Category: Buying A Car

How is the Coronavirus Affecting Car Loan Interest Rates?

9/14/2020

In March, the Federal Reserve made several moves to reduce interest rates and help support the economy. While this should help keep your car loan interest rate down, you should be aware that interest rates are slowly going back up. However, many car manufacturers are offering huge incentives to lure consumers back to car shopping.

No interest loans, if financed through their corporation, are plentiful right now on new cars. Manufacturers are even offering longer loan periods and offering options to not make your first payment for several months. Most often, these incentives are only available to those with excellent credit and who are looking to purchase a new vehicle.

If you are looking to purchase a used vehicle, or your credit is less than perfect, the best way to get lower interest on your loan is to shop around different financial institutions. Changes in interest rates are happening daily and to find the best rate for you, you will have to put in time and effort to compare several financial institutions. Remember, you will likely have to do most of your shopping on the phone as many places are still closed or only open for limited hours.

Different financial institutions lower their rates at different times so a few phone calls could save you thousands in interest on your loan. Because the economy is still shaky, some banks don’t want to take on any loans that may be a risk to them, so they are pricing their interest rates very high to drive people to seek other options. Other lenders are making their interest rates very low to offer as many loans as they can.

This is why you need to carefully compare several places. Your credit score will drastically affect what interest rate you are offered. Once you have a pre-approved amount, take it to the dealership and see if they will offer any incentives to convince you to get your loan through them.

Most experts agree that there is no way to know exactly what will happen to interest rates in the next several months. Many factors are unknown. Right now, interest rates are still low, but slowly rising, so if your job is secure, it may be a good time to search for a new vehicle.

Did you Buy a New Ford and then Lose your Job?

7/20/2020

Recently, the Ford Motor Company launched a new program called the Ford Promise program. It is intended to help those people who purchased their new vehicle and then lost their job due to the coronavirus and the downturn of the nation’s economy. It is also intended to reassure people who are considering the purchase of a new vehicle.

Anyone who purchased or leased a vehicle and financed it through Ford can now return their vehicle within the first year they own it if they lose their job. The return must be made within thirty days of losing their income. The program only covers personal vehicles not commercial or business ones.

Vehicles with model years 2019, 2020 and 2021 are eligible, and the vehicle can be used, new, or certified pre-owned. This program is good for vehicles that are purchased through September 30, 2020.

A value will be assigned to your vehicle using the National Automobile Dealers Association average trade-in value. The amount you owe will be reduced by that amount, and Ford will waive up to another $15,000 of your loan. If you owe more than that on your vehicle, you will be responsible for the rest of the loan.

You are also responsible for any late or deferred payments, and if there is any damage to the vehicle, you must pay for that. Once all of the conditions of the program are met, the account is marked as closed and paid so no one needs to worry about a negative report in their credit report.

The company states the program is to assure anyone considering a vehicle purchase but who is worried about the uncertain economy and possible job loss, that there is help available if they do lose their job.

“We feel like right now, the economy is at the stage of recovery where people want things to be back to normal, they want to buy, but they’re still a little nervous about what the future holds,” says Mark LaNeve, vice president, U.S. marketing, sales and service. “We want them to know we understand that, and we’re here to support them in their buying decisions.” (media.ford.com)

Do I Need a Lawyer if my Car is a Lemon?

6/28/2020

Anyone can end up with a new car that has constant problems. A new car like this is known as a “lemon” car, and there are laws to protect consumers who may purchase one. If you have one, you may be angry and not sure what to do first. If contacting the dealer where you purchased the vehicle does not bring you the results you need, you should contact an attorney who specializes in the “lemon laws” of your state.

why you Need an Attorney

Just like other professions, attorneys often specialize in certain areas of the law. When you begin your search, make sure you ask the lawyer how much experience they have with lemon laws. If they don’t have much experience, you would be better off to search for another lawyer. The laws can be confusing, and you need someone who is familiar with the law in your area to guide you through the process of getting your vehicle repaired or replaced.

To be considered a lemon, a new vehicle must have a defect that is covered by the manufacturer’s warranty that became known during a certain time frame or number of miles you have driven. Every state has different lemon laws and different timelines which is why it’s important to contact an attorney as soon as possible after you start having problems with your new car as they are best able to guide you in the process.

