Cheapest Cars – Best Deals

cheapest new carsAutomotive consumers who want a brand new car at the absolute lowest price should look beyond the sticker price.

Sticker price is one thing, actual selling price is another. Most new cars are sold at prices below MSRP sticker price. However, it’s easier to get good deals on some car brands and models than others, depending on available incentives and willingness of dealers to offer discounts.

The cheapest new cars are generally small cars such as the Honda Fit or Nissan Versa. Although small, these cars are very practical, economical to drive, inexpensive to insure, and actually very safe. Because they are so maneuverable and easy to park, they are great for city or campus driving.

In the list of cheapest cars below, we show you the MSRP (sticker price), including destination charge, for the least expensive version of the model, then show you the TrueCar price that a customer should actually pay for that car.


Great Car Deals – or Dealer Scams?

good car deal or scamCar buyers often ask if the great new car deals being advertised on TV and in newspapers are some kind of “bait-and-switch” scam by dealers and if they can actually expect to get the deals if they go to a dealer.

The short answer is, yes, these are legitimate good deals and are not dealer scams.

Here’s why.

Car companies are very competitive and want to attract buyers with promotional deals. The companies actually lose money but consider it a good investment if they can win customers.  It’s simply part of the cost of doing business.

Car incentives can come in the form of cash-back rebates, loyalty bonuses, low-interest loans (even 0%), and special lease deals.

American car makers typically have the biggest and best rebates, and low-interest loans. European companies, such as Mercedes, don’t often have large incentives with the exception of BMW, which frequently has great lease deals on nearly every model. Asian (Japanese and Korean) companies are most likely to have the best lease deals. Low-interest and zero-percent loans are very common these days since “normal” new-car interest rates are already low — around 3.0%.

So what’s the catch?


Zero Down Car Deals – Explained

zero down paymentThere are a number of ways to buy a new car with no down payment.

One of the best ways is to find rebate deals like the ones we talk about on this web site because a rebate can be, and usually is, applied as a down payment.

For example, if you find a vehicle that currently has a promotional rebate of $3000, that money can be used in place of an actual cash down payment. In most cases, you would need no other down payment cash — zero down payment from you, thanks to the generosity of the car company. If you are short on cash, this is a great way to get a new car with no money down.

Another popular way to avoid a down payment is to trade a vehicle. The credit you receive from a dealer for the vehicle can act as a down payment towards the purchase of a new vehicle. There would be no need for additional cash from you. This assumes your trade vehicle is fully paid off or that your loan balance is less than your trade vehicle is worth. If your loan balance is higher, you are “upside down” and may have to make a larger down payment than you would otherwise have to make.


Five Ways to Get Best Car Deals – Explained

best car dealsGetting the best car deals is not difficult but many people don’t know how to go about it. They end up spending much more money than they could have otherwise. Here are five things that will help you get the best deals:

1. Buy last year’s leftover models

Right now,  last year’s model cars are great deals as dealers and manufacturers need to get rid of leftover inventory and make room for new models. Since car makers only redesign cars about every 4-5 years, it’s likely that last year’s model of the car you want is almost identical to this year’s model — but at a much better price.

Manufacturers add “incentives” to make the leftovers more attractive to customers. These incentives can come in the form of large cash rebates, bonuses, low-interest loans, or special lease deals — or a combination of all the above. Although good deals are available on these vehicles, choices of colors and styles may be limited, especially later in the year.

Therefore, if you want to take advantage of “clearance” sales such as these, and you want a particular color, style, and options, it’s best to buy early and not hold out for possible better deals later.

2. Minimize your cost and dealers’ profit

Many people spend hours with a dealer negotiating a great price on the new car they want and then end up losing their great deal in the Finance Manager’s office. Finance Managers are charged with maximizing a dealer’s profit on every car deal. First, if you are trading a car, the dealer will offer you the lowest possible price, to increase his profit on the overall deal.

If you don’t know the fair value of your trade-in vehicle and insist on being paid that value, you can lose the advantage of the great price you negotiated for the new car.

