Tag Archive | "new car"

Finding a Car Online

Tags: ,


The idea of buying a car online, in my opinion, is sheer genius. Being able to avoid dealers, while still having the luxury to view a car and select my options is an appealing concept to say the least.

Regardless, I would still be somewhat nervous to make such a momentous purchase with a simple click of my mouse. The average American consumer tends to agree. Perhaps it’s a wariness that keeps us from buying something we haven’t actually touched, or maybe it’s just the ingrained cultural notions we have about our cars. The test drive, for one, is almost as much a traditional mainstay as mom and apple pie. Whatever their reasons, most people prefer to do their research online and then head out later to a brick-and-mortar dealership.

While there are a few sites that promise to deliver your newly purchased vehicle, most car buying sites specialize in putting the potential buyer in contact with an “authorized dealer.” So if you were shopping online to avoid the dealer, you should probably resign yourself to having to deal with a live salesperson at some point in the process.

Why bother shopping online then? Well, the great thing about it is not that you’re necessarily buying anything from the comfort of home, but that you’re doing some in-depth window-shopping, which will allow you to walk into the dealership a much wiser (read: less vulnerable) consumer.

One of my co-workers enthusiastically endorses the online car “shopping” process. While he didn’t actually purchase online, the car he drives now is the result of some thorough mouse-clicking research. He searched through his preferred manufacturer’s pre-owned certified stock, picked several cars that met his needs, and compared the prices that the manufacturer offered against the online Kelley Blue Book to make sure that he wasn’t paying for a huge hike-up price. He even ran lemon checks and VHR reports on his choices. Finally, he compared and ultimately obtained insurance for the car of his choice. In short, he did everything a potential buyer should do to make sure that a car buying experience is rewarding. He offers these words of advice for the online window shopper: “Car shopping is like buying jewelry — you should actually go look at it before you buy it.”

How it Works

When you’re car shopping, the Web can provide two services: providing the means to buy and finance online, and providing a massive quantity of information. Any of the larger search engines, such as Gor MSN, have auto sections dedicated to providing users with online price quotes, a wealth of tips on everything from avoiding “lemons” to getting the best price out of a dealer, to online calculators to help you determine your monthly payments.

Online Comparisons.

Any number of sites, AutoWeb, Autobytel, CarPoint, Cars.com, DealerNet, AutoVantage, and AutoTown, for example, allow you to request free price quotes from local dealers. You simply provide the make and model of the car you’re interested in purchasing, your contact information and you receive a quote in a short period of time, usually within the next 24 hours. Most of these sites also offer model comparisons, reviews, ratings and images in addition to providing price quote services.

Better yet, you can shop for financing in much the same way. Apply for a loan online — from online lenders like CapitalOne Auto Finance, ELoan, and LendingTree.com — and you receive quotes within a matter of days, if not hours.

Consumer Resources.

Another advantage to online window-shopping is that you have quick access to sources like the Kelley Blue Book, which provides a car guide with invoice prices for new cars and current trade-in values (to help you negotiate that trade-in to your best advantage), and Consumer Reports online, which rates just about everything in terms of value-for-your-money. For auto shopping purposes, however, the CR site has an entire section of the site dedicated to advice and ratings on every conceivable aspect of new and used cars. While Consumer Reports online offers extensive information for free, you have to subscribe to their site for a fee of $4.95/month to access their entire ratings and reviews archive. That fee may keep you from making a $20,000 mistake.

Edmunds.com also has extensive vehicle guides for both new and used cars, as well as consumer advice and resources that range from road test editorials provided by the site’s staff, to crash test data. Best of all, the pricing and rating information is free of charge.

The Step-by-Steps.

There are several sites that are godsends to those who, like myself, have never really been familiar with car lingo and need every tip available to make an informed decision.

The MotleyFool.com offers an extensive thirteen-step guide to help you make an informed choice, and alerts you to any of the pitfalls of making such an enormous purchase. It even provides worksheets to take you through any of the car-purchasing processes, giving you handy lists to bring along when you test drive a new or used car.

The guys at CarTalk.com, who host the NPR talk show by the same name, also provide a handy guide for the car novice. The site provides a link to Cars.com’s pricing guides and classifieds, but most helpful are the Car Report and the Test Drive Notebook. The report allows you to access varied information — from performance on crash tests to common user complaints — on the make and model of your choice. The Notebook provides observations made by the Car Talk hosts — the reigning experts on any kind of “funny noise” your car might be making — on their test drives of an extensive list of vehicles.

