Five Rules of Car Buying
The rules of car buying have changed dramatically in recent years. Here are the five rules to live by when you compare auto loans and purchase a new car.
- Good deals are everywhere. If you haven't heard, car makers are in trouble. Dealerships are saturated with vehicles they can't sell because of changing consumer demand and a tough economy. When this happens, however, dealers get desperate. Car buyers can now find a good deal on a vehicle on just about any car lot in the country. After you compare auto loans, actually finding a vehicle at a decent price should be a piece of cake.
- The credit crisis has affected auto loans, but not to the extent you think. The credit crunch has definitely extended into the realm of car loans, but that doesn't mean that you will be unable to secure financing. As long as you're not a subprime borrower, you should be able to compare auto loans from multiple sources without a problem. Some car manufacturer financing divisions have discontinued loans to subprime borrowers, but loans are still readily available to consumers with good or even average credit. The only change borrowers with good credit might possibly see in auto loans is shorter terms. Six- and seven-year auto loans may be harder to come by with some lenders.
- Forget about affordable leases. Leasing has taken a serious hit because of the economy, but that shouldn't matter to consumers who prefer to compare auto loans. Nowadays, lease payments are fairly equivalent to loan payments, which leaves consumers with almost no incentive to lease instead of buy. The only exceptions to the obsolescence of leases are luxury cars. Luxury vehicles depend heavily on leasing to maintain their profits, so these leases are likely to remain unchanged.
- You can use the past leasing boom to your advantage. The leasing bonanza that took place several years ago is coming to an end, which means the contracts on all those leased vehicles are expiring. When the lease expires, dealers are stuck with two- and three-year-old vehicles in excellent condition with relatively few miles that they need to sell. This is yet another opportunity for you to get a bargain on your next car. If you don't mind driving a slightly older model, consider purchasing a former lease vehicle. Dealers are usually pretty good about offering certifications and warranties on these cars.
- Consider the stability of the manufacturer before you buy. Another factor you need to consider when you compare auto loans and shop for your new vehicle is the stability of the company that makes it. Most U.S. automakers are on the brink of bankruptcy; namely, Ford, GM, and Chrysler. If these companies go bankrupt and you have purchased a domestic vehicle one of them made, you face the small risk that you won't be able to find parts or have your warranty honored.