Second, the Finance Manager will try to sell you a variety of “add-on” products and services, most of which are overpriced (for high profit) and unnecessary. He might offer extended warranties, insurance, security devices, paint and fabric protection, or service contracts. Each of these items, if purchased, increases dealer profits and reduces the value of a customer’s deal.


Good Credit Gets Best Car Deals

credit scoreUnless you plan to pay cash for your next car purchase, your credit score will play a large part in your purchase or lease.

You may already know that interest rates for car loans and home mortgages are currently the lowest in history. Special low-interest car loans are common, as are 0% APR (no interest) loans, for as long as 72 months. Many car lease deals now are structured with near-zero finance rates (leases must have some finance charge, even if practically zero). This makes for some incredible new-car deals.

But there’s a “catch.” (Isn’t there always?)

The “catch” is that special low-interest and 0% APR car loans, and special lease rates, are only available to customers with excellent credit.  Car companies call these kinds of customers “well qualified.” You’ll see these conditions stated in the “fine print” that accompanies advertising of the deals.

Anybody who is considering buying or leasing a car should already know their most recent credit score before they visit a dealer. It’s easy enough to get — from one of the online services who specialize in providing credit scores and credit monitoring. What’s your FICO score? Find out now when you check your credit report for $1 at!


Where are the Cheap Car Leases?

Where are the best deals in car leasing right now?

The answer: almost everywhere. Nearly every car manufacturer is currently offering some great special lease deals on at least a few of their models and styles.  With the exception of some General Motors leases, nearly all the lease deals now being offered come from non-American car makers.

These deals come and go. Some months are better than others. If you are looking to lease a Honda, for example, you missed the big $0-$0-$0-$0 promotion in March and April. However, the current Honda deals are almost as good.

Nearly all manufacturer-backed car lease deals are actually good deals and well worth considering if you like the models and styles being promoted. Most of the deals require some money up front (due at lease inception) but if you don’t have the cash, you would have to pay about $20-$30 more per month for every $1000 you can’t pay. It doesn’t change the fact that the lease is a good deal — it simply means you pay more per month to get the deal..

Most of the cheapest promotional lease deals are in the $200 range, more or less. These are generally 36 month leases, 12K miles per year, and usually require some down payment cash (as discussed above) and your first month’s payment.

Here are examples of some of the best lease deals going right now:

Ford Fiesta  - $159/month, 36 months, $1789 due at signing

Ford Focus  - $159/month, 36 months, $2099 due at signing

Ford Fusion  - $189/month, 36 months, $2529 due at signing

GMC Terrain – $199/ month, 24 months, $2559 due at signing

Honda Accord sedan- $189/month, 36 months, $1999 due at signing

Honda Accord sedan Hybrid- $189/month, 36 months, $2799 due at signing

Honda Civic coupe - $159/month, 36 months, $2699 due at signing

Honda Civic sedan - $149/month, 36 months, $2499 due at signing

Honda CR-Z- $199/month, 36 months, $2699 due at signing

Hyundai Accent  - $169/month, 36 months, $1899 due at signing

Hyundai Elantra (2015) - $159/month, 36 months, $1499 due at signing

Hyundai Elantra (2016)  - $179/month, 36 months, $1499 due at signing

Hyundai Elantra GT (2015) - $179/month, 36 months, $1999 due at signing

Hyundai Elantra GT (2016) - $179/month, 36 months, $1999 due at signing

Hyundai Sonata - $179/month, 36 months, $1999 due at signing

Hyundai Veloster - $179/month, 36 months, $1999 due at signing

Jeep Renegade Sport  - $189/month, 36 months, $1999 due at signing

Free New Car Price QuotesYou can get free quotes on any of the above vehicles from quotes will automatically include any cash-back rebates or discounts that are currently available.

For more cheap car leases, see our article Car Leases Under $200 a Month.


Cash or Loan? 0% APR or Rebate? Lease or Buy?

new car offersWe frequently see cars being advertised with simultaneous lease and purchase deals.

There might be a cash rebate, a 0% APR loan rate, and a special lease deal being offered at the same time.

You have to choose only one of the offers; you can’t combine them. So which is best?