Now get out there and click that mouse.

Buying Used Car

Tags: , ,


That said, the big advantage of buying a used car is that you’re avoiding a huge depreciation of value over time. The value of a new car drops significantly the moment it is driven off the lot. After that, most cars tend to depreciate by about 50% after three years, and then drop about 10% per year afterwards, eventually reaching close to 0% per year. Aside from the lower sale price, knowing that a used car is less of a long-term investment is one of the better reasons to buy one.

Of course, if you’re in the market for a new car, you can compare identical models and play their respective dealers off each other to strike the best deal — luxuries you will not be afforded if shopping for a used car. But that’s what makes it sporting.

Buying a Used Car

You can find and/or purchase a used car through various means:

  • Dealer.

    The advantage to buying from a dealer is that many times used cars will come with fresh warranties. The problem is, you will be dealing with someone who has an even worse reputation than the stereotypical new car salesman. If you’re not getting a good vibe from the dealer, try a non-haggle superstores, like AutoNation or Car Max, which offer certain guarantees and warranties on their vehicles.

  • Person-to-Person.

    The advantage is you’re not dealing with the dealer and you’re more likely to be able to negotiate a price that’s close to the used car value that you’d find in the Kelley Blue Book or the Edmunds.com listings. The disadvantage is that you’re taking the car “as is” — it will not be certified or have any warranties.

  • Public Auctions.

    You’re literally determining how much you’re going to pay for that car as you’re buying it. Be forewarned that while you might be able to start the car and view it during the preview session, you’re not likely to be able to drive it and test it out beforehand.

What to Look For

When buying a used car, research is key. You don’t want to end up burying yourself with a purchase that was initially intended to save you money. Give the potential vehicle a thorough inspection: Examine the outside and determine its wear and tear from every angle, and find out what it has weathered. Has it survived a flood? Did it tow all of the owners’ kids’ stuff to college and back cross-country? Has it ever been in a major accident?

While you’re certainly going to want to ask the owner for all of this information, it’s a good idea to run a Vehicle History Report (VHR) using the Vehicle’s Identification Number (VIN) to find out where the car’s been and what it’s done. While a car may turn up with “no history,” that doesn’t necessarily mean that it’s problem free. However the extra research (which can run anywhere from $10-$15 per report) could help you make a more informed decision… After all, you don’t want to end up foolishly buying the car that they used as the stunt-vehicle in the latest blockbuster car-chase movie.

If you punch up Vehicle History Reports on any search engine, you’ll come up with several services that can provide a VHR -

Finally, make sure that you ask the seller about any funny noises while you’re test-driving the car. Get a feel for the it, push buttons (make sure that what’s supposed to work does), ask questions — test it out in any way you can imagine, short of trying to determine how well it holds under fire (gunshots or otherwise.)

Test Drives for Him and Her

Tags:


In their respective humiliation, they observed things that will be of interest to anyone currently in the market for an automobile.

His

Affecting an innocent, doe-eyed demeanor, and attempting to exude as much of a “rube” vibe as possible, I stepped into a certain foreign car dealership and, professing my automotive ignorance, announced that I was looking for a car. Within three seconds, I was approached by the sales manager who told me to “have a look around, take your time and come see me if you have any questions.” He then smiled and proceeded to follow me around the showroom like a starving dog. Other salesmen circled.

“You know,” one of them said. “There’s never been a better time to buy … we have a special on financing this month.”

These days, with “bottom line pricing” becoming more popular (dealers show what they paid for the car, and what they stand to make from it, virtually eliminating the haggling process), dealerships stand to make more on the financing of the car than they will on the car itself. The first thing the salesman mentioned to me was financing, before he even suggested a model. Then, he directed me to a clumsy looking convertible, his approving nod making me a party to some sort of understanding that all guys like convertibles, even those who live in cities in which winter seems to last forever.

Being the cautious and modest person I was supposed to be, I decided to test-drive a popular mid-range, mid-priced car with a V6 engine. The salesmen nodded to each other.

We walked out to the lot, and stopped at a white model that listed for $5,000 more than I had told him I was able to spend.

“Now what color are you interested in?” he asked.

“White’s fine.”

