November 2009 Topic - "Buying a car and getting a good deal"

Getting a great deal is important, however be sure that your new car is reliable and safe. Considering how greatly cars depreciate it pays to keep cars for at least 5 years. Take into consideration long-term maintenance and other expenses.

Fuel efficient cars are selling now with great discounts, since fuel prices are relatively low. Once inventories level out and fuel prices rise the incentives will decrease. Purchasing a SUV or truck right now could cost you a lot of money in the future. Bear in mind the cost of ownership over time.

Used cars in this market may be your best investment. Not only are there incentives on used cars, they also depreciate less rapidly than a new car. Cars lose their most value within the first year. Buying a model that is a couple years old could save you up to 30%.

Throughout this month's newsletter we will explore some interesting tips and give some advise on car shopping. Please do all research and take advantage of any incentives available to you. With that said make sure you are getting a good deal and not just stimulating the economy.

01.  Tips for Getting the Best Deal on a New Car
02.  Buying a Car with Bad Credit
03.  Tips for Buying a Used Car

---

1. Tips for Getting the Best Deal on a New Car

Fix your credit score: Your credit score can save or cost you a lot of money. Possible lenders will analyze your credit history to determine if you are approved for the loan. Your credit score will play a large role in the interest rate you are offered.

Do your research: : Investigate current incentives that are being offered by dealerships. Look for any hidden fees or costs to you. Apply with your local bank or credit union for financing. It will prove beneficial so that you can compare rates and financing options. This will help with your negotiations with the dealer. First negotiate with your dealer for the best rate available. Once all negotiations, including your trade in if applicable, are negotiated then you present the dealer with your bank's offer. Often times the dealership will beat the banks offer which could save you a lot of money.

Know the car you want: Before you go car shopping, decide which type of car would fit your needs. You will want to decide if you want a truck, van, midsized car or SUV. What is the purpose of this vehicle? Will this vehicle still be useful 3 years from now? For instance, you may want a 2-door sports car now, however if you are planning on having a child in the next couple years this may not benefit you then.

Narrow down your list and read up on all options available. Compare safety features, and specifications. In addition to this contact your car insurance company and find out if your premiums would increase or decrease with the new purchase. Finally, take the car you had in mind for a test drive. Make it known to the car salesman that you are not purchasing a car today.

Don't negotiate in person: Negotiate over the phone or through email. It not only saves you time, but also it is easier to walk away if the terms are not what you wanted. This will give you the leverage to shop around and compare prices. Once you reach a price with one dealer you can use that as a negotiating tool with another.

After you have agreed on a price discuss the financing options. It's imperative to make this your last step because a salesperson can offer lower payments for a longer term, which in turn would increase the price of the car. On the flip side once the price is agreed on the financing options are based on the sale price. Also at this time you will want to discuss any trade in.

Everyone wants to get the best deal, however keep in mind the dealer must make a profit as well. If you try to get something for nothing it may only get the salesperson agitated and at that point could become unwilling to work with you. Be reasonable and that alone will save you money.

2.Buying a Car with Bad Credit

There are two determining factors when purchasing a car. The first is credit and the next is income. Unfortunately with the economy and unemployment rate many Americans do not have good credit any longer.

Financing a car is very feasible even with mediocre credit. To lessen your chances of getting denied of financing you want to try to keep your monthly payments under 16% of your monthly income.

Lenders use a computer system to determine the approval of loans. This system will look at a compile of information. These items include but are not limited to employment history, assets and other important information, prior to making their decision.

It is best to prepare this information prior to going to the dealership. Job description is a crucial deciding factor. Be sure to word your job description in the best way possible.

Assume you will have to supply a down payment. A down payment will reduce financial risk. If the car does go into default it will alleviate some cost to the financing agency.

A co-signer is an option. If you have a close friend or family member with a good credit history who is willing to sign for you this can be an easy way to get approved.

However, bear in mind you are putting their credit history at risk if you default. It is recommended to use a co-signer for a short period of time. After you maintain a payment history with the lender you will want to refinance the loan to release your co-signer.

Don't steer away from small car lots. There are many offers for "sign here and drive regardless of credit". This may be a good option to get your feet back on the ground financially. Be aware though that interest rates are typically high through these places, since there is a lot of risk for the lender.

3. Tips for Buying a Used Car

Kelley blue book and Carfax are free assets available to the public. Take advantage of these websites. Kelley blue book can be accessed at www.kbb.com it will give you current values of used and new cars. If you are planning on trading in a car you will be able to determine a reasonable trade in value as well.

Carfax is a website designed to allow you to view history on a particular car that you are interested in. Carfax is free of charge, and the results will prove to be priceless. It gives you the benefit of finding out any costly problems you may encounter with the car in the future. This website will report any accidents, titles problems and other detailed information.

Do as much research as possible looking for your new purchase. Dealerships sometimes offer certified used cars. You typically pay a little more, however the cars may come with a limited warranty.

Narrow down your choice and be specific with mileage and features that you require. Mileage is very important when purchasing a car. The more miles that a car has the less value it retains. Cars with low mileage will cost you more money upfront. On the flip side, typically speaking lower mileage may mean a manufacturers warranty could still be in effect. The benefit to this is if a problem occurs having a warranty could save you thousands of dollars.

Once your research is complete and you have found some potential cars make appointments to see and drive the cars. If you are not car savvy bring a friend or relative with you to get a second opinion. While driving the car test the brakes, and pay attention to how it handles the road. Check everything to be sure it is working. Walk around the outside of the car to look for obvious problems, such as rust or dents. It is a good idea to have your mechanic look over the car you are interested in prior to purchase.

---

Got a question? Then contact our Education Team on 561-883-2398 Ex.310 United conducts regular seminars on financial education, including "How to Budget", come along and join us - to reserve your seat contact our Education Team on 561-883-2398 Ex.310

Newsletter 11
Rev.1
November, 2009