Let’s examine it from a number of different viewpoints:

- If you know you want to pay cash for your car, accepting a rebate is the obvious choice. Since rebates are funded by the car manufacturer, not the dealer, you should also expect to get some additional discount from the dealer himself. But don’t expect a special discount because you’re paying cash. Dealer’s actually make more money when customers buy with a loan provided by their “captive” finance company. Cash is not king at a car dealer.

- If you’re not sure whether to buy with cash or a 0% loan offer, understand that the total cost of purchase will be exactly the same, either way. Neither has a cost advantage. However, with a 0% APR loan you get to use the car company’s money for free, which means you might want to find better uses for your cash, such as putting it into even a low interest savings account. Sure, you’ll have car payments every month but you’ll also have readily available cash for emergencies or other purposes.


Best Leased Car Brands

best car lease brandsCar leasing has become popular again with automotive consumers after the near-meltdown in 2009 when the car industry, and the economy, was suffering through the worst of a worldwide recession. Nationally, leasing accounts for about 25% of car sales across all brands, and it’s growing as consumers continue to look for affordable ways to drive new cars. In fact, leasing is growing faster than sales.

As stated, the average rate at which cars are leased, not purchased, is about 25%. However, that rate is much higher for car brands and car companies that are “lease-friendly.” The average rate is dragged down by brands that aren’t as interested in leasing or who don’t have good leasing programs.

Generally speaking, American car companies such as Chrysler, Ford, and General Motors were the hardest hit during the recession and practically stopped leasing altogether. As a result, they’ve been the ones who have been slow to return. On the other hand, Japanese and European brands continued to lease and are now the strongest in lease financing. Leasing rates are highest with luxury brands, in the 50%-70% range.


Lease Deal Calculator

car lease deal calculatorThose new car lease deals you see advertised for $199/month seem to be good deals — because the payments are so low.

Are they really good deals or is this just some kind of dealer trick? How do you go about determining if a deal is good or not? What you need is a lease deal calculator that gives you the answer.

Car leases are more difficult to evaluate than simple car purchases. The reason is that there are more factors involved in calculating the monthly payment for leases.  There’s the price of the car that the lease is based on, the number of months in the lease, the money factor (finance rate), the lease-end residual value, and the down payment (if any). Even the make and model of the car makes a difference in a lease.

But, normally, you don’t see all those factors when you are presented a lease deal by a car dealer, or when you see a lease deal advertised. Typically, you only see the MSRP sticker price, lease term (lease months), monthly payment, and down payment requirement. Although the monthly payment may seem low and a good deal, you don’t really know. It might actually be a poor deal for that car, from that dealer. It’s possible that a much better deal is available at another dealer or on another similar car.

You therefore need an easy way to evaluate individual lease deals and compare multiple deals.


When a Good Car Deal is Not a Good Deal

good car dealsYou just got this great deal on a new Ford Explorer XLT in which you paid only $29,217!

The MSRP sticker price was $33,795, which means you got a savings of $4578.

Wow !!!

That’s 13.55% below MSRP! A great deal.

It’s even below dealer invoice price of $32,183.

[Is this a realistic deal? Yes. How do we know? Because we checked with and found all the above numbers, including what other people are paying for this same vehicle — and received an offer to get the same deal for ourselves – Editor]

However, when you went into the F&I (Finance and Insurance) Manager’s office to apply for your loan and sign the papers to conclude the deal, the deal began to fall apart.

Here’s how.

Not knowing that it’s the Finance Manager’s job to make additional profit for his car dealership, you fell for most of his attempts to sell you additional services and products, all of which erode your deal, make a lot of profit for the dealer, and don’t provide you good value in return.

Let’s take a look at what you bought and why you probably shouldn’t have.


Good Car Deal – or Not?

best car prices1. A car dealer offers you what seems like a good price on a brand new car. Is it a good deal or not? Should you expect to do better?

There are two prices that are important to know when buying a new car. One is the MSRP (Manufacturer’s Suggested Retail Price) or “sticker” price shown on the car’s window sticker — retail price. The other is the “invoice” price — the price a dealer pays a car manufacturer for the car — wholesale price. With no other factors involved, a dealer can sell a car for a price anywhere between MSRP and invoice, depending how much profit he wants to make.

Many customers think dealers should sell cars at cost, which is ridiculous because any business has to make a profit to pay the bills and stay in operation.

