| The biggest question in the car buying | | | | offer the best value in today's market, you |
| process is whether to buy new or used. | | | | can research several auto review sites |
| | | | online. You can also use the Internet to |
| The second biggest question is what make and | | | | check everything from the performance ratings |
| model to purchase. | | | | to the safety records of the vehicles you're |
| | | | interested in. |
| The third most important question is where to | | | | |
| get your financing. | | | | Be sure to test drive any vehicle you are |
| | | | considering under varied road conditions. If |
| #1 New or Used | | | | the vehicle is used, ask to see all |
| | | | maintenance records and check its history on |
| The average new car costs more than double | | | | CarFax. And don't forget to have your |
| what the average used car does. (The Kelley | | | | mechanic give it a thorough inspection. If |
| Blue Book pegs the average new car price in | | | | you are buying new, try to pay as close to |
| 2005 at $26,100 and the average used car | | | | the factory invoice price as possible. You |
| price at $13,000). It's not surprising, then, | | | | can look up factory invoice pricing online. |
| that used cars outsell new cars three-to-one. | | | | |
| | | | #3 Car Financing |
| New car loan rates are about the same as used | | | | |
| car loan rates. The major difference between | | | | Many experts recommend getting your financing |
| the two is the length of the loan. Most used | | | | before you start car shopping. This puts you |
| car loans are for no more than 36 months | | | | in a better bargaining position because the |
| whereas new car loans can be 60 or even 72 | | | | dealer knows money won't be an issue. (They |
| months long. | | | | also won't have the chance to run you through |
| | | | their finance department, which is a good |
| Remember to take depreciation into account. | | | | thing for you!) |
| Depreciation is the difference between the | | | | |
| Manufacturer's Suggested Retail Price when | | | | Of the 60 million new and used cars sold |
| you bought the vehicle and what it's worth | | | | annually in the U.S., about 27.5 million are |
| now. Some new cars lose as much as one-third | | | | financed by subprime loans to buyers with |
| of their value within a year. On most | | | | less than perfect credit. If you have bad |
| vehicles, depreciation settles down to about | | | | credit-a FICO score of 620 or lower-you will |
| seven-to-ten percent per year after the first | | | | need one of these loans. |
| three years. | | | | |
| | | | You will not qualify for the new car offers |
| Which brings us to . . . | | | | advertised on TV, like the "0 Down," "O |
| | | | Interest" or "Low APR" deals. However, you |
| #2 Make and Model | | | | can still get a good deal on a bad credit car |
| | | | loan from Internet lenders like Auto Loans In |
| One way to slow depreciation is to buy a make | | | | Seconds. Their free online application |
| and model with a prestigious nameplate. | | | | process lets you know exactly how much you |
| Models that depreciate faster than most | | | | can borrow, and at what rate. |
| include: Jeep Grand Cherokee, Ford Explorer, | | | | |
| Ford Taurus and Lincoln Continental. Cars | | | | "Consumers should shop around for financing |
| that hold their resale value longer include | | | | with the same vigor that they shop around for |
| the more expensive makes like Lexus, | | | | a car," says Jack Gillis, public affairs |
| Mercedes-Benz and BMW. | | | | director for the Consumer Federation of |
| | | | America. "One or two percent can erode all |
| To learn more about which makes and models | | | | the money you negotiate in a good price. |