How to Choose a New Vehicle The National Automobile Dealers Association (NADA) and its 20,000 dealer members have prepared this step-by-step guide to make your purchase of a new car or truck as easy and pleasurable as possible. Before You Begin As with any major purchase, it pays to do your homework before you head for the showroom. The most important things to think about before you begin to look for a new car are: • What kind of car is right for you • What you can afford to spend Does your family need a large vehicle, with four doors and lots of load space, or is a small, economical, easy-to-park two-door model the best for you? What features and options do you require, and which ones can you live without? All add to the overall cost of the car, so always ask yourself, “do I need it,” “can I afford it” and “can I live without it?” Make a list of all the makes and models you're interested in, including features and options you want, and do some homework on those cars. A number of consumer and automotive publications are available from newsstands and libraries to help you compare different cars and trucks and narrow your choices of models, features and options. These publications also offer information about reliability, frequency of maintenance, trunk space, passenger comfort and other practical features of today's new cars. Dealership sales people will also assist in the selection of the right model for you. But the more you know about your individual needs, the quicker you can drive the car you love off the lot. The Test-Drive The only way to get a proper feel for the perfor mance, handling, ride and comfort of a new car or truck is to drive it. The test drive is a perfect opportunity to ask any remaining questions you may have about a vehicle. The following tips may be helpful: • Test drive all the models you are considering. • Drive the cars on different types of roads. • The test drive should last long enough for you to get an accurate feel for acceleration, braking, steering and overall stability. • Listen to the radio for sound quality but turn it off during the test drive so you can listen to car, wind and road noises. Buy or Lease Increasing numbers of people are leasing vehicles as an alternative to buying them; leasing is like renting. There are two types of automobile leases: closed-end and open-end. With a closed-end lease, at the end of the lease term you simply return the vehicle; you don't owe any additional money unless the car or truck shows more-thannormal wear and tear, has been damaged or has been driven more miles than are specified in the lease. Most leases are now closed-ended. The obvious disadvantage to leasing is that you do not own your vehicle. You build no equity as you make payments and, unlike loan payments, you own nothing at the end of your lease to use as a trade-in on your next vehicle. Only you can decide which method is right for you. Once you have decided on a specific make and model, the dealership salesperson can help you make this decision by showing you on paper the financial differences between leasing and buying the same vehicle. The advantages to leasing is that your payments will be lower, you are never in a negative equity position, and when you return the vehicle in 36 months you "owe" nothing. You can use a lease as a tax deduction, and a lower monthly cost to own. March 2011 Trade-In Value The market sets the real value of a used car; yours may be worth more or less than the average value for the year and model. If you are planning to trade in your present car on a new one, you can find out the approximate value by checking asking prices listed in the classified sections of local newspapers or, better still, those listed in NADA's Official Used Car Guide or similar publications, available at many libraries. The NADA Official Used Car Guide lists average trade-in, loan and retail prices offered by franchised new-car dealers. But remember, this is just a guide. The region of the country where you live, the time of year, the condition of your car and the current market climate can affect these suggested prices. The best way to determine the actual value of your trade is to visit more than one dealership in your area. While you may not get quite as much for a trade-in as you would by selling the car yourself, you gain the ease and convenience of a one-stop transaction and avoid the hassle and cost of advertising and dealing directly with another buyer. Price Price is almost always negotiable, automobiles are the only consumer items required by law to carry manufacturer suggested retail price stickers. This sticker, also called a Monroney label, is attached to a window of the vehicle. It shows the base price of that model, including all standard equipment; manufacturer-installed options; transportation or freight charges (also known as destination or delivery charges); and the total manufacturer's suggested retail price (MSRP). Details about the average fuel economy for the vehicle are required on all cars and light trucks; this information is usually included on the Monroney label, but will sometimes be found on a separate sticker, the EPA [Environmental Protection Agency] Fuel Economy Label. The suggested retail price offers guidance for negotiations. But it is important to remember that these are suggested prices, to be used primarily as guidelines. The negotiated final price may be higher or lower, depending on the demand for that particular model. Some models can sell for more than the MSRP, while others can and often do sell for less than the “sticker price.” Some dealers may use other stickers that include additional charges, such as dealer-installed options and additional dealer markup. Many manufacturers prohibit an additional charge for dealer preparation, which covers the dealer's cost of performing certain checks and adjustments before the car is delivered to you. You should have a clear understanding of all these charges before negotiations begin. Incentives The total cost of a new vehicle is also affected by manufacturer incentives, used by many auto companies today to attract buyers to their showrooms. These incentives include cash-back rebates, cut-rate financing, leasing programs and option-package discounts. All represent solid savings off the manufacturer's suggested retail price. But you should put pencil to paper to decide whether a low interest loan is a better option than a cash-back rebate and conventional financing. Your dealer can assist you with an ammortization schedule to help your decision. Warranties New-vehicle warranties are an area of competition between auto companies. As a result, a wide variety of warranties are now available. Basic coverage of all mechanical or other defects range from 12 months or 12,000 miles. To unlimited powertrain warranties that are unrestricted by time or mileage. Some manufacturers also offer extended warranties of major drivetrain components (engine, transmission, transaxle, etc.) Service contracts usually have deductibles of $0 - $200 for up to seven years and 100,000 miles. In addition, service contracts and “wrap-around” warranties that cover repairs for a longer period, or those not included in manufacturer drivetrain warranties, may be purchased from manufacturer and warranty companies. The key to all types of warranties and service contracts is to understand exactly what is in them. Carefully consider the following. Coverages are: • who stands behind the warranty or service contract; • length and terms of coverage; • what repairs are covered; • who pays for the parts and labor; • who performs the repairs; • the difference between the coverage under the warranty and the coverage under the service contract; • the cancellation and refund policy. As a general rule it is always best to purchase a service contract from the vehicle manufacturer. Financing Your New Car Seventy percent of all new cars and trucks are financed. Buyers have the option of financing their new car from the dealer, banks, credit unions and other loan institutions and companies. Rates vary, but with today's low-interest incentives offered by manufacturers, the odds are you will find that the dealership is a very competitive financing source. It does pay to shop rates to ensure you get the best one. The Salesperson Statistics show that most buyers who leave the dealership without agreeing to something will not return. So a salesperson will encourage you to make a decision today. He or she may begin by asking “qualifying” questions to help determine what you want and need in a car. Be honest: tell the salesperson exactly what you are looking for and how much you want to spend, this prevents wasting your time and theirs. Negotiating the Price After the test drive, the salesperson will probably ask if the car is right for you. Again, honesty - with yourself and the salesperson - is crucial: if you're sure the car is right for you, say so; if you are unsure, say no. The salesperson will be glad to show you another model or answer any questions you have about another model or answer any questions you have about that model. If you say yes, this is where the negotiation begins. Negotiating doesn't have to be frightening or intim idating if you have done your homework and understand the process. The dealer, like any other merchant, has to make a profit on the car; only you know what you can afford. If the car is offered at a figure higher than you are willing to pay, say no. It's your money. However, if you agree to buy today, the dealer may compromise on the price. If you feel uncomfortable about any part of the negotiating process, just say you would like to sleep on it and leave. Don't sign a contract or leave a deposit unless you are sure this is what you want to do. In todays market; dealers value each and every cus tomer. Thus, most dealers strive for a win/win solution to your car buying efforts. www.havredailynews.com 6