FINANCING YOUR CAR
 

Ok, want the staright poop from someone on the inside? find out what the best rates are right now, get advice on how to pay for your car, and what to be alert for when you talk to your dealer. I can also offer assistance on understanding your credit rating.

SEE ALSO WARRANTIES AND SERVICE CONTRACTS and CARS

WARRANTIES AND SERVICE CONTRACTS
 

Need advice about buying extra protection for your car?

see also CARS and FINANCING YOUR CAR

Do extended warranties ever actually "pay for themselves" or is it just another way to get money out of folks, because most failures tend to occur in the first year or so, aren't covered under the warranty, or occur after five to seven years (under average usage conditions)?

basically, wolf, it's insurance. I have seen people never need their warranty that they paid $1500 for, and i've seen a $4300 transmission job that cost the customer $420 for the warranty, and $100 for the deductible. I sold myself one for my 99 Laredo... already recouped half with a new driveshaft, and some seepage repairs. and i'm covered up to 100K miles bumper to bumper.

something on your mind, bruce? wtf?

Buy vs. Lease -- which is more affordable? I've been told that making a purchase is always better than a lease unless you drive a very short number of miles each day and plan on getting rid of the car quickly.

it depends on how you define more affordable. And, as you said, how you will use your car.

If you are a person that trades their car in for a new one every 3 or 4 years, you should lease. ESPECIALLY if you drive a lot of miles. just set the lease up to allow you the amount you actually drive, plus a little padding. The payment is almost always significantly lower on a lease, and at worst, you break even at the end and start over. I f you had bought the car with a 5 year loan, there's a good chance that you may still owe more than your car is worth in 3 -4 years, and have to carry "negative equity" into the next loan. this can creat a revolving effect that gets worse every time you trade in, and at some point, you reach the saturation point and become "burried". not to mention the trouble you'd be in if your car was totaled while you were in the red. always consider gap insurance when buying a new car. you don;t always need it, but it can save your ass if you do.

If you tend to keep your cars for 6+ years, you should probably buy it. Use the time that you don;t have a paymetn to save for your downstroke on the next car.

the BEST way to go is to buy a 2 year old used car with low miles that is in good shape. allow room in your budget for a warranty, and keep the car until it is paid off + 2 years to save for the next one.

So (not to get off topic) where do you find such cars & what is an appropriate price differential? I've heard that before (about late model used cars) and I considered something like that for our last purchase (we ended up with a 2002 Dodge Grand Caravan), but the prices I saw on 2000 and 1999 models did not seem enough lower than the prices on new ones to make it worthwhile.

typically you'll find them at same make new car dealers. the price diff will vary depending on the car.

example: a new 2004 sebring sedan list price is 21,000 +/- we bought a 2004 like equipped sebring sedan with 20,000 miles on it from a rental company for 11,300. sold it for 13, 500. customer saved $7500. we made $2200 . win win

2004 grand cherokee invoice 27,900, we traded back in for 19,500 with 5400 miles on it. that was a push on the trade too.

the general formula for a quick trade car goes like this:

like invoice amount
less current rebate amount
less holdback (3% of orig. msrp before shipping)
less $3000 for being titled
less mileage adjustment of 10-13c. per mile depending on class of vehicle. ( small cars less, large cars more)

IMO, the best financing on a car is cash. In addition to the low interest rate, it keeps the dealer from playing games with numbers to hide the true cost of the car.

The exceptions are when the manufacturer is running a subsidized leasing or financing deal, but even then it's tricky to keep from getting buried in numbers and paying too much.

And beware of open-end leases.

open ended leases don;t exist any more.

and you only paid too much if you paid over sticker. anything else is a discount. maybe you could have gotten a better discount, but that's entirely up to you.and yes, always negotioate the price seperately from the payments.

first negotiate the price
then the trade
then the rate vs. rebate options.

THEN the payment works itself out.


more on leasing later....

Probably a good thing. They should have at least required a gaming permit for those...

Sorry, Jim, I wasn't born yesterday. I know that with anything but the most popular cars (and Saturns), if I go in and offer sticker, the salesguy is going be telling stories about that "sucker" for weeks.

Just a joke , Jim.
Sorry you didn't get it. I'll go away.:)