Having said the above, dealers often get “help” from their manufacturer in the form of “holdbacks”, bonuses for making sales goals, and factory-to-dealer cash to help sell particular models and styles. Manufacturers also frequently offer direct customer rebates and bonuses.

Given this kind of help from the factory, dealers can often sell cars for prices that are below invoice price — with little or no money from their own pockets.


Great Car Deals Available on 2014 Models

VW dealsEven though we are now in 2015, there are still plenty of brand new unsold 2014 model vehicles sitting on car dealers’ lots waiting for buyers who are looking for great deals.

Car manufacturers and dealers need to sell these “leftover” models to make room for the newer 2015 versions of the same vehicles. Consequently, they are offering some of the best deals we’ve seen in a long time. The deals come in the form of large factory-to-customer rebates, dealer-provided price discounts, low interest loans (including 0% APR), and special low-payment lease deals.

These are all deals that customers could not possibly negotiate on their own, without the incentives that are being offered, with no negotiation required.

Are these deals actually good deals? Absolutely. Compare the price difference with a new 2105 model of the same make and model, and you’ll be convinced. In many cases, the newer models are pretty much the same as the older model with possibly only a few cosmetic or appearance changes. Most cars get a significant “remake” only every 4-5 years.


Negotiating Car Deals – Explained

negotiating a car dealMost of the kinds of car deals that we discuss on this web site don’t require negotiation because they are pre-packaged deals offered by car manufacturers, not dealers. They are usually genuinely good deals and better than any deal customers could negotiate on their own with a dealer.

However, these promotional incentive offers are limited to specific makes, models, and styles and are only good for a specific period of time, usually a month. Some manufacturers regularly offer such incentive deals; others do not.

So, what is the best way to negotiate great new-car deals when there are no incentives being offered?

1. Know your car and know your prices – do your homework first

Before you ever contact a car dealer, you should have already done your homework. Use the Internet to research the car you want, its options, color choices, features, and prices. Go to a dealer and test drive the car you like, but leave your checkbook at home. Use web sites such as and to find invoice prices and “market” prices (prices other people are paying). If you will be trading a car, use Edmunds or Kelley Blue Book web sites to get trade-in values. In order to intelligently negotiate prices, you have to know what you’re negotiating for. You have to know what are reasonable negotiation targets, not blindly “shooting in the dark.”


How to Lower Your Car Insurance Cost

cheap auto insuranceAuto insurance is one of those necessary evils of owning and driving cars. Most states require at least some liability  insurance to protect other people in case you cause an accident. Although the laws don’t require you have collision or comprehensive coverage, most auto loan companies and banks do.

Keep in mind that car insurance costs can vary widely between insurance companies for the same car and same individual. And rates change frequently. The cheapest insurance company this year might not be the cheapest next year. The company that has the best rates for a young driver may not have the best rates for an older driver. The company that has the lowest rates in one city and state may not have the lowest rates in another city and state.

So how do find the cheapest auto insurance rates?

Simple. You ask for rates from a number of different companies, compare them, and go with the most affordable. Insurance quotes are free and there’s no obligation to accept any of them.  Then, in about a year, you do it again because rates can change in that timeframe.

Understand that auto insurance companies have a complicated risk-based system that determines rates. Rates are based on the age of the insured, his driving record, where he lives, where he drives, how much he drives, for what purpose he drives, the make/model/age of his vehicle, if he has other insurance with the same company, and his credit score. Yes, many insurance companies have determined that people with poor credit scores are more likely to submit car insurance claims, and therefore should pay higher insurance rates.

How much insurance should you buy?

Cheap Cars – Best Car Deals

cheap-carsWhere are the cheap cars?

Where are the best deals?

Everybody knows that all new cars have window stickers that display MSRP (Manufacturer’s Suggested Retail Price), which is the full retail price of the car. Of course, we all know that nobody pays full retail price anymore.

So, who and what determines the actual price we pay for a new car?

First, dealers can discount prices, depending on the following factors:

1. Wholesale price (invoice price) – This is the price a dealer pays the manufacturer for the car.  A dealer cannot sell below invoice price without help (money) from his manufacturer.