His eyes lit up. Now there was more on the line than a simple test-drive. He might even be able to sell me this car. After all, I did put myself forth as a bit of an uninformed pushover with $20,000 burning a hole in my pocket. He began to extol the virtues of a white car.

Once on the road, I shed my shy persona and commenced beating the car like a family mule. I floored it, weaving through Boston traffic, swerving, braking hard. At one point, while cresting a hill at 60 MPH I joked, “Whoa, feels like it’s going to come off the ground!” while the salesman furtively grabbed for the door handle. After fifteen minutes, he suggested we return the car to the lot.

Back in the dealership he stressed the virtues of the car: the V6 engine, suspension, brakes and whatnot, then went on to the safety features. He then looked me dead in the eye and asked:

“Now, what do I have to do to get you in this car today?”

“Sell it to me for $20?” I responded.

“Ha ha ha. No, seriously.”

“I am serious,” I said. “Well, actually, I want to take a look at some other makes and models before I make a decision.”

“I understand,” he said understandingly. “Well, Joe, I hope you’ll come back and see us, even if you decide on another car. It was a pleasure meeting you. Before you go though, let me introduce you to my manager.”

The soft sell wasn’t working, so now I was going to have to face King Rat — a balding, smirking, greasy character with an easy “I played-football-in-high-school-and-haven’t-done-anything-since” way about him.

“So which one did you drive?” he asked.

“The ____,” I said.

“Well, are you going to buy it?”

“Not right now, I haven’t looked at any other cars yet.”

“But you liked it, right?”

“Sure, but I have no frame of reference.”

“Well, you know what you should do? You should buy the car you like, get all the options you want, then let us help you pay for it.” He grinned at his coworkers, who nodded at me.

I shuddered, thanked everyone for their time, and went home to take a shower.

Hers

When Joe returned from his test-drive ready to submerge himself in a bath of cleansing soaps and oils, I was pretty nervous to wade into the same shark-infested dealership that very afternoon.

I walked into the showroom and eagerly looked at every model I happened to walk by, as the receptionist called one of the sales reps to the floor. He sat me down and asked about cylinders, power, doors and locks, and then proceeded to tell me a little bit about the variety of used cars they had on their lots.

I was a little surprised that he mentioned a used vehicle because I hadn’t explicitly said anything that would indicate that was what I’d been looking for. In fact, I’d dressed up in one of my favorite “young professional outfits” and had even opted to wear my black half-boots instead of my favorite work tennis shoes in order to present myself as a more “serious” buyer — the kind of buyer that would purchase a new car.

When I mentioned I was actually looking to buy a new car, I seemed to catch his interest just a bit more. So we checked out a couple of the new models on the floor, and he pointed out their various features: “Take a look at this neat cupholder! Check it out! You can put your glasses or garage-door opener here! Look at this — do you have children? Well, when you do, you can attach their car seats right on to that!”

He popped the hood — which surprised me since I expected to be talked right through this part — and took me through all of the safety features, telling me a little about the engine, and then cracking up when I asked where the oil was. (Remember, I was attempting to come off as a total naif.)

On the test drive, we chitchatted about everything from my bike to his children and really didn’t focus too much on the car itself.

It wasn’t until after we’d gotten lost and un-lost in the downtown area and were heading back towards the dealership that he started to ask about how much I intended to put down and how much I planned to pay a month. Now, I think that in doing research for the test drive, I’d punched up the online car-buying calculators one too many times and had a slightly skewed perception of how much somebody actually pays for a car. When I started speaking in numbers, he looked at me, shut his mouth, re-opened it and said, “Wow. Are you sure you don’t maybe want to go for a Beamer?” And I thought I was being conservative.

Back at the dealership, I watched as my salesman and his manager conferred for several minutes in hushed whispers before approaching me and telling me how much money I’d save in the long-run if I took the 3.9% interest rate financing package with the money I was willing to put down.

I walked out of the dealership car-free, but fairly certain of the fact that the salesman would become my new best friend. He wanted my number and my email and a timeline on when I’d be making my decision to that he could “follow-up.” While he encouraged me to certainly look around, he wanted to make sure that I would love my shopping experience with his dealership so much that I would go to him whenever I needed a car — now and forever.

While I was wary the entire time I was there, I certainly didn’t feel the need to go home and rub myself down with cleaning fluids. Sure, there was some pressure to make a decision fairly soon, but I didn’t feel like I had to beat anybody off with a stick.

