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New vs. Used - There’s nothing quite like a new car smell, but 3 times as many used cars are sold
Where To Shop For an Auto Loan Auto Financing: Five Keys each year. Here’s a quick look at the advantages and disadvantages of each:
Banks - offer standard loans with to the Best Loan Rate Advantages Disadvantages
competitive rates 1. Shop around for the loan before you visit the „ Warranty covers at least 3 years or 36,000 „ Cost more than a used car

Credit unions - often have lower rates, must dealership. You can get your loan ahead of time miles „ Insurance will be higher
be a member and make sure it fits your budget. New „ Higher safety standards „ It will lose 25-40% of it’s value the
Finance companies – often owned by the 2. Keep an eye on the total cost of the loan. „ No problems with accidents or maintenance moment you buy it.
auto makers (GMAC or Ford Credit) but can be 3. Don’t be talked into buying a car just because of „ Long term ownership commitment
independent. More flexible on credit history, a low interest rate. With 0% financing you may „ Cheaper than new car „ Maintenance history unknown
but usually higher rates. actually be pay a higher price for the car. „ Insurance is less „ No new warranty

Dealerships – they work with finance 4. Remember, your credit record affects your „ You keep more value than in a new car „ Higher maintenance costs as it has
companies and local banks. Convenient, but interest rate. Special 0% financing may be Used more miles
there may be a hefty markup in the sales price „ May be able to get more features in an
to cover their “cut” of the profits. More available only for people with excellent credit. older model for the same cost as a new „ Not as many safety features
plain model
flexible on credit history, but 5. Keep financing discussions separate from
expect a higher interest rate. negotiations on the car price. Buying vs. Leasing - Which one is right for you?

You can buy a car, but you also may be able to lease it for 2-4 years, then return
it. There are pros and cons to both situations. It really depends on what meets your
Key Terms needs. Use the buy vs. lease calculator at http://www.bankrate.com/calculators/

Here are some key terms you’ll need to know to navigate auto purchasing and finance: auto/buy-or-lease-calculator.aspx to get the details.

„ Trade-in value: amount the dealer gives you for your old car as partial payment for the car Advantages Disadvantages
you want to purchase • You own the car • Higher payments because you are paying for the
„ Book value: how much a particular car is worth based on its condition, mileage and other • No restrictions on mileage, or customization full value of the vehicle
factors Buying • You’re building equity in the vehicle, you can sell it • The value of your vehicle will decrease as it gets

„ Incentives: factors such as special finance rates, What’s the “Blue Book” or trade it in when you are ready for a new car older
• More maintenance costs as the vehicle ages
rebates or other offers designed to encourage buyers Value of My Car? • Your car payments will stop when you’ve paid off
the car.
to purchase a vehicle
The Kelly Blue Book is one of the • Lower monthly payments and up-front costs • Limits on mileage, changes to vehicle
„ Lease: paying only a portion of the vehicle’s sales best known guides to use when • No long term commitments • You pay for extra wear and tear
price and returning it to the dealer at the end of the you want to find the estimated • Enjoy a new car every 2-4 years • Expensive if you end the contract early
specified time value of a used car. You can Leasing • Less worry about repairs and maintenance on a • You are not building equity in the vehicle
„ Purchase: paying the car’s full price and keeping it access the guide at: newer vehicle - usually under warranty • At the end of the lease you will have to lease
for as long as you want. http://www.kbb.com/ another car or purchase this one.