2. Profit objectives – How much profit they must make to keep their business alive and profitable. Dealers must make some profit to pay their bills and stay in business.

3. Time in invenory – A car that’s been sitting on the lot for a long time is costing the dealer money in interest payments on the money he borrowed to buy the car from the manufacturer.

4. Sales goals and quotas – Dealers typically have sales goals or quotas to meet each month, each quarter, and each year. Bonuses and incentive payments are often at stake. Buying cars at month-end, or year-end is always a good move.

So how do you find cheap cars?

Look for the cars with the largest incentives (rebates, loyalty bonuses, factory-to-dealer cash, low-interest loans). Use this web site or go to the car makers’ web sites and look for the “special offers” section.  You might have to enter your zip code because deals can vary by region of the country.

If you don’t mind buying last year’s models, you can find cheap cars and save a lot of money. Typically, the highest incentives are on makes and models for which dealers still have leftover inventory. However, in many cases, incentives on this year’s models are just as good, or almost as good, as last year’s models. When sales are slow, deals get better.

If you are looking for cheap cars and new-car prices are still a little out of your budget, consider a used car (see Used Car Advisor) or bargain-priced cars at public car auctions, repo auctions, police impound sales, or government surplus sales (see Public Car Auctions for more details).


How the Best Car Deals Are Made

best car dealsMany people think the way to get the best car deal is through shrewd negotiations and hard bargaining with car dealers.

Not true. That’s old outdated thinking.

The best deals are the ones that are given to you, with no negotiation required, by automakers and their “captive” finance companies.

You see, dealers control only one factor in a car deal — price. And that’s only to a limited degree because he (the dealer) must work within his relatively small range of potential profit, which can vary between about 4% and 12% of MSRP depending on brand and model. There are also holdbacks and possible sales bonuses that reduce his cost but a dealer cannot sell cars for little or no profit without going out of business.

The best car deals are those that are incentivized by car manufacturers, combined with contributions from dealers. Car companies can control all factors in a purchase or lease deal — price, rebates, factory-to-dealer cash, interest rate,  lease money factor, lease residual values, and lease mileage allowances.

With this wide range of control, car companies can, and do, offer limited-time special deals that automotive consumers could not possibly negotiate for themselves. Without such help from the parent car company, dealers could not sell or lease cars on such attractive terms.


Where Are The $0 Down Car Lease Deals ?

$0 down car lease dealsA few automakers are currently offering $0 zero-down lease deals.

These have slightly higher monthly payments than the same deals with a down payment.  Whether you make a down payment or not doesn’t change the value of the deal. A good deal is still a good deal with or without a down payment.

The car companies with the $0 down lease deals are Honda, Acura, Kia on selected models/styles, and Scion. The deals are offered both with a down payment and without.

However, these deals are a little different in how they are implemented.

For example, Volvo, Honda and Acura offer their special leases as $0-$0-$0 ($0 down, $0 first month’s payment, and $0 security deposit). This means that you owe nothing at lease signing except the usual official tag and registration fees specific to your home location. Not having to pay the customary first month’s payment means you only make 35 payments on a 36 month lease.

BMW’s $0 down leases simply means you pay no down payment (cap cost reduction) but you still pay the first month’s payment, plus possible security deposit, plus any official tag and registration fees at the time of lease signing.

What’s the catch with these special limited-time leases? Nothing except that not all models and styles are offered with the special deals. If you like the models being offered, fine. If not, you’ll have to settle for a non-promotional normal lease deal.

All of the special lease deals being offered by Honda, Acura, BMW, and Volvo have been rated “Good” or “Excellent” by

For more zero down car lease deals, see our article, $0 Down Car Leases Are Back.


Buy a Car – Skip the Dealer

nissan ZIf one asks oneself why one must go to a car dealer to buy a new car, one would come up with the following answer.

Most people go to car dealers because they want to know about that dealer’s brand of cars, what models are offered, what options are available, about gas mileage and safety ratings, about benefits his cars have over a competitor’s, about what cars the dealer has in stock, and at what prices. Some people also want to know how they might finance their purchase and if they can buy within their monthly budget.

