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?


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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.


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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 Experian.com!


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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 Quotes
You can get free quotes on any of the above vehicles from Edmunds.com.The 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.

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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.


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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.


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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).

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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.


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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 LeaseGuide.com.

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

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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?
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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.

Value
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.


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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


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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 Edmunds.com, 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.

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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.

Why?

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 Edmunds.com.The 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.

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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:


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Should You Lease Your Next Car?

car leasingCar leasing has made a big comeback after a couple of years in the doldrums during the Great Recession. Over 25% of new cars are now leased.

The reason that leasing took a slide is not that automotive consumers didn’t want it; car manufacturers (especially American manufacturers) lost their shirts by being too agressive with their lease deals. Consumers loved it but many car makers lost millions and millions of dollars.

So they slowed down and even stopped leasing in some cases. Now, some years later, they have returned — in a big way. Nearly all other car companies are now offering some of the best lease deals we’ve seen in a long time.

Some of the car makers currently offering special car lease deals are Honda, Acura, Nissan, Toyota, Mercedes, Mazda, Mitsubishi, Scion, Subaru, Volkswagen, Volvo, Infiniti, Audi, Hyundai, Jaguar, Land Rover.

Many people could easily qualify and be paying far less in monthly car payments if they leased their car, assuming they qualify and are right for leasing, which everyone is not.

However, many people don’t lease because they 1) don’t understand leasing and are afraid of it, 2) think it’s like throw-your-money-away apartment leasing (which it’s not), 3) think it’s only for businesses and tax benefits, or 4) have gotten bad advice from friends or relatives (who don’t understand it either).

So what are the benefits of leasing?
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Pay Cash for Your New Car? Better or Not?

Should you pay cash for your new car, if you have the cash available? Is it smart to pay cash instead of financing with a loan or lease? Does it save you money? Can you get better deals with cash?

My dear old mother who is now gone grew up during the Great Depression. She felt that one should always pay cash for anything one purchased, including cars. One should never go into “debt” to buy the things they want or need. Many people still think that way about buying cars. Are they right? Is that still a good philosophy?

Maybe. Maybe not. It depends on the circumstances.

First, let’s dispose of an old myth. Paying cash will not get you a better new-car deal. Here’s why. Dealers do not finance their own loans. If they did, as some did in our grandfathers’ days, they would rather have up-front cash than payments over a long period. However, these days, dealers always get cash, even when they arrange financing for customers with a bank or with their “captive” finance company. The bank or finance company writes them a check as soon as a customer’s financing has been approved. In fact, dealers make more profit on a finance or lease because they receive a bit of a “kickback” payment or “finders fee” that they would not get if the customer pays hard cash. In short, a new-car dealer makes more money on financed deals.

Let’s now get to the heart of this discussion. If you have the cash in the bank or in an investment,  should you use it to buy your next car?


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Cheaper to Buy New Than Used?

new-car-dealsIt is always smarter and cheaper to buy a used car rather than buy a brand new car. Right? Not so fast.

With the agressive rebates and super low-APR loans being offered these days by most car manufacturers, it is not difficult to find cases in which buying a brand new car is actually cheaper than buying a late model used car of the very same make and model.

How can this be?

Heavy rebates and dealer discounts during short-term promotions can reduce a new vehicle’s price so much that used vehicle prices don’t have time to react and adjust. This means for a short time, during the promotional incentive period, that the price difference between new and used becomes smaller. In some cases, the new vehicle’s price actually becomes less than the used vehicle’s price, assuming a used vehicle that’s only one or two years old.

Another way this can happen is that loan interest rates can be so different between new and used car loans that it makes a big difference in overall cost. Used car loan rates are always higher than normal new-car rates — usually about 2%-3% or more. The difference is even greater when a manufacturer is offering a 0% or low-interest promotional loan rate.  Remember, there are no incentives or promotional rates on used cars — only on new cars.

Therefore, the next time you think you want to buy a late model used vehicle because you think you’ll pay less by avoiding the infamous 1st year depreciation, do yourself a favor and at least compare new-car prices for the same vehicle. You might be in for a nice surprise.

HINT: You’ll most likely find these kinds of deals on Japanese brands that hold their resale value well. This would include Honda, Acura, Mazda, and Toyota/Lexus.

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Best Cars – And Worst Cars

best car dealsBuying a new or used car can be an overwhelming task when trying to buy the best car for your needs. There are simply too many choices.

Which are the most reliable? Which are the safest? Which are the best values for the money? Which have the most comfortable ride and handling? How about price comparisons?

Which used cars have a history of good reliability? Which are recommended? Which are specifically not recommended? What kinds of problems can I expect from specific makes and models?

What tires are best, have best wear and performance, and are the best values?

For many years now, Consumer Reports magazine has come to the rescue, in their annual Auto Issue in April each year.

It’s the largest selling issue of the well-respected monthly magazine and is considered by many to be the “bible” for smart car buyers.

The new April 2015 issue (available on newsstands now at the time of this writing) is no exception. In fact, the issue seems to get better and more useful every year.

A couple of things that makes Consumer Reports unique is that the organization thoroughly tests (over 50 different tests) all the new vehicles they report on, as well as conducts a huge national survey of vehicle owners. This allows them to publish results about each vehicle such as handling characteristics, performance, safety, fuel economy, build quality, and reliability.

They score and rank car brands, as well as individual models and styles, based on overall evaluations and test results — and then make recommendations. Any prospective new car buyer would be remiss if they didn’t consult with Consumer Reports as part of their pre-purchase research process.


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Reliable Cars Make the Best Deals

most reliable carsThe most reliable and dependable cars make the best deals, even if the initial price is higher.

First, any car that is reliable is going to spend fewer days in the shop, cost less for repairs, cost less for insurance, and create fewer inconveniencies for its owner. Some of those inconveniencies, such as lost work time, could also count as lost money.

Second, since reliable cars are more desirable and in greater demand, resale values are higher, making long-term overall ownership cost lower. High resale values also means high lease residual values, which translates to lower monthly lease payments.

Consumer Reports (ConsumerReports.org) magazine produces reliability reports each year that rate and rank most automobile brands and models. This year, they have ranked 28 car companies and multiple models within each company. Each is rated in terms of how its tested reliability stacks up against the industry average. Brands whose vehicles were evaluated as having higher reliability than average rank highest.


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Best Deals – New or Used?

Do you get the best deals on brand new cars or on used cars?

best car leasesIt might seem to be an obvious answer — that used cars are always better deals. But that’s not always true.

Used cars seem to be better deals in the sense that you pay less than for a brand new car of the same make and model. It’s common knowledge that new cars rapidly depreciate in value and if you can buy a used version of the car, you avoid suffering the high initial value loss.

In a simple world, this might be good logic. However, it’s not a simple world and there are a number of other factors that come into play when considering a used-versus-new decision.

Although it would be a rare situation if a used car cost the same or more than a brand new car of the same make and model, it is very possible that when a bad deal on a used car is compared to a great deal on a new car, the new car deal provides more bang for your buck and can be a smarter buy.

So what’s happening right now in the car world, and how does it affect new and used car deals?

At the time of this writing, two important factors are affecting the used-versus-new situation.


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Long Term Car Loans – Good Deal or Bad?

Long term loansSince the end of the Great Recession, average auto loan terms have become longer and longer. Forty-eight months was typical for a car loan just a few years ago but now that car companies are offering 6 year, 7 year, and even 8 year loan terms, the average is slowly creeping up as consumers take advantage.

Why are longer loans popular?

The short answer is that automobile buyers are simply looking for ways to make new car more affordable. A long-term loan produces much lower monthly payments than a shorter loan. Some car companies have provided encouragement through special offers of 0% APR interest rate for the longer terms. Consumers who might have considered a typical 3-year lease now might find that a 6 or 7 year loan produces similar or lower monthly payments. For those who know they’ll be driving their car for a long time, a long-term loan seems to be a better alternative.

What are potential problems with long-term loans?

The largest problem with long car loans is that the loan is “upside down” for most of the loan term. The loan balance is paid down more slowly than the rate at which the vehicle depreciates in value, which means there is always (until near loan end) a deficit or “negative equity” situation. In other words, the buyer has no ownership value in the vehicle that would allow him to easily sell or trade the vehicle until very late in the loan term. To sell or trade would mean producing a significant amount of cash to pay off the loan.


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Short-Term Lease on a Porsche

Porsche short term leaseWant a short-term lease on a nice Porsche Boxster or Cayman? The leases can be as little as 6 months up to more than a year and are attractively priced.

This is very unusual so what’s the catch?

The “catch” is that you must have already ordered, or will soon order, Porsche’s hot new Macan (pronounced (ma-CAHN). It’s Porsche’s first small cross-over SUV that performs like a sports car but hauls your stuff at the same time. The problem is that the company has already sold all it can make in it’s initial production and deliveries will take anywhere from six months to a year before they get caught up.

Meanwhile, for those who have ordered or will order and are willing to wait, Porsche is offering short-term leases on the Boxster and Cayman to those customers until the Macans arrive.

It’s a good deal for both the customer and for Porsche. It gives the customer something very nice to drive while they wait and, for Porsche, it might even create some new Boxster and Cayman sales once new customers experience them.

Check with your local Porsche dealers for details regarding this offer.

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Why Few Porsche Deals?

Porsche dealsWe don’t know if you’ve noticed but we don’t often mention Porsche deals on this web site.

There’s a good reason — Porsche almost never offers any great deals or heavy incentives on their automobiles. However, Porsche is not in the business of playing in the discount car market, even in a tough economy. You either want a Porsche, or you don’t. And you either pay the price, or you don’t.

If you want to finance your Porsche purchase (a large percentage of buyers pay cash), you might be able to get a reduced interest rate through the dealer (as low as 1.9% APR), assuming you have a fantastic credit score. Don’t expect to ever see 0% APR however.

That’s not to say you won’t be able to squeeze out a token price discount or a “free” option occasionally but any thought of paying anywhere closer than shouting distance of dealer invoice price is nothing more than a pipedream. However, you might be able to do better on a almost-new used Porsche with low mileage.


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