Monday, March 26, 2007

Smart Car Buying Strategies

With nearly 40% of today's auto loan balances upside-down (owing more than the car is actually worth), it's wise to pursue a smart car buying strategy. Great Deal? Your dealer offers you a new car for very little or nothing down, plus a low interest rate and lengthy period to repay the loan. What a great deal! However, consider that your car may depreciate up to 30% during the first two years. If your auto is stolen or totaled before you repay the loan, insurance will cover only the market value, not what you owe. Therefore, consider Guaranteed Auto Protection, which will cover a shortfall between the insurance payout and the loan amount.

Hurry It Up. If your new car's interest rate is near the prime rate, keep the loan period as short as you can. Avoid rolling the debt from your last car into your new loan. Otherwise, you'll be paying on a car you don't even own anymore. Put the maximum down you can afford (some experts recommend at least 20%), and pay off the loan as quickly as possible.

The Fleet's In. When you can't afford a new car, your best bet is probably to locate a used car through an auto club, credit union or other organization offering fleet rates. You may be able to purchase it at or below the mid-Blue Book price, and get a limited warranty.

1 comment:

Amity said...

People should read this.