In other words, we look to a dealer sales person — repeat, sales person —  to educate us about the car we might want and how to finance it. Sales people usually do a pretty good job at educating us but keep in mind that everything a sales person does and says is aimed at only a single objective — selling a car for the best possible profit for the dealership.

When you visit the dealer’s showroom or sales lot, you are on their home turf where they have the advantage. That’s where they want you to be. That’s where they can be more effective in what they do best, selling cars. Most customers who come in to buy a car on their own terms, get sold a car on the dealer’s terms.

So, how can we as car buyers retain control over the car buying process?

Car Brand – Does It Matter?

Best car brandsMany car buyers simply want a vehicle that gets them from Point A to Point B and don’t care about the brand or what company makes it. After all, isn’t one brand of car pretty much like another?

To others, vehicle brand is very important — although maybe not for the right reasons.

What are the best car brands?

Let’s take a look at some of the reasons why you might want to take care in selecting your car brand. It’s simply not true that all are alike.

The old adage “you get what you pay for” is not the same today for the automobile market as it was, say, 25 years ago. In those days, an inexpensive car would probably get you poor reliability, poor quality, few safety features, and minimal creature comforts. For more money, you could get more luxury and creature comforts and possibly a little more in the way of improved reliability, quality, or safety.

Today, the car you get for your money is light-years ahead of those of 25 years ago with significant improvements in quality, reliability, safety features, comfort, construction materials, paint, fit-and-finish quality, rust protection, engine technology, fuel efficiency, emissions control, sound systems, navigation systems, and luxury features. The lowest priced cars today are far better than the most expensive cars of yesterday.

Today, different car brands are more alike than they are different. A Honda Pilot Touring at $39,000 is not so much different than a Land Rover Range Rover at $79,000 — same quality, same features, same technology, same safety, similar styling, most luxury features same, same reliability (actually, the Land Rover brand is rated by Consumer Reports as having much poorer long-term quality than less expensive Honda).

Stated a little differently, there may be a difference in perceived value between a Honda (or other moderately priced brands) and a Land Rover (or other expensive luxury vehicles) but very little, if any, difference in actual value. The incorrect notion that more money gets you a better car has been successfully propagated by high-end car makers using slick advertising.


What Car Should I Buy?

“What car should I buy?” is a common buyer’s question, particularly from people who don’t spend a lot of time reading car reviews, visiting dealer showrooms, or who don’t buy cars very often. There are so many makes and models, many of which are very similar in appearance and specifications.

Then, of course, we all have our own unique likes, dislikes, priorities, and needs. For some, cost is most important. For others it might be safety or reliability, or comfort, or style, or performance.

But for many people, a car is simply a way to get from point A to point B. These people are simply looking for the best vehicle to do the job at the lowest cost.

We can recommend  a few cars that we feel are the best overall — best combination of value, reliability, safety, perforamnce, style, and economy of operation. Even if you don’t particularly like our recommendations, you can use our vehicles as a basis of comparison for any other vehicle you might prefer more. For example, if you need more passenger space than our vehicles, what do you have to give up, if anything, to get that space? What if you need an SUV instead of a car? Is the possible reduction in fuel economy important to you?

Here are recommended vehicles. If you have no particular preferences and simply want a good vehicle for good money, you should consider these first.

Compact Car Recommendations


Car Deals Without Negotiating

Internet car dealsMost people really hate the process of buying a new car.

It’s because they know that car dealers have the advantage in price negotiations. Dealers do it all day every day, while the average car buying customer only does it once every few years. Customers who have better bargaining skills get the best prices.

However, in the last few years since the coming of the Internet, car sale prices don’t vary as much as in the past. This has happened because automotive consumers are increasingly using the Internet as a means of gathering the information they need to make them better deal-makers.

Car manufacturers and dealers now realize that potential customers are using the power of the Internet to do pre-purchase research and price comparisons. Since almost everyone has access to this information, there is less opportunity for dealers to manipulate prices — and less need for customers to negotiate prices.

In fact, most dealers now participate in Internet Pricing Networks through which they offer their best deals, knowing that customers are also getting and comparing deals from other dealers. These deals include any rebates or incentives currently being offered by manufacturers, plus discounts directly from the dealer.