If you are unlucky enough to purchase a new vehicle from a dealership that cannot repair your vehicle, an attorney can contact the dealer or manufacturer on your behalf. Sometimes, a letter from an attorney is enough to force the dealer or manufacturer to discuss options with you, but this isn’t always the case.

Most manufacturers require you to go through non-binding arbitration first. You and your attorney will have the opportunity to present your proof of attempted repairs and the time you were without your new car. Once the arbitration board has heard your case, the manufacturer may make an offer. You and your attorney can discuss whether to accept or decline the offer.
If you decide the offer is not satisfactory to you, your attorney can file a law suit against the manufacturer of your vehicle. Your attorney can offer more of the evidence you have collected in court. Always be sure to keep careful records of repairs that were completed on your vehicle and any discussions you have had with the dealer you purchased the car from. All of this will be important in helping your lemon law attorney in building a strong case for your law suit.

While it may seem like this is a simple process that you can handle on your own, the complexity of lemon laws are very confusing to someone who isn’t experienced with the law. You may miss an important detail or deadline that will prevent your car from being declared a lemon and repaired or replaced. It would be best to let an experienced lemon law attorney handle the process for you so you get the best outcome for your situation.

Is it Better to Trade my Car to a Dealership or Sell it on my Own?

5/18/2020

When it’s time for a new vehicle, it can be a tough choice deciding whether to trade your car in on the new one or try to sell it on your own. The choice really comes down to whether you are willing to put forth the effort in selling it on your own or if you need the trade in for your down payment.

Pros and Cons to Selling your Car on your Own

If you are willing to spend a little time and effort, selling your car on your own can offer some big benefits, but many people don’t want to deal with it.

Most of the time, selling your car on your own will get you more money for your vehicle. Dealerships will often not offer much more than wholesale value for your vehicle, but selling it yourself lets you put the price on it.
It may be easier to negotiate with your potential buyers as they probably don’t have the experience at haggling like a car sales person would. You may be able to keep the price closer to what you want.
It does take a lot of time to sell your car. You need to get it ready to sell, advertise, deal with strangers, and give test drives.
If you are counting on the money for your old car to make the down payment on the new, you may not be able to get your new car as soon as you would like. Or, if you still owe on the old car, you may have to make two vehicle payments a month until you do sell it.
The longer you try to sell it, the harder it may be. If you don’t trade it in, you may be stuck with taking much less than you wanted if you can’t afford to make two payments a month.
You will have to pay more sales tax on the new car, but if you make enough on the old one, you may still come out ahead.

Pros and Cons to Trading your Car to a Dealership

Many people think that trading their car to the dealership is the best way to get rid of an old car. There are many advantages to doing that, but one big disadvantage.

The biggest reason to not trade your vehicle is the price. Dealerships will simply not give you as much for your car as if you sold it yourself. They need to think of resale value and will want to make money on your old car when they resell it to someone else.
A huge advantage to trading in your car is how simple it is. You just drop it off at the dealer and from then on, it is their problem. You don’t have to advertise it and try to find someone willing to pay your price.
The amount the dealership gives you can be used as part, if not all, of your down payment for the new vehicle.
You will have to negotiate with very experienced sales people over the price.
Many states only charge sales tax on the difference between your trade-ins value and the price of the new car so you may save some money in taxes.

Making the decision of whether to trade in your old vehicle or sell can be difficult. If you don’t have the time to deal with advertising and with people looking at your car, trading it in may be the better option. However, you may get more money for it if you sell it yourself. The choice becomes whether you have the time and need the extra money or whether you just want the car gone.

What Fees Can I Expect When I Purchase a New Car?

4/7/2020

Many people know that car dealerships are very good at adding fees to the cost of your new vehicle. These little additions can add up quickly so always question the list of fees you are given when negotiating the price for your new car. You might be able to negotiate a lower fee at times, but be sure to ask about total fees before agreeing to the cost of your car. You don’t want to get a nasty surprise when you look at the finance paperwork and see a much higher price than you agreed on.

Be aware that some fees are regulated by state and local agencies, and you will have no choice except to pay. The most common fees you may be asked to pay usually fall into one of three categories – sales tax, registration fees, and documentation fee. These are usually non-negotiable.