I did, however, walk out feeling that those helpful online car-financing calculators should have disclaimers and warnings attached.

The Quest to Buy a Car

Tags:


Whether you’re buying or leasing, choosing new or used, here are some questions you’re going to want to ask yourself first:

What am I willing (and able) to spend?

The first thing you need to do is determine your budget. Make sure you know exactly how much you can afford to put towards monthly car payments – and don’t forget to consider ancillary expenses like gas, insurance and unforeseen repairs.

Do I want a new or used car?

With a new car you know exactly what you’re getting, and there are many financing options available including cash rebates just for college grads. But that security is also going to cost you. Just driving a new car off of the lot will diminish its value by about 25%. So if you’re on a limited budget, a used car may be the answer.

Am I going to buy or lease?

Leasing a car has become a popular option and you’ll pay less in monthly payments. Better yet, you can trade in for a new car every couple of years (just remember to look at the fine print before you sign any lease agreement). But, if drive a lot of miles, or just want to own your vehicle outright, buying is probably the option for you.

Have I done enough research?

Don’t just rely on the advice of family and friends. These days the Internet is a gold mine of information for car buyers, which will give you a lot more reliable information than your strange Uncle Max and his bridge-playing buddies. Compare vehicles and prices at Kelly Blue Book (www.kbb.com); or search for cars in your area with other sites like www.autobytel.com, www.edmunds.com or www.carsdirect.com. Doing some online research will help you determine the cars you like, the options you want and the dealer nearest you.

Do I qualify for any special rebates?

Some car manufacturers actually see recent college grads as an asset. Companies like Ford, GM and Mazda offer special deals and college rebate programs. These programs can provide you with hundreds of dollars in cash rebates, as well as other special perks like deferred payments. A new service created this year exclusively for graduates is CarsForGrads.com. It’s free and can connect you with the various special deals and offers that you might be eligible to receive. Simply go to www.CarsForGrads.com, provide some basic information about yourself and the car/s that you are interested in, and the free service will match you with the currently available vehicle rebates designed exclusively for recent college grads.

How do I negotiate with the dealer?

Negotiating doesn’t have to be the most nerve-wracking part of the car-buying process. If you’ve done your homework, you should know how much the car is worth, how much you’re willing to pay, and have a couple of dealers to choose between.

What about insurance?

Don’t forget that you’re going to need car insurance. Make sure you work the cost of insurance into your budget so you are not surprised by the extra bills you’ll be receiving every month.

Lease or Buy a Car?

Tags: ,


Leasing has become increasingly popular over the last few years for several reasons:

  • By leasing, instead of buying, you get to drive a brand spankin’ new car every two years or so.
  • Lower monthly payments and up-front costs (usually limited to a security deposit).
  • At the end of the lease, you can either buy the car, or just drop it off back at the dealership and forget about it.

How Does a Lease Work? Contrary to what you might think, you don’t lease the car from the dealership, but from a leasing company that purchases the car from the dealer you’re negotiating with. After the terms of the lease are worked out through said dealer, the leasing company rents the car to you, with the dealer taking a cut and profiting from the sale of the vehicle.

Your payments are determined by the difference between the “capitalized cost” (the price for which the dealer sells the car to the leasing company, which is negotiable) and the car’s “residual value” (the projected value of the car at the end of the lease — not negotiable, but maintainable, provided you take good care of the car). If the car is sold to the leasing company for $20,000, and is expected to depreciate 35% in value by the time the lease expires, you’ll pay the remaining 65%, plus an interest rate known as the “money factor,” which is set beforehand by the leasing company.

There are two types of leases available. In the first, a “closed-end lease,” the residual value of the car is fixed at the start of the lease. In the second, an “open-ended lease,” the residual value is estimated at the start of the lease, and then compared to the market value upon termination. You pay the difference if the market value falls below the residual value. You should only consider a closed-end lease.

At the end of the lease you’re given the offer to buy the car for the remaining 35%. If you choose not to, you can just walk away, provided you didn’t damage the car or exceed the maximum mileage — either can be quite costly.

Other options to consider include buying the car and selling it privately for a profit, or “trading it in” to the dealer for a credit towards another lease or purchase.

Why not?

You’re aware of the advantages of leasing: lower payments, less financial responsibility, a freshly minted ride every few years — but there are also a number of disadvantages that need to be weighed before jumping in.