Internet Pricing Networks, such as, have relationships with dealers in every area of the U.S.. When someone requests price quotes for a particular make/model vehicle, multiple dealers in the customer’s area respond with their price offers. Customers then select the best offer and visit the dealer to pick up their car and close the deal.

We are often asked if the prices from Internet Pricing Services are the absolute best prices that can be had from offering dealers. Maybe, maybe not. If a deal includes a heavy dose of manufacturer-supplied rebates and bonuses (which a dealer has no ability to change), you probably won’t get a much better deal if you try some additional negotiating.  However, it never hurts to try for a better deal, though you might end up spending a lot of effort for little gain.

The bottom line is that you now can — with the help of the Internet — get a fair deal on a brand new car without the hassle and stress of old-fashioned head-banging negotiating.


0% APR Loan Deals – Good Deal or Not?

0-apr-dealsCar makers are offering 0% APR loans (zero percent interest) as incentives on many makes and models during these times of slow car sales. Sounds great. But is it really? Is it better to take cash back, if offered?

Let’s take an example in which you agree to buy a car and finance $15,000 for 48 months at 6.70% APR interest rate.  Your monthly payments will be $357.11 per month. The total of all your payments for the life of the loan will be $17, 141. This means you are paying $17,141 – $15,000 = $2141 in interest, or finance charges.

Now, if you find a 0% APR interest loan deal for the same car, same price, you would pay only $312.50 a month and save $2141 in total cost over the life of the loan. You would be paying no interest and every cent of your monthly payment would be applied to reducing your loan amount.

Not a bad deal, right? Right. But maybe not the best deal.

Most 0% APR deals also come with an alternative cash back rebate deal. Typically, you can take one or the other but not both. If you take the cash back rebate, you must finance your loan at normal interest rates.

But, remember, the amount of your loan is less if you accept the rebate, even though you pay a highr interest rate.

Is it better to take the 0% loan, or the cash rebate?

To find out, compare the savings of a 0% loan to a loan at normal interest rate that includes the rebate amount.

First, simply divide your loan amount by the number of months in your loan. This produces your 0% APR no-interest monthly payment.

Second, use an online auto loan calculator ( to calculate your monthly payment at the normal interest rate, after you subtract the amount of the rebate from your loan amount.

What is the difference in monthly payment amount?

In our example above for a $15,000 car, our payment with the 0% APR loan was $312.50.

Assuming the car maker is offering an alternative $2000 rebate, that would reduce the loan amount to $13,000. Calculating our monthly payment, we find that the payment would only be $309.49, which is less than the 0% APR deal.

In other words, accepting the rebate gives you a lower monthly payment than the 0% loan.

If the car manufacturer is offering more than $2000 rebate for this deal, it becomes even sweeter.

Generally speaking, it is nearly always better to accept a rebate than a 0% loan deal if you have that choice, and if the rebate is more than $2000. This is especially true if you are short on down payment money because the rebate acts as a down payment.

See the following article, Best Car Rebates, to find out which car brands and models have current rebate deals.

In summary, don’t automatically assume that a 0% APR deal is better than a rebate. In many cases it is not. Do your math before you decide and you may be surprised at the results.


What’s Better – New Car or Used Car?

New car or used car? Which is better deal?A couple of years ago (the “old days”) before the recent economic recession and car industry “crash”, it was nearly always a better idea to buy used cars instead of brand new.

It was a no-brainer.

Not anymore.

Used car prices, according to Automotive News, are the highest in years and will remain that way for the foreseeable future.


Because there’s currently a shortage of 2- to 5-year old used cars which makes them hard to find — which makes them expensive. In the recession, people are holding on to their cars and not trading them as often. Leasing hit a low point which means lease returns will decrease over the next few years. Dealers depend on lease returns and trades for their used-car inventory. Furthermore, last year’s “cash for clunkers” program destroyed many good used cars when they were eliminated as part of that program.

While used car prices are higher, new car prices are lower.

