San Mateo, CA (PRWEB) August 13, 2008
With $4-per-gallon gas a reality, more Americans are listing their SUVs for sale and looking to purchase more economical vehicles. For buyers seeking any new or used car or truck, Bills.com President Ethan Ewing suggests that consumers consider these nine tips before heading for the nearest auto dealership.
"A car can be a tremendous convenience and even a necessity in many U.S. communities," Ewing said. "But it also can be another cause of financial problems for individuals who live on a tight budget. Being a smart consumer can help you make a better vehicle choice, and prepare for a better financial outlook."
Ewing's tips include:
1. Watch out for "we'll pay off your trade-in" offers. A dealer who makes this offer will actually just add the amount of the loan on the vehicle you trade in to your new vehicle loan. "If your car has lost value quickly, or if you have had a new car for less than a year, the loan amount on your car may be more than its trade-in value - meaning you would you could be facing a big chunk of debt added to a new car loan," Ewing cautioned.
2. Go low. At its most basic, a vehicle is a tool to transport you from place to place. It should work reliably, be safe, and have payments that fit within your budget. While society sometimes links cars with status, think about what you could do with the price difference between an older car and a BMW. Saving $200 a month on a car payment could add $14,400 to your nest egg in seven years - nearly enough to buy your next car outright.
3. Beware the hybrid temptation. Before jumping on the hybrid bandwagon, be sure you can afford it. All hybrid vehicles get better gas mileage than the same model with traditional technology, and are better for the planet. But they typically cost $3,000 to $6,000 more than their conventional counterparts. Some analysts suggest that hybrid buyers will only break even on the costs over the lifetime of the vehicle. If the cost is a strain, look at a conventional car that gets good mileage. For thousands of dollars less, you will still be saving money on gas and helping the environment.
4. Consider after-purchase costs. While researching a vehicle, call a few insurance agents for different companies and get their estimates of costs to cover the vehicles you are looking at. Some features and some vehicles cost more to insure. Check a site such as Edmunds.com, which presents "cost of ownership" figures that take into account maintenance and repairs.
5. Compare and negotiate. When it comes to a car purchase, "slow and steady wins the race." Carefully research the cars that interest you, test drive them, and compare book prices and local offers. Contact several local dealers and ask them to fax or e-mail you their best price on your chosen vehicle, and consider online auction sites such as eBay for another way to shop around.
6. Use a broker. Another option to relieve the uncomfortable pressure of car sales is to work with a broker. A broker negotiates the car deal for a flat fee. Because the broker typically obtains a good price, the total cost is usually no more than you could negotiate yourself. You also avoid the hassle of negotiations. If you are a member of a credit union, warehouse or automotive club, ask the club if they offer similar services.
7. Check your credit. Before buying, check your credit report and credit score. If below average, you will pay higher interest rates. Taking a few months to pay bills on time can build up your score and get a better deal.
8. Review financing options. Paying cash for a car often is the best value -- without interest payments, you keep your money. But if you have not saved up for a car, take the time to compare financing. Usually, your own bank or credit union will offer the best rates. But those with good credit might be able to benefit from special low- or no-interest financing from the dealership. Whatever you choose, look at several options and make your decision carefully, not under pressure from the sales team at the dealership. Go home and sleep on the deal if necessary.
9. Do not burn cash. Once you have your car, refrain from driving aggressively -- it wastes gas and essentially burns up money. Basic frugal moves like combining errands, carpooling or taking public transit, or walking and biking when possible can produce substantial gas savings over time.
"A vehicle is a significant and important purchase," Ewing said. "With the right planning and consideration, the choices you make will not drive a car-sized hole right through your budget."
About Bills.com (http://www.bills.com)
Based in San Mateo, Calif., Bills.com is a free one-stop portal where consumers can educate themselves about complex personal finance issues and comparison shop for products and services including credit cards, debt relief assistance, insurance, mortgages and other loans. As the online portal to Freedom Financial Network, LLC, the company has served more than 40,000 customers nationwide since 2002 while managing more than $1 billion in consumer debt. Its RSS feed is available at http://www.bills.com/news_releases/.
In 2008, Entrepreneur Magazine ranked Bills.com as the No. 3 fastest-growing U.S. company on its Hot 100 list. Bills.com also was named a finalist as "most innovative company" in the American Business Awards in 2008. Company co-founders and co-CEOs Andrew Housser and Brad Stroh were named to the Silicon Valley/San Jose Business Journal's "40 Under 40" list in 2008, and are recipients of the Northern California Ernst & Young 2008 Entrepreneur of the Year Award.