  • Many leasing companies impose mileage restrictions on leased vehicles, mainly as a measure for ensuring the integrity of the residual value. This number is often 15,000 miles. If the limit is exceeded, you’ll be charged rather heftily by the mile. Leases are not ideal for traveling salesmen or anyone else spending lots of time on the road.
  • It generally costs more to insure a leased vehicle.
  • If you go through with the lease and then buy the car for its residual value, you will have paid significantly more than you would have had you bought the car in the first place, partially due to interest rates on used cars being significantly higher than those on new ones.
  • If you decide to lease, you may end up paying the dealership for doing absolutely nothing. Among these are “disposition fees,” which you may be expected to pay when you drop the car off, and “acquisition fees,” for which you’ll be milked for picking the car up. Both are somewhat bogus, and can run upwards of several hundred dollars. It will behoove you to find a dealer who doesn’t include such charges, or is willing to drop them.
  • A leased car doesn’t belong to you, so you’ll pay thousands without ever being able to proudly consider it “yours.” Also, you can’t modify/customize it without paying dearly upon the termination of the lease.
  • If you terminate the lease prematurely, prepared to be screwed. Consider this: If the car was expected to depreciate by 30% in three years, and you want out after the first year, in which the value of the car already dropped 20%, then you likely haven’t paid anywhere near the current depreciation (the steepest decrease in value comes right after you drive the car off the lot, then slows over the next few years). You’ll have to pay the difference, known as the “gap.” There may are also be stiff penalties for early termination.

All in all, it’s important that you fully understand what you’re getting into before deciding if a lease is right for you. A little healthy foresight can prove invaluable in the long run.

Negotiating Your Best Deal For Your Car

Tags: , ,


Before You Go

Make absolutely sure you can afford it.

Don’t get carried away with the euphoria of buying a car. Remember that this is a huge financial responsibility that you’ll have for several years. Gauge your needs and your means, and then narrow down your search to about three models. Remember, after making such a huge purchase, some financial sacrifices will be unavoidable, but you shouldn’t have to skip two of three meals a day to be able afford this car.

Do your homework.

  • Familiarize yourself with every option available on the cars you choose. It’s a lot easier for a salesperson to convince you that you need something if you don’t fully understand what it is or what it does. Then study every other aspect of the car, from the engine to the finish. Become conversant in the technical terms.
  • Look up the invoice price (what the dealer paid for the car, usually inflated by 3% or so) and the manufacturer’s suggested retail price (MSRP) — your offer, the fair price, lies between the two. Keep in mind that dealers are accustomed to buyers’ first offers being below the invoice price. Avoid this crucial mistake, and you’ll show that you’re an educated customer ready to make a reasonable offer. The single best source for invoices and MSRPs is edmunds.com’s “True Market Value” calculator.

Choose a dealer wisely.

You can get each dealership’s Customer Service Index (CSI) from the car manufacturer. Choose accordingly. The right dealer can make all the difference in the world, and ultimately save you money and frustration in the long run. While all dealerships pay the same price for their cars, those with high CSIs may get bonuses from the manufacturer that may enable them to cut you a better deal.

At the Dealership

Choose your salesperson.

Ask to see the fleet manager first. If that fails, ask for the sales manager, and if that fails, pick from one of the salespeople. If you don’t like the salesperson, or get the distinct impression that this person will be unwilling to make a deal, leave and look elsewhere. Remember, if it walks like a shyster and talks like a shyster…

Take a test drive.

Inspect every aspect of the car before getting in. Look at the drunk, slam the doors, hell, kick the tires. Look at the finish, the shape. Can you see yourself in this car? Get in and give it a good beating on the roads. Try it out on residential streets and highways alike. Ask the salesman to stay quiet so you can concentrate, but ask any questions freely. It never hurts to seem apprehensive.

Don’t gush.

You don’t want to come across as though you need this car, even if you do. Make it seem as though you could gladly take it or leave it, then walk into the dealership and start negotiating.

Make a deal.

  • First off, avoid any questions about how you intend to finance the car. Say you’re paying in cash, even if you’re not. Financing can be a big moneymaker for the dealership if the buyer isn’t informed. Stick to the price of the car and deal with financing later, if you haven’t already made an arrangement with a bank or lending institution. The only exception — do your research ahead of time to determine if the dealership is giving you a competitive rate.
  • Make your informed offer, and be prepared for the ‘ol thrust-and-parry. The salesperson will try to get you to go higher, to gush over the car. He may perhaps consult his manager (several times) to “try” to get the best deal for you. The best way to combat these tactics is to seem doubtful or disinterested. Make him work for the sale by removing any sense of urgency.
  • Ask to see the invoice. If he doesn’t want to show it to you, you’re probably about to get screwed.
  • Never let them forget that you’ll gladly go elsewhere if you are displeased with the treatment or deal you’re receiving.

