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If you have plans to buy a new or used vehicle in the coming year, there are some things you should be doing now before you make that major purchase.
Here are eight strategies that can help you save money and make the process easier.
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| 8 smart auto moves in '08 |
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1. Consider buying a used vehicle.
The inescapable truth is that any new vehicle
loses at least 30 percent or more of its value
the minute you drive off the lot. While that loss
has less of an impact if you keep a new vehicle
for at least five years, it still should enter
into your calculations. A vehicle that's 2 or
3 years old and with low mileage may be a better
deal for you. To find out which type of car is
best for you, check out Bankrate's "New
vs. Used" tool.
2. Weigh fuel costs.
Although there's no crystal ball to predict where
gas prices are going, there's little doubt that
prices aren't going to return to the $2 gallon
mark. So look at vehicles with higher fuel ratings
and give some consideration to hybrids,
even though some hybrids cost considerably more
than comparable gas-only vehicles. Also, be aware
that for 2008, the government economy ratings
have been revised downward to better reflect the
actual mileage you'll receive.
3. Beware of low-cost lease deals. As manufacturers become more desperate to sell cars -- 2008 looks
to be another down year overall, with sales of less than 17 million new cars and trucks - you'll see a lot of offers involving
cut-rate lease payments. While these appear attractive, they can trap you if you drive more than the allotted mileage. Many of
these leases allow only 10,000 miles a year and charge as much as 25 cents a mile for every mile over the allotment. Be honest
with yourself about how many miles you drive -- it's likely more than most leases allow.
4. Get your
financial house in order. The last thing
most people do is check their credit worthiness
before going car shopping. Do you know your FICO
score? This is the number that can determine whether
or not you qualify for the lowest interest rate
on a car loan. You can estimate your score with
the FICO
Score Estimator. Check your credit report
for erroneous information and look for ways to
raise your credit score, such as paying off some
open credit card accounts. Remember, though, that
closing credit card accounts after paying them
off can actually lower your FICO score.
5. Shop for the best loan deal
before buying. One way to avoid getting
burned on your next car purchase is to have your
financing in place before you set foot on the
dealer's lot. A good resource should be your credit
union, which typically has the lowest rates. Another
place to shop is the Internet, where lenders like
Capital One offer essentially pre-approved loan
checks that you can take directly to the dealer.
Use Bankrate's Auto
Loan Rate Search tool to find your best rate.
6. Build up your down payment. Too many people these days buy cars with little or no money down
and then are surprised that for the first three or four years of ownership they owe more than their car is worth. A good
rule of thumb is to put at least 20 percent down on any vehicle, either in cash or trade.
7. Clean up your trade-in. Look at the vehicle you currently own as though you were a shopper.
Is it clean, does the paint shine and are their some dings that could be cheaply fixed? The difference between a car that looks like
it has been well cared for and one that looks a little shabby can be thousands of dollars. Also, if you still owe money on your trade,
make sure you can get enough to pay off the loan rather than roll the balance over into the loan on your new car.
8. Widen your
shopping list. It's quite understandable
that many car shoppers go directly to Toyota or
Honda, given the impressive record of reliability
that both of those brands have. But the truth
of the marketplace is that the domestic manufacturers
have closed the quality gap and have vehicles
that favorably compare. Given the push by the
Detroit-based
manufacturers to regain market share, some
of the best deals of 2008 can be found there.
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