In recent months, the news has been full of stories about struggling auto makers and declining car sales. While that’s bad news for the economy, it can be good news for consumers looking to make an auto purchase because car dealers are anxious for your business. The New Jersey Society of Certified Public Accountants (NJSCPA) offers these tips on getting the best deal:
Do Your Homework
No matter what the economic climate, it’s always smart to come to the dealership with a good idea of the book value of the car you want (and any trade-in vehicle) and what competitors are charging. Get quotes from a number of dealers, and do some research about a basic price for the model you’re interested in on sites such as www.kelleybluebook.com and www.edmunds.com.
Tell the dealer about the most attractive prices you’ve seen, and ask if they’re willing to do better. When the dealer realizes you’re a knowledgeable consumer who’s willing to go elsewhere to find a smarter buy, he or she will be more likely to negotiate.
Shop for Incentives
Car companies are coming up with a lot of great ideas for getting people into showrooms, so make sure you don’t miss the offers that are out there. To find out what’s available, ask two questions. First, what kinds of incentives do you have for this car? These may include cash back offers or other deal sweeteners.
Second, what is the best financing deal available? Some automakers offer zero- or low-interest interest loans, either for an initial period or for the full term of the loan. The car companies’ websites are a good source for this information.
Know the Tax Advantage
Consumers should be aware that there is a tax advantage to buying a new car between now and the end of the year. That’s because the government’s stimulus plan provides a small bonus for some consumers who buy new cars, light trucks and motorcycles from February 17, 2009, until December 31, 2009.
Those with adjusted gross income up to $125,000 ($250,000 if filing jointly) can claim an above-the-line deduction for state and local sales or excise taxes on car purchases attributable to the first $49,500 of the vehicle’s purchase price. The deduction will be phased out to the extent adjusted gross income exceeds the above figures.
Make Your Case for Financing
None of these opportunities will do much good if you are unable to obtain the financing you need to buy your new car. Many lenders have instituted stricter loan terms due to the uncertain economy, and some buyers who once might have qualified are now being turned down.
If you have trouble getting financing, you might be able to solve the problem by paying a bigger down payment, such as 10 percent or more of the car’s price. That won’t guarantee you a loan, but the lender may have more confidence in the deal because of the cash you’re putting up. A larger down payment also means you’ll have a smaller total loan amount, which may not only get you the loan, but will also mean smaller payments going forward.
Time It Right
No matter what state the economy is in, there are certain times when it’s easier to get a good deal on a car. At the end of a model year, for example, auto dealers generally want to unload the old models so there’s room for new cars. In addition, dealers are often more motivated to sell toward the end of the month to meet any sales quotas for that period.
For more information on various personal financial matters, visit the NJSCPA’s public service website at www.MoneyMattersNJ.com. While visiting, you can subscribe to Your Money Matters, the NJSCPA’s free, monthly email newsletter to receive valuable personal financial planning advice throughout the year.
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