As long as you’ve come prepared, you should get the deal you want. And if you don’t, simply try another dealership. Remember, this is a huge investment, every dime saved helps, and every slip-up can be pretty costly.

Financing Your Dream Car

Tags: , , ,


If you’re looking to purchase a new car, most finance experts will simply tell you: “don’t.” No matter how you look at it, a car is not a profitable investment. Your newly purchased vehicle starts to depreciate the moment you drive it off the dealership’s lot.

But, from a quality of life perspective, a new car can often be a sound buy, especially if you’re wise about paying for it. First, determine if you can realistically budget a new car (along with all the added expenditures – insurance, gas, maintenance – that go along with it). Then, make sure you arrange a payment schedule that won’t be a crippling economic burden. This is where financing comes in. Your financing plan should correlate directly with your budget. Remember that you will be paying for the total price of your car (minus any rebates), associated taxes, and the interest rate on your loan.

Go into the financing process with this in mind: If you’ve negotiated a great deal, and gotten a decent price for your trade-in, why would you want to give back a good portion of it in high interest rates?

Most dealerships can arrange financing for you, but you’re often likely to get a better deal if you walk into the dealership to make your final arrangements with a financing plan already in hand.Even if the dealership offers you a killer price — and some do — you’ll only know that if you’ve done your homework ahead of time.

Sources of Financing

There are several ways to fund your vehicular purchase:

  • Banks.

    Banks tend to offer lower interest rates than car dealers, particularly if you are already a customer. Typically, the more money you put down, the better your financing rate will be. This is because the bank will generally use the down payment as a “hedge” against the depreciation of the car. The necessary down payment can be anywhere from 10-20%.

  • Credit Unions.

    Because credit unions have lower overhead costs than banks, they are more likely to be able to provide a lower financing rate, which is often at least a full percentage point lower than that of a bank.

  • Home Equity Loans.

    This is an increasingly popular way of financing a car purchase (provided, of course, you actually own a home). In essence, you use your home as collateral on the car loan. If you have enough equity — based on the net worth of your home (how much it’s worth minus how much you owe on it) — then it’s an entirely feasible method through which to finance your dream vehicle. Even better, the interest on a home equity loan is tax-deductible — a rarity among loans. The important thing to remember here is that you’re using your home as collateral. So make sure you can afford that car payment, or you may be sleeping on a park bench.

  • The Internet.

    What comprehensive search would be complete without Asking Jeeves to conduct all that pesky research for you? Actually, online applications usually offer a quick turn-around, providing you with various willing lenders sometimes within hours of your request. Some of the more reliable online sites are: Eloan, LendingTree.com, and CapitalOne Auto Finance.

  • The Dealership.

    The rate at the dealership will often be higher than other available rates simply because financing makes up a considerable portion of the profit for the business. That being said, it’s not impossible to get a good deal if you go through the car manufacturer’s own finance company. Some car companies offer special deals, around the 2.9% rate for example, generally towards the end of the model year. The real advantage of dealership financing is convenience — but only if you’ve done your homework ahead of time.

The Final Steps

After you finish all that exhausting research, you should end up with about three financing options from which to choose from. They should all be plans you can live with for at least the next four to six years. Compare the rates and check them against the current national average — which in early 2001 was about 8.85% — and narrow down your search by finding the one that best suits your needs and your budget. If you’re in good credit standing and you’ve done your homework, you won’t have to barter off any of your relatives to find a financing option you can live with.

College Rebate Programs

Tags: , ,


With school loans, rent and other bills to pay just when you’ve started to earn real money, you may be wary of affording a new car. However, if you need a new set of wheels, now is one of the best times to approach car companies because many offer special deals that are only available to recent grads.

The most eye-catching deals are rebates — they offer an immediate cash discount on your purchase. Ford, GM, Hyundai and Mazda offer a generous $400 rebate on a variety of vehicles. To take advantage of these deals, you need only to have graduated from an undergraduate or graduate program within the last couple of years.