Sales Tax

Sales tax is required on every vehicle purchase and is non-negotiable. The dealer does not set the amount of tax – that is state regulated and must be paid. Make sure to ask whether the sales tax will be included in the amount you finance or if you will be required to pay it when you register your new car. If you can afford it, it is better to pay cash for your sales tax as it will reduce the amount you have to finance and save you interest.

Vehicle Registration Fees

Often, a dealership will register your vehicle for you to save you a trip to the Department of Motor Vehicles. Again, this is a state regulated fee, and the dealer has no control over the amount. This fee covers the registration and title fees for your new car. It will vary, depending on the car you choose – the more expensive your car is, the higher the fees will be.

Documentation Fees

Documentation fees are supposedly meant to cover the cost of the office personnel needed to do the paperwork after you purchase a new car. When examined, this fee looks more like additional profit to the dealer as the dealer is paying an hourly employee to handle several transactions per hour. These fees vary from dealer to dealer. Some states put a limit on how much they can be. Most documentation fees are between $50 - $500. South Carolina does not have a limit on this fee, and documentation fees average around $350 here. Always ask about this fee before you sign any papers as many dealers will not mention the amount until you have signed a contract. You can try to negotiate this fee with the dealer, but expect a fair amount of push back.

Other Fees

Most dealers also charge a small fee based on environmental laws in their area. They will also charge regional advertising fees. All dealers are required to join in regional advertising for dealers in their area. Manufacturers insist on this to help pay for expensive ads that run nationally but point you to your local dealer. Make sure the dealer is not charging for their own advertising. If you aren’t sure, call another dealer in your area and ask them about their regional advertising fees and compare the two amounts.

The reality is every new car purchase will be saddled with fees. You may not be able to negotiate lower fees for certain things, but it never hurts to ask. A dealer may want to move merchandise and be willing to reduce some fees.

When a Dealership Contacts Several Banks for my Financing, Does it Hurt my Credit?

3/25/2020

Often, when a person goes to a dealership for a new car, they let the dealer search for financing options. Most of the time, you have several offers to choose from. It is a known fact that inquires on your credit can cause your credit rating to drop, but does this type of inquiry have any impact?

Timing is Important

The most often used credit scoring systems allow people to shop for the best loan for their vehicle purchase without lowering their credit score. This is done by considering all inquiries for a car loan done within a certain time frame as one inquiry,

Be aware that the time frames may be different. To be safe, you should keep your inquires within a 14 day period. Within this time frame, your inquires should be counted as one or perhaps excluded completely by some scoring systems.

When a dealership sends your application to several lenders, those banks will check your credit score and compete for your business. Every lender that checks your credit will appear as a separate inquiry, but because these will happen in such a short amount of time, it should only count as one. So, you shouldn’t need to worry about dealerships sending your application to many lenders. These inquiries should not hurt your credit score, unless you shop outside of a short time frame.

Before you Shop for a Car

When you think you may be ready for a new car, you need to get a copy of your credit report and make sure there are no errors on it that may prevent you from getting a good deal on a car loan.
Besides checking it for errors, your report will also explain what is in your report that is affecting your score. If you have poor credit, this information will help you improve your score before you try to get a loan and will increase your chances for approval and a better interest rate on your loan.

You may also want to consider getting pre-approved before shopping for a vehicle. This will give you a rough estimate on how much you can spend on a vehicle before you get your heart set on one.

How Depreciation Affects your Car’s Value

1/27/2020

A popular belief is that as soon as you drive your new car off the sales lot, it loses value. This is a true statement, as cars usually lose about 20% of their value within the first year and up to 60% within five years. The rate that the vehicle loses value is called depreciation.

What Affects the Rate of Depreciation?

Depreciation is the monetary toll that several factors take on the value of your car. Some of the factors are how old the vehicle is and how many miles are on it. The rate varies between makes and models of cars, as some hold value regardless of mileage and age.

The effect mileage has on your car depends a lot on what car you are driving. A fancy sports car with 15,000 miles on it in a year would be considered a high amount of mileage because that isn’t a car that most people drive often.
However, a mini-van with the same mileage would be considered an average amount of miles. A car with more miles than is average for its type will have a higher rate of depreciation.

Another way the make and model of your car affects depreciation is that cars in higher demand when they are new often hold their value longer than other cars. Also, cars in states with warmer weather are often in better shape than cars from cold weather states due to salt damage.

If your car is one that people consider to be more reliable, it will usually keep its value longer, too.

