The New Rules Of Car Buying Rule 1

Written by Terry J. Schultz    Monday, 09 February 2009

YOU CAN FIND A DEAL ANYWHERE, AND WE MEAN ANYWHERE You can hardly escape the grim news surrounding the car industry: an 11th-hour federal loan package to help General Motors and Chrysler survive to the new year, frugal consumers shying away from big-ticket purchases-especially four-wheeled ones-and tighter credit making it tougher for the few willing buyers to borrow. November auto sales plunged 37% from a year earlier, according to Autodata, a sales tracking firm. Even after production cutbacks, ports are stacked high with new cars that can't fit on dealer lots. Where there's an inventory glut, there's a fire sale, and that's great news for you. Desperate car makers are begging you to buy with extraordinary deals, from 0% loans to more than $7,000 cash back. "The level of incentives is unprecedented," says Jack Nerad, a market analyst at car-price publisher Kelley Blue Book. "It is almost mind boggling." Rebates and low-interest loans are nothing new, of course. What's different today is how large they are-and how widespread. Last summer, with gas at $4 a gallon, the incentives were limited mainly to gas-guzzling SUVs and trucks. Now you'll find deals on small cars too. Even foreign car makers that rarely, if ever, offer such sweeteners have jumped in, although their discounts aren't as deep as Detroit's. You could recently get $1,750 cash back on a Nissan Altima and 1% financing on virtually any Acura. "Toyota just hasn't had to use incentives, but in November they had record incentives," says Philip Reed of Edmunds.com, a car information website. Want a fuel-efficient Corolla, one of the best-selling cars in America? Toyota has been knocking as much as $1,500 off the price. Today's deals aren't limited merely to incentives. You can and should negotiate hard. Before you shop, go to kbb.com or edmunds.com to see what the car is really going for. And find out what loan rate you qualify for at a bank or credit union. With good credit you wield vast power in the negotiations, says analyst Tom Libby of J.D. Power & Associates. Finally, when deciding between cash back or a low-rate loan, consider your time frame. Cash will usually beat cheap interest if you plan to get rid of the car or pay off the loan within three years.

Last Updated ( Monday, 09 February 2009 )