Not all dealerships offer these rebates or incentives, however, so once you’ve narrowed down your model choices, it’s a good idea to log on to a car manufacturer’s home page to find your nearest participating dealer. Once you find a dealer, you must be able to prove that you are a graduate (or soon–to–be graduate) of an accredited program (a copy of your diploma or transcript should suffice).

The next step is to consider your various financing options and determine if you qualify. Some car manufacturers, for example, offer financing and leasing eligibility to those who have graduated within 120 days of purchase or can prove they can still swing a car payment after rent, student loans, etc.

Finally, consider the benefits of a “no down payment” offer. Combined with a rebate, this option can free up some cash and make those first couple of monthly payments easier.

If you’re still confused, cars4grads.com is a great website that has compiled information on all the college rebate programs offered by car companies.

Remember, don’t be intimidated — car companies want your business and are eager to make your first purchase a pleasant experience. Just think carefully about what you can afford and you’ll soon be driving off in that dream car with your financial security still intact!

Cars4Grads.com

Cars4grads.com is a service created just for graduates and makes the process of searching for car rebates and special offers fast and painless. It’s like a personal search engine for the various rebate programs available to college graduates and, best of all, it’s free.

If you are about to graduate or have recently graduated and are thinking about buying a new car, you may be eligible to receive up to $750 in cash rebates, just for being a college grad! However, figuring out which car manufacturers have these offers and other discounts can be a time consuming and tedious process.

All you have to do is tell cars4grads.com a little bit about yourself and the cars you’re interested in, and they’ll match you up with deals that you’re eligible for. The process only takes a few minutes and you could save a lot of money.

Car Math

Tags: , ,


Even if you failed algebra in high school, don’t worry. There are no unknown variables here, and we’ve even provided you with a handy calculator to help you determine your monthly car payments.

To estimate how much you’re going to owe per month on your new car, take several factors into consideration: the total price of the vehicle, the sales tax in your state, the amount of your down payment, the interest rate of your financing options, and the duration of your financing plan. (Financing can be arranged either through the dealer or through a separate lending agency).

For example, if you decide to purchase a $20,000 car with no down payment, a state sales tax of 5% and a 9.05% interest rate, and pay it off in four years, your monthly payment will be about $525. (Check out our loan calculator to figure out how much you’d have to pay for the car of your choice). Based on your estimated monthly payment, ask yourself if you can budget this successfully given your current income and still afford gas and monthly insurance payments (not to mention rent).

It seems like a lot to consider when all you want to do is to ride your new car out of the dealer’s parking lot. However, if you keep these key terms in mind, you won’t be caught by surprise when it’s time to negotiate the payment terms on your new car:

  • The total price of the car. This is the negotiated price of your vehicle plus tax, minus any dealer’s rebates. This isn’t the total amount you ultimately pay for your vehicle; however, it is the base from which dealers calculate the tax and interest rate on a car.
  • Down payment. In essence, the down payment is a portion of the total price of the car that the buyer “puts down” in order to be able to drive the car away from the dealership. Traditionally, by laying down a significant amount of money, you signify your intent to continue paying for the vehicle; however, “money down” isn’t always necessary. Remember, while putting no money down might be advantageous in the short-term, it will increase your monthly payments in the long-term.
  • Interest Rate. This is one of the most important numbers you’ll have to deal with when financing a car, so pay attention. Basically, this is the price the lender charges for making you a loan. For each year of your term, you are charged on the remaining amount that you owe. This means that you’re charged interest yearly, but pay it on a monthly basis. Interest rates vary by state and sometimes by city. The national average is about 9%; however, rates can range up to about 13%. These make a huge difference in what you owe: take a look at our example above. Given the terms stated, you’d end up paying just over $5,000 in interest. If the interest rate were 13%, the total would rise to almost $7000. Make sure the interest rate is one you can afford comfortably.
  • Term. This refers to the duration of your financing plan. Generally, you can pay your car off in monthly installments for either 24 or 48 months, although this period is negotiable with the dealer. This number is closely tied to the interest rate because the longer you take to pay off the car, the more you’ll be paying in interest. The quicker you pay off the car, the less extra money you’ll shell out in interest.

Keep these basis concepts in mind, and you can walk into the dealership confident in your knowledge of all things finance – and start worrying about different kinds of car math, like how many bags you can fit in your trunk for a weekend trip to your summer share.