Posted on Tue, Apr. 01, 2008

Whether you're considering buying used or new, from a large dealership or a small-time corner lot, here's some advice to follow.

CHOOSING THE RIGHT CAR

• Determine what you need: Put your wants on the back-burner and be honest with yourself. Do you need a luxury pick-up? Third-row seating? 17-inch wheels? Compensate for this pragmatism by splurging on reliability. In the long run, a reliable car will save you money and aggravation.

• Consider year-old models: Don't shun last-year's models. New cars depreciate the minute you drive off the lot. A used, year-or-two-old car with low mileage is unlikely to give you any more trouble than one fresh from the factory. And, every now and then, there's that car with zero miles that has waited a year or more for a buyer; take it off the dealer's hands and net yourself a steep discount.

THE MONEY PART

• Do the math: Figure out how much of your monthly budget you can part with, and leave a little room for insurance. Once you get a figure, play with online loan calculators (try Cars.com, Bankrate.com) to see what price range you should realistically aim for.

• Price it out: Gauge what the model you like is worth. Check the Kelley Blue Book (www.kbb.com), NADA (www.nadaguides.com) or Edmunds.com, and determine the local going price by comparing prices from private sellers and local dealerships.

• Compare insurance costs: Premiums for different models in the same category can vary vastly, depending on how expensive they are to repair, how popular they are with thieves, what kind of driver is drawn to them, etc. Some used models even retain surprisingly high insurance costs over the years.

Plenty of websites will give you personalized insurance estimates but only after asking for personal information and looking up your credit history. This will prompt every agent in town to begin mailing you solicitations. If you already carry auto insurance for another vehicle, your current insurer should be able to give you quotes on models you're considering without pulling your credit record.

Otherwise, only Allstate (www.Allstate.com) offers "ballpark'' estimates without requiring any identifying information. Give it a whirl; it'll provide you an idea of how different models compare in insurance costs, all else being equal.

• Shop for financing: Dealerships are eager to sell car loans, but their rates are rarely better than those offered by credit unions or banks.

Here's how to shop for a loan:

Ideally, you already keep tabs on your credit rating; if you don't, start now. Get credit reports from the three main reporting agencies -- Experian, Equifax and TransUnion; U.S. consumers are entitled to one free report per year, which must be obtained through www.AnnualCreditReport.com or 877-322-8228. Check for errors and get them corrected (a lengthy process). Then, get your credit (or FICO) scores, the main factor in determining which interest rate you'll qualify for (you'll be charged for this).

Get on the phone or visit different banks or credit unions in person and ask what kind of rate you'd likely get with your score. Don't let anyone request your credit history or score from the credit bureaus until you're reasonably certain you've found the best loan; each time a lender seeks your credit information, it places an "inquiry'' on your credit report, a negative mark that can bring down your score -- and, thus, raise the rates you're offered.

Having the loan ready before you find the car gives you the negotiating power of cash. It gives you an instant bargaining advantage and circumvents salesmen's attempts to divert attention from the bottom line and ensnare you in a sales pitch that focuses on the monthly payment.

Exceptions to the rule: For college students and people with little or bad credit, financing through a dealership can be helpful. Of course, you don't want to advertise your situation, as that makes you a good target for bad rates. But if dealer-financing is the only way you'll be approved for a car loan, read on.

AT THE DEALERSHIP

• Avoid vultures: Some dealerships have so many salesmen around that competition to net a sale is cut-throat. If you're greeted by a swarm of men wearing ties, shift into reverse and flee, never to return.

• Don't wait around: Conversely, if you have to wait 10 minutes to be helped, go home. Some dealerships strive to exhaust customers so they're seeing double by the time they sign the papers.

• Hold your ground: Don't be swayed to look at models you're simply not interested in because the salesman wants you to. Stay focused, stick to the mission and, if you don't feel comfortable with the situation, leave.

• Focus on the bottom line: While you're browsing, don't discuss financing. Assuming you already have financing set up, you have the upper hand and can negotiate as if you were paying in cash.

• If you're seeking dealer-financing: Ask to see your "buy'' rate, the interest rate for which you were actually approved. Dealers can legally tack up to three percent extra on that rate. If they refuse to show you the buy rate, l-e-a-v-e.

• Read the fine print: Important! Don't sign anything until you've read it thoroughly. Take copies of the sales papers home, get out a dictionary and scour the documents with a magnifying glass, if you must. There's no such thing as "now or never."

• Watch out for add-ons: Tire insurance. Dealer fees. VIN etching. Fabric guard. Dealers will sell you all kinds of extras and accessories you don't need or could purchase for a lot less elsewhere. Built-in GPS navigation systems, for instance, are often more expensive than portable ones from a big-box store and may require costly updates the others don't.

What you don't want to skimp on is safety: Anti-lock brakes, airbags and anti-theft devices, for example, will protect you and your car, and bring insurance discounts.

• Research the warranty: If the car you like comes with a warranty, find out if the warranty company is reputable; call the state Attorney General's office (866-966-7226) and the Department of Financial Services (800-342-2762) to ask if they have had complaints.

• Ask to see the title: If you're buying used, this is of utmost importance. Compare the vehicle identification number to make sure it corresponds to the car you're purchasing. The VIN is on the driver's side of the dashboard, under the windshield.

• When you find the one: Take the car to a trusted mechanic to have it checked out. He'll be able to tell you whether she's worth the money or not. For the roughly $50 it'll run you, you'll save yourself a world of trouble.

THE LEMON LAW

Florida's Lemon Law applies only to cars bought or leased new. If your new car has been to the mechanic three times for the same repair or spent 15 consecutive days in the shop, it will probably qualify as a lemon and, thus, state mediation. For details, visit the state Department of Agriculture and Consumer Services at www.800helpfla.com/lemonlaw.html or call 800-321-5366, toll-free. The Attorney General's office enforces the Deceptive and Unfair Trade Practices Act; for more information, go to http://myfloridalegal.com or call the AG's Fraud Hotline at 866-966-7226.