9 wise car strategies for 2009

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No one has ever seen such turmoil in the auto industry, and this chaos affects both buyers and sellers.

Potential buyers are worried about their own finances and confused about whether they can qualify for credit. Even if they do get credit, they wonder what the rate might be.

Manufacturers — particularly Chrysler, Ford and General Motors — are anxious about staying in business long enough to weather this perfect financial storm.

Although this situation has been with us for months, it’s not likely to go away in 2009 and maybe not even into 2010.

So it’s important for consumers to plan ahead when it comes to transportation needs.

To help you deal with the coming year, here are nine things to consider in 2009:

1. Don’t be so quick to dump the vehicle you have now.Yes, we are a consumer-oriented society. If the auto industry is going to bounce back, we’re all going to have to start buying at some point.

But for now, look at your current vehicle as something you may need to live with for another couple of years. If it needs some repairs to make it more reliable, find a way to get that done.

Spending $1,000 now will be infinitely cheaper than taking on five years or more of new car payments in an uncertain economy.

2. Boost your credit score as high as possible.Lenders are getting a lot pickier about who they will finance, and anyone with a credit score under 700 could find it tough going. So check your score and avoid the sorts of things that can drive down rating, including applying for new credit or even initiating credit inquiries.

3. Avoid repossession or voluntary give-back of your vehicle.There will be more auto repossessions in the coming year than perhaps ever before. Many will be unavoidable, but some will be from people who just choose to stop making payments because they don’t want to cut corners elsewhere in their budgets.

A car loan, next to a mortgage payment, is the single biggest determiner of your creditworthiness. A repossession or a give-back will haunt you for at least five years. If you’re in trouble, check with the lender on whether new terms can be worked out.

4. Cash or trade-in equity will be king.While you will see some zero-down financing options, they won’t be offered to anyone but shoppers with top-tier credit.

Even if you do qualify, don’t take the deal. All cars — including the best models — lose value from the moment you buy. That’s why you’re probably still upside-down three years into your zero-down car loan.

Try to put down at least 10 percent, with 20 percent a better target.

5. Don’t buy a car using the equity in your home.When real estate prices were soaring, many people used home equity loans to buy luxury cars and SUVs they might not have afforded otherwise.

With home prices collapsing, it makes no sense to put your shelter at risk for the sake of a car. If you take out a car loan and can’t make the payments, you will lose the car. If you can’t make that home equity payment, you can lose your home.

6. Be realistic about what you can afford.Someone with a sweet tooth walking into a pastry shop knows how car buyers feel when they consider a new car: All those extras — from satellite navigation to higher-end wheels — are tempting.

But extras also add thousands of dollars to the price of the car. And at trade-in time, those extras usually return just pennies on the dollar.

Also remember that if a Toyota Corolla can serve your needs, resist the temptation to step up to the Camry.

7. Be even more vigilant at the dealership.There’s little doubt that dealers are hurting for sales, so you probably can drive a good bargain on the initial price of the car.

But dealers will try to jack up their profits with add-ons like extended warranties, theft-deterrent systems and other things that usually can be purchased at a better price away from the dealership.

8. Check out used vehicles.Even if you’ve always been a new-car buyer, don’t be a snob toward low-mileage cars and trucks that are just a few years old.

Many vehicles today can run to 100,000 miles or more without major repairs. So it makes sense to avoid the initial depreciation hit of a new vehicle and pick up on the value of a used vehicle.

9. Don’t be fooled by falling gas prices.We’re all breathing easier now that gasoline prices have fallen well off of 2008’s peak. That may prompt you to overlook fuel mileage when buying a new vehicle, but remember that you’re buying a car that you’ll probably keep for five years to seven years.

While we can debate exactly how much oil is left in the planet and whether the United States will ever be energy independent, there’s little doubt that worldwide competition for crude eventually will have gas prices marching up again. So buy the vehicle that gets the best mileage and still suits your needs.