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Assess What You Have

­To­ get the right vehicle at the best price, it's important to do your homework before starting to shop. Begin with the basics.

Decide how much you can afford and how much you are willing to pay before you shop for a vehicle. If, like most consumers, you have to borrow money, shop for a loan before you shop for a vehicle. Calculate what you'll have to pay each month, including interest. For instance, if you borrow $10,000 for 4 years at 8 percent interest, your monthly payments would be $24.41 times 10, or $244.10. Borrowing that same amount at 8 percent for 3 years would raise the monthly payments to $313.40 ($31.34 times 10).

Keep in mind, too, that you'll probably need a down payment of about 20 percent (in the example above, about $2000), unless your trade-in is worth that much. The total of your loan, down payment, trade-in, and any factory rebate will have to cover the price of the car, as well as fees and sales tax. Your bank or credit union can discuss loan options to help you set a realistic price range that fits your means and budget.

Buying a new car is a financial stretch for many consumers and out of reach for quite a few. Many have turned to used cars and others to leasing, hoping to avoid a hefty down payment and lower their monthly payment.

More than 43.5 million used vehicles were sold during 2003, according to the National Independent Automobile Dealers Association. More than 13 million changed hands in private transactions, but the others were sold by either franchised new-car dealers or independent used-car dealers.

Buying a secondhand vehicle always carries some risk, and most of them include no warranty. To counteract that concern, almost all automakers have certification programs that operate through their dealers. About 1.58 million certified pre-owned vehicles were sold in 2003. Programs vary, but only vehicles up to a certain age, with less than a specified number of miles on the odometer, are certifiable. Each is given a thorough inspection at the dealership, according to manufacturer directives. Additional warranty coverage is included. Certified used cars cost more, but many consumers are willing to pay extra for the added peace of mind they provide.

As greater numbers of consumers wind up in bankruptcy or with insurmountable credit problems, even a used car becomes difficult. Credit-challenged customers are consigned to the rank of sub-prime buyers, who are obligated to pay interest rates far higher than the norm -- assuming they can get credit at all.

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