How to Slow the Rate of Depreciation

While many of the factors that determine the rate of depreciation on your car are out of your control, there are a few things you can do to lower that rate.

Try to limit the mileage you put on your car.
Keep up with the routine maintenance recommended by the manufacturer.
Keep your vehicle clean – inside and out – and wax it regularly.
Accidents will lower the value of your car.

When you are purchasing a vehicle, it does little good to try to guess what type of car will hold its value. Purchase the car that suits your needs and desires and don’t try to purchase one that will depreciate slowly.

Are Car Maintenance Plans Worth the Cost?

11/29/2019

Buying a new car is an exciting time. When you are sitting at the dealership, the salesman may try to offer you many other products for your vehicle and it is hard to make a quick decision on what you really need. A car maintenance plan is an option that your salesman may try to convince you to purchase.

What is a Maintenance Plan?

If you are offered a vehicle service plan, ask for specifics about what that plan is. Many dealers use that term for both extended warranties and car maintenance plans.

A car maintenance plan covers services that the vehicle’s manufacturer recommends be completed to keep the car running in optimum condition. These things could be oil changes, filter replacements, and tire rotations. Dealerships have learned that offering maintenance plans can be a very profitable revenue stream for their business.

These plans are prepaid and can be very valuable to have, but you need to carefully consider what is covered and what you would pay out of pocket compared to the cost of the plan. Always read all of the fine print details, and if you don’t understand the contract, consider having an attorney explain it to you.

The Positives of Purchasing a Plan

Dealerships rely on their service departments for a large part of their income. By selling car maintenance plans, they are guaranteed that their department stays busy. These plans are prepaid and often offer discounts on the services you will need. Remember, though, that what sounds too good to be true often is, and you still need time to think about whether you actually need the maintenance plan. Do not let a sales person talk you into something that may not fit your needs.

For example, the average cost of an oil change in South Carolina is around $30. Assuming you change your oil as recommended, or about every three months, that is $120 a year. Tire rotations are about $40, and it needs done once a year. Filter costs vary, but you may plan on about $100 for filters a year. If this is your plan of maintenance, you will be paying about $260 a year in car maintenance. (You also need to check your car’s owner’s manual for recommended maintenance.) If you can get a car maintenance plan for less, it may be worth it.

The Negatives of Purchasing a Plan

Before you purchase a plan, carefully read your owner’s manual. These can often be found online if the dealership doesn’t have one. See what maintenance the manufacturer recommends. Some dealers still use outdated information to try to convince customers to purchase the plans.

An example of this would be that new vehicles require very little maintenance. Many cars will go for more than 5,000 miles (instead of 3,000) between oil changes. This reduces your out of pocket expenses. Many manufacturers now state that your vehicle will only need significant servicing every 30,000 miles. If you don’t drive much, a car maintenance plan is probably not a good option for you.

Also, once you purchase the plan, you will have no options about who services your car. Unless you decide to pay out of pocket, you will have to take your car to the dealership for services. If you aren’t happy with their service, you have no options. Another thing to consider is that the things that do wear out quickly, such as wipers and brake pads, are not usually covered by maintenance plans.

The dealership may also sell the plan according to their schedule of maintenance and not what is recommended by the manufacturer. If you drive often in extreme heat or cold, oil changes may be recommended more often, but your dealership may not take these conditions into account, and you will have to pay for the oil changes yourself.

The Final Cost

If you decide to purchase the car maintenance plan, be sure to pay for it in full and do not add it to the total of your car or you will be paying interest on the plan, just like the purchase price of the car. To make the best informed decision, make sure to find out exactly what is covered and compare prices of those services to the total cost of the plan.

Steps to take when buying a car from a private seller

10/21/2019

When buying a car from a private seller, you have few guarantees or warranties to fall back on. Here are some steps that you can take to reduce your chances of being cheated by an individual looking to ditch a defective car.

1. Set Your Car Budget Before You Start Shopping
The best way to avoid getting drawn into spending more money for a vehicle is to decide how much you are able to spend and have this number clear in your mind. Only look for those cars within your budget and don’t be talked into spending more.

2. Select Your Target Vehicle Model
Check Kelley Blue Book to see what model years and mileage you can expect from a car that will fit within your budget. Use Consumer Reports to see reliability ratings and check the Insurance Institute for Highway Safety to review crash safety ratings for the make, model, and year for the car you are going to see.

