In the auto business everyone’s trying to be the next Toyota. The next car brand the surges to the top and appears to completely bullet-proof. Well, the next Toyota might end up being Hyundai. For the last 3 months Hyundai sales have bucked the auto industry trend of decreasing sales. Something the big guys like Honda and Toyota could not do. The only question left for Hyundai to answer is can they keep this up? Well their product is not just affordable, but very well made and that’s the real key. No they just need to continue increasing sales and they will be on their way to becoming a force in the auto industry.
Car dealers are coming off a very soft month for sales (October 2009) so buying a car early in the month should provide you with better than normal negotiating opportunities. Your local car dealer is DESPERATE to sell cars! Go in with my car buying program (available at www.autoinsidertips.om) and you’ll have the salesperson eating out of your hand!
Please be very careful of a car scam that involves used cars and Ebay. The set-up is you find a car that’s a great deal and when you contact the owner he tells you he will sell it to you through Ebay Motors. Then you find out that the vehicle is no longer listed on Ebay so they tell you that you can not purchase it there. At the same time the seller sends you an invoice via email and tells you to make payment via a money gram to an agent that has been assigned to you. This is a scam and you need to run, not walk away from this!
If you are shopping for a new car now do not be surprised if you find picking pretty slim at your local car dealerships. The combination of Cash for Clunkers and the factory shutdowns of last spring/summer has left car dealers with very little inventory. Now car dealers are faced with a conundrum: do they sell a car at any price because of the severe lack of customers or do they try and hold some profit because they only have a few cars on their lots?
It’s a hard problem. If you are shopping for a car now and you are not too concerned about things like the car’s color, sound system or other available options you can get a tremendous deal now because some dealers will wheel and deal to move a car because they need to generate cash flow. So shop smart and you’ll save big!
Ally Bank is a financial institution created from the old GMAC. They are an internet based bank that has been trying to gain market-share by offering better interest rates than the competition. Now, starting October 1, 2009 they will be making a strong push to get car dealers to finance their customers through their bank.
So, based on their business principle you should assume nothing but the best rate possible from an Ally loan. This is where you need to be careful; Ally is giving big incentives to dealers. Dealers will want to put that money in their pocket. If your dealer tells you that Ally will be your lending institution ask what the rates are from other banks. Do not be surprised if their response is, “another bank has the same rate as Ally…” but you get a silly reason to do business with Ally like, “but Ally is better to work with.” That’s nonsense. At this point you should pressure the dealership to give you a better rate. Tell them you are aware of Ally Banks incentives and as the one who’s going to be making the payments, you feel you should share in their incentives. Mention that you can take your lending out of their dealership completely and that you understand that this will cost them money. Be strong here and save money.
At first glance the 60-day money-back guarantee program GM is offering looks great. But some consumers are concerned that if they attempt to return their car they will not get back 100% of their trade-in amount, their sales tax and when you read the fine print it mentions if there is more than $200 of damage done to the car you can not return it. And it doesn’t take much of a collision to do $200 worth of damage; we are talking another car door or a shopping cart. So I do not suggest using this program to drive the GM car of your dreams for free for 60 days.
Many car dealers are starting to get the cash for clunkers hangover. You see, during cash for clunkers car dealers were fat, drunk and happy – full of sales. The program was great at creating new car sales demand; the only problem with that program (and others like it) is the demand comes at the price of future sales. There is a finite number of customers out there and when a program creates an increase in immediate sales it is at the expense of future sales.
So if you are shopping now or in the near future you may find dealers with a limited amount of inventory, but they will be anxious to give you a great deal because they are becoming desperate for sales again.
Chrysler recently announced that their dealers will soon be able to offer customers the option to lease their vehicles again. This is obviously good news for the company and its dealers, but I wonder what type of residual will some of these cars have? The residual is best explained this way: if you lease a car for 3 years the residual determines what percentage of the car you will pay for during those 3 years.
The higher the residual, the less you pay for your car. For example if the residual is 59% you lease 41 % of the car, if the residual is 58% you pay for 42% of the car. Companies like Toyota and Honda lease with very high residuals. Before they terminated leasing, Chrysler’s residuals were VERY low. So if you are considering leasing a Chrysler, check the residual!
As part of the economic stimulus plan that brought us Cash for Clunkers there is still some advantages left for new car buyers. Although you can not receive a Cash for Clunkers rebate you can still receive a tax break if you buy a car. If you buy a car now you can deduct state, local and excise taxes paid on up to $49,500 of your new vehicle’s purchase price. Keep in mind that if you have an adjusted income of $125,000 or more ($250,000 if filing jointly) your ability to take advantage of this program is limited.
Sure it’s a gimmick. Sure it’s nothing more than a band-aid on a gushing wound. Sure it screams desperate. But I like it. It is bold and it shows that GM is a corporation willing to put their money where their mouth is. When the program is officially announced I will give you a game plan and a full evaluation. But what I like best about this program is that there are not any real restrictions or loop holes. It looks like this is a company that really believes that they are selling some of the best vehicles on the market.