My family isn’t planning to buy a new car in 2009 as we have decided to keep a pair of aging cars on the road for at least the next few years. It is far cheaper for us to maintain what we have, but as our children grow we’ll need to find something roomier by then.
Over the past few months, the global auto industry has been seeing a precipitous sales decline and at rates not seen for over twenty-five years. Adjusted for an increase in population, January 2009 sales numbers rank among the worst ever.
Auto Sales Stink = You Win
Whereas the industry as a whole is suffering mightily, consumers who are in the market for a new car stand to do quite well if they decide to buy right now. At some point the discounts won’t be as good as they are today, making 2009 a good year to consider purchasing a new car.
Of course, if you can pay cash for your purchase you stand to come away with the best deal out there. Cash purchases allow buyers to negotiate the lowest price without having to consider financing or a trade in. Oftentimes, these types of buyers are able to negotiate a price that is well below sticker price, even below dealer invoice.
For people who need to finance their new car purchase, there are some things to keep in mind before you begin car shopping including:
What are your financing options? Find out what your credit score is before you shop — the higher your credit score, the more likely you’ll be approved for an auto loan and with favorable loan terms (e.g., lower interest rate).
How much are you putting down? The more money you can put down, the better. Besides not getting stuck with a huge and burdensome monthly payment, if you are able to put more money down than you will be in a better position to negotiate favorable financing terms.
Cash rebate or cut rate financing? These days almost every manufacturer is offering some sort of deal on their vehicles. Besides taking hundreds, even thousands of dollars off of sticker prices, some companies are offering zero or low interest rate financing. Almost always it is better for you to take the cash back and seek financing elsewhere. A few companies, such as Chrysler, offer cash back and low financing. Talk with your banker or credit union representative about loan options before you visit the showroom.
Are you ready to negotiate? Few cars today are sold at sticker price, with most offering some sort of discount. Consumer publications such as Consumer Reports sell information about dealer invoice amounts for specific make/model/trim level cars. You should be able to pay below invoice in most cases as dealers also receive “secret” incentives from manufacturers to help move product.
Savvy shoppers understand that other factors in the car buying process can help them too. Check with your insurance company to get an idea what your costs will be to insure your new vehicle, learn what the projected resale value of your car will be a few years out, and be prepared to get bids from competing dealers to find the best deal out there.
Although we’re currently in the teeth of the recession, the current economic climate will not last forever. When automakers align production with demand and as the recession eases, discounts and special financing offers will shrink and prices will once again increase.
Adv.— Are you considering the purchase of a house or a car during this recession? For consumers who have good or excellent credit, this may be the best time to jump in to the market. You’ll also want to make sure that your emergency income levels are consistent during these times as well as have a good food storage plan in place to keep those costs under control too.
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