| #1 New or Used | | | | Be sure to test drive any vehicle you are |
| The average new car costs more than double | | | | considering under varied road conditions. If the |
| what the average used car does. (The Kelley Blue | | | | vehicle is used, ask to see all maintenance records |
| Book pegs the average new car price in 2005 at | | | | and check its history on CarFax. And don’t |
| $26,100 and the average used car price at | | | | forget to have your mechanic give it a thorough |
| $13,000). It’s not surprising, then, that used | | | | inspection. If you are buying new, try to pay as |
| cars outsell new cars three-to-one. | | | | close to the factory invoice price as possible. You |
| New car loan rates are about the same as used | | | | can look up factory invoice pricing online. |
| car loan rates. The major difference between the | | | | #3 Car Financing |
| two is the length of the loan. Most used car loans | | | | Many experts recommend getting your financing |
| are for no more than 36 months whereas new | | | | before you start car shopping. This puts you in a |
| car loans can be 60 or even 72 months long. | | | | better bargaining position because the dealer |
| Remember to take depreciation into account. | | | | knows money won’t be an issue. (They |
| Depreciation is the difference between the | | | | also won’t have the chance to run you |
| Manufacturer’s Suggested Retail Price | | | | through their finance department, which is a good |
| when you bought the vehicle and what it’s | | | | thing for you!) |
| worth now. Some new cars lose as much as | | | | Of the 60 million new and used cars sold annually |
| one-third of their value within a year. On most | | | | in the U.S., about 27.5 million are financed by |
| vehicles, depreciation settles down to about | | | | subprime loans to buyers with less than perfect |
| seven-to-ten percent per year after the first | | | | credit. If you have bad credit—a FICO score |
| three years. | | | | of 620 or lower—you will need one of these |
| Which brings us to . . . | | | | loans. |
| #2 Make and Model | | | | You will not qualify for the new car offers |
| One way to slow depreciation is to buy a make | | | | advertised on TV, like the “0 Down,” |
| and model with a prestigious nameplate. Models | | | | “O Interest” or “Low |
| that depreciate faster than most include: Jeep | | | | APR” deals. However, you can still get a |
| Grand Cherokee, Ford Explorer, Ford Taurus and | | | | good deal on a bad credit car loan from Internet |
| Lincoln Continental. Cars that hold their resale | | | | lenders like [ Their free online application process |
| value longer include the more expensive makes | | | | lets you know exactly how much you can |
| like Lexus, Mercedes-Benz and BMW. | | | | borrow, and at what rate. |
| To learn more about which makes and models | | | | “Consumers should shop around for |
| offer the best value in today’s market, | | | | financing with the same vigor that they shop |
| you can research several auto review sites online. | | | | around for a car,” says Jack Gillis, public |
| You can also use the Internet to check | | | | affairs director for the Consumer Federation of |
| everything from the performance ratings to the | | | | America. “One or two percent can erode all |
| safety records of the vehicles you’re | | | | the money you negotiate in a good price. |
| interested in. | | | | |