3. Test Drive Your Target Model
It is important to feel how the car you are going to buy handles. Are there any mysterious noises when you drive the car? Check how the car handles in city traffic and on the highway.

4. Get the car inspected by a mechanic
For about $50, you can have a mechanic at a car shop do a used vehicle inspection. This is useful to help you avoid buying a car with major problems. It is also useful to have the inspection results when negotiating the price.

5. Negotiate the Best Price
After gathering information about the car from your test drive and car inspection, show the seller book prices or a list of repairs that are needed. Sellers are more likely to accept the lower price if they think it is rational and that other buyers would likely come to the same conclusion.

Following these steps will help you make a good deal with the private seller, but there are no guarantees. It is important to find out as much as you can about the car before you purchase, and doing this will lessen the likelihood that a seller will take advantage of you.

Tips for buying a car after a hurricane

10/8/2019

After a natural disaster, such as a hurricane, one of the first items people want to replace is their damaged car. They need transportation to take care of all of the other details associated with the after affects of the hurricane. And usually, a car is the easiest to replace. However, after a hurricane, you need to be very careful about the car you purchase.

Ask when the car was put up for sale. If the car was for sale before the hurricane, you still need to check for flood damage, but it means the seller had already intended to sell it and not just selling it because the car was flooded and repaired. If the car was only listed as for sale after the storm, and the seller is very motivated (is willing to lower the price and not try to negotiate with you), be wary of it. It is very possible that it was flooded during the hurricane and the owner is trying to sell it before any damage becomes obvious, such as electrical problems and rust.
Ask if the car was flooded during the hurricane. Sellers must tell you about any damage that they are aware of, but you need to look for signs the car was flooded, too.

Ask to see the title. If the car has a flood brand on the title, it means it has been underwater. It does not mean the vehicle has been repaired. Beware of this. Also understand that unscrupulous people may dry out a car and send it to another area with a new title.
Ask for the car’s history report. If the dealer doesn’t offer it to you, ask. Check the date to be sure it is current and look where the car has been registered. If the dealer refuses to show you the report, walk away.
Smell the car. The inside of flooded cars can be cleaned, but it is really hard to get rid of the musty smell. If the car smells strongly of air freshener, walk away as the seller may be trying to cover it up.
Look for rust and dirt in unusual areas. Check areas under the hood where a quick washing may not have removed evidence of flooding.
Check the flooring to see if it is new. New flooring in an older car is a sign that it was recently replaced – perhaps to disguise flood damage.
Look at the headlights. It is hard to get water out of partially sealed areas, like lights. Fogging on the lights is another indication of flood damage.
Be careful about underpriced cars. If it looks too good to be true, it probably is.

3. Ask for a full inspection by your mechanic. Once the car passes your initial inspection, bring a mechanic you trust to check out the car. They will know how to find flood damage.After a major disaster, it is truly a seller’s market as thousands of people may need to replace their cars with a limited supply. It is understandable that you may be in a hurry to replace your car, but go slow. Think about your options and be sure to thoroughly check the car you are considering. If you rush this decision, it may be one you come to regret later.

<<Previous

How is the Coronavirus Affecting Car Loan Interest Rates?

Did you Buy a New Ford and then Lose your Job?

Do I Need a Lawyer if my Car is a Lemon?

why you Need an Attorney

Is it Better to Trade my Car to a Dealership or Sell it on my Own?

What Fees Can I Expect When I Purchase a New Car?

When a Dealership Contacts Several Banks for my Financing, Does it Hurt my Credit?

How Depreciation Affects your Car’s Value

What Affects the Rate of Depreciation?

How to Slow the Rate of Depreciation

Are Car Maintenance Plans Worth the Cost?

What is a Maintenance Plan?

The Positives of Purchasing a Plan

The Negatives of Purchasing a Plan

The Final Cost

Steps to take when buying a car from a private seller

Tips for buying a car after a hurricane

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why you Need an Attorney

What Affects the Rate of Depreciation?​

How to Slow the Rate of Depreciation

What is a Maintenance Plan?

The Positives of Purchasing a Plan

The Negatives of Purchasing a Plan

The Final Cost

Top Read Posts

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What Affects the Rate of Depreciation?