know what you're really paying for a new car is to take such things as the trade-in value and the cost
of financing out of the equation. When it comes to a loan, get a commitment from your credit union, bank or online lender
for a set amount of financing. That way you can deal from a position of strength when you choose the car you want.
5. Don't buy more car than you need or can afford
It's awfully tempting to stretch your budget for that Lexus or BMW. But if the monthly payments will leave you car-poor, pass them by.
Or at least look at some of the less-expensive models on which some of those luxury cars are based.
For example, the entry-level Lexus sedan is really a tarted-up Camry. The entry-level Acura is a gussied-up Accord. Do you really
need that expensive nameplate and the wood dash accents that will wind up costing you thousands of dollars?
6. Think about fuel mileage
Gasoline isn't going to be getting cheaper anytime soon -- if at all. Consider this: A fill-up on many SUVs and cars, especially
those that require premium fuel, can cost $50 to $75. That adds $200 to $300 a month to your transportation costs over and above the
monthly payments on the vehicle.
The federal mileage estimates on 2008 models reflect a more realistic view of what you can expect to experience, so they are far
more reliable guidelines on which to compare fuel economy. You should strive for a vehicle that gets at least 20 miles per gallon, or mpg, in city driving
and 27 mpg to 30 mpg on the highway.
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