As we approach President’s Day, you may be thinking about buying or leasing a new car. President’s Day weekend is traditionally considered a good time to get a deal on a car. Before you go shopping you should be prepared. Here are some 2018 car buying trends and tips to consider from a recent post in WalletHub by senior writer John Kiernan where I was recently quoted.
On a scale of 1 (an emphatic no) to 10 (an emphatic yes), is this a good time of year to buy a car?
8 — if you need a car, you should buy one. Reliable transportation is a must. I prefer and recommend buying a used car, to avoid the hit on depreciation and potentially lower one’s excise tax and sales tax costs. The economy has been doing well, so there may be options for finding good used cars with low mileage, as others are trading up or coming off a lease.
Do you expect auto financing deals to improve/get worse/stay the same over the next 12 months?
Get slightly worse. As the economy expands, there is less of a motivation for dealers and manufacturers to offer special incentives. With the likely increases by the Fed, you’ll see lending rates increase as well. That being said, I believe that when the yield curve inverts (likely in the mid-2019), then a recession will follow. Then, there will be increased incentives to move product to maintain auto manufacturer bottom lines, and improve the economy generally.
What steps can buyers and dealers take to make the car buying process more transparent and hassle-free?
Car buyers need to come armed with information. They should do their homework. There are lots of sites online where information can be found about car prices and individual cars (Consumer Reports, Carfax). Car sellers could be more transparent by offering a Carfax report on each vehicle, and explaining what, if any, incentives they are receiving from manufacturers. Car buyers need to know their credit score and shop ahead for a loan and insurance. Then, they’ll be able to compare whatever financing options the dealer may have.
What tips do you have for individuals with fair or poor credit who are looking for an auto loan?
Get your credit score ahead of time, and work on whatever you can to correct misinformation. I also recommend building up cash for a larger down payment, so that they don’t have to finance as much.
What are some signs that you may be getting ripped off in the auto financing process?
Besides high-pressure tactics, I would say confusing paperwork and terms. Getting loaded with lots of after-market services is another problem. You may not need to buy a service package, extended warranties or extra auto detailing. These add to the cost, the loan amount, and the payment the car buyer will ultimately get.