The past couple of years has been a time of unprecedented incentive programs on new cars. Manufacturers are offering huge incentives on not only last year’s models but also on brand new models. The incentives come in the form of cash-back rebates, low-interest loans, 0% APR loans, loyalty bonuses, special lease deals, and early lease return programs. Manufacturers are also putting significant money into “factory-to-dealer” rebates (marketing support) to help dealers give customers heavy price discounts that dealers could not otherwise offer on their own.

If you are still thinking the old fashioned way — that buying a used car is always a better deal than buying new — you would be well advised to do your homework before making a decision. In many cases, the old rules will still apply, especially if you buy an older used car that is in good condition. But if you are looking for a relatively new used-car, first make sure you can find the one you want, and then compare the price with the deal you can get on a brand new model of the same car. Even if there’s a price difference, consider the full new-car warranty, lemon law protection, and updated features of the brand new car.

Free New Car Price Quotes

You can get free price quotes on any new car from quotes will automatically include any cash-back rebates and other incentives that are currently available from the car manufacturer.

Factory-To-Dealer Cash Incentives for Best Car Deals

factory to dealer incentivesCar companies help dealers sell cars by offering incentives. Incentives come in a variety of forms which might include direct-to-customer rebates, low interest loans, special lease deals, and factory-to-dealer cash. In any given month, a car company might offer all, some, or none of these incentives on any particular car model or style.

Factory-to-dealer incentives are unique because they are “secret” and not visible to customers like other incentives that are heavily advertised.

Sometimes called “marketing support”, factory-to-dealer cash travels from a car manufacturer directly to a dealer when a vehicle that has that incentive is sold. In effect, it is a rebate to a dealer.

A dealer can use these  manufacturer’s rebates in almost any way he wants that helps sell the vehicles on which the incentive applies. He might, for example, spend some of the money on a special sale event, advertising, or TV commercials. However most if not all of the money will be applied as a price discount to create attractive sale prices on selected vehicles.

Dealers might advertise (or not) the special prices made possible by factory-to-dealer rebates. Some luxury brand dealers prefer not to heavily advertise “sale” prices to avoid the brand being viewed as a “discount” brand. They prefer to offer the discounts face-to-face with customers, or let the customer “negotiate” for the discount. It makes the customer feel better if he thinks he’s the only one getting the discount.

Factory-to-dealer rebates are generally larger on hard-to-sell car models or on last year’s leftovers, but are not uncommon on even the latest models if the car company is trying to get off to a fast sales start on those models.

If you find a vehicle you like that has a nice factory-to-dealer backed discount, you should also expect your dealer to kick in an additional discount of his own — manufacturer-backed discount plus dealer-backed discount equals big discount.

When we find large factory-to-dealer and marketing support incentives, we tell you about them on this web site.

You can get free price quotes on any vehicle from Edmunds.comThe quotes will automatically include any cash-back rebates or discounts that are currently available.


Incredible Lease Deals – Electric Vehicles

Electric vehicle leaseElectric vehicles (EVs) are hot right now but not quite as hot as car companies, the Federal government, and state governments want.  The government wants millions of EVs on the road in the next few years to help reduce fuel dependencies and environmental damage.

After a bit of a slow start, electric vehicles are picking up steam, particularly now that there are multiple brands to choose from and more styles from basic to luxury. However, to give customers additional incentive, car makers are offering big price cuts and special low-payment leases — on top of the huge $7500 tax credit being offered by the U.S. government. Note that the $7500 is a tax credit (comes right off the top of your tax bill) rather than a tax deduction, which has a much less significant effect.

Some states such as Georgia, California, Colorado, West Virginia, Utah, and Illinois have additional state tax incentives for EV buyers and leasers. And some states exempt sales tax on electric vehicles. In some of these states, the incentives phase out over time.

Then, of course, there’s the huge gas savings ($0 cost) that comes with EV ownership.

Leases on EVs are particularly attractive because the $7500 tax credit is already built in. You see, the credit goes to the car’s owner, which is the lease finance company. They, in turn, discount the price of the car by that amount when calculating the monthly lease payment. In other words, you get an immediate benefit from the credit by leasing.

If you buy the same car, you pay and finance full price and only get the $7500 credit next year when you file your taxes.  Leasing is the only way you get the credit at the time acquire a car.

Let’s look at some of the best EV leases currently available: