Consumer Survival Kit; 220; New Cars

Consumer survival kit. Number 220 new cars. The Maryland Center for Public Broadcasting. Going public. Hello I'm Larry. These days a car needs to be much more than shiny and new to make buyers out of showroom shoppers energy and economy force most of us to demand all the mileage we can get out of our gas tanks and our wallets. With that in mind we'll take a look at shopping for new guys will help you practice your showroom strategy. Bob Smith will demonstrate how to hold the line on expensive and gas hungry options reify can will explore

available avenues for financing a new car. And Fran Johansen will unveil this week's survival kit. But on the way to the showroom let's conduct a test drive of our own. You're number one. The other replied undercoating will effectively rustproof