How to Drive Home a Bargain
At the end of 2009, it was easy to find a deal on a new car. Dealers were desperate to clear inventory and were piling on incentives to lure buyers onto their lots.
This year dealers aren't so desperate. However, that doesn't mean you can't get a bargain. Jessica Anderson explains how in the March issue of Kiplinger's Personal Finance:
As manufacturers bring production in line with demand, expect the number of insane deals to dwindle. Cash-back offers will likely stay below the 2009 industry average of $2,800 per vehicle. On the other hand, low-rate financing will stick around in 2010. For example, General Motors was recently offering 0% for 72 months on the majority of its models, and even Porsche had 1.9% financing deals on the table. Plus, lease deals are more plentiful because Detroit carmakers are back in the leasing market.
Usually you have to choose either the carmaker's low rate or the rebate. In general, if you plan to trade in the car within three years, take the rebate and bring your own financing. But make sure you negotiate the price of the car before subtracting the rebate. Credit unions are maintaining a presence in the auto-finance market with attractive rates; new-car loans recently averaged 6.4% for four years, compared with 6.8% at banks.
If you'd rather take the low-rate loan, note that to nab the lowest rates from the automakers' finance companies, you'll need a credit score of at least 720. If you don't have a score that high, you may be able to trim the interest rate by coming up with a bigger down payment.
To get the best deal, make dealers compete against one another. Start by e-mailing several dealers to see which has the vehicle you want at the best price. For an idea of what you should offer, log on to www.truecar.com for actual transaction price ranges. If you hate to haggle, consider using Kiplinger's partner, CarBargains, the buying service of the nonprofit Consumers' Checkbook organization. For $200, CarBargains will get five dealers in your area to bid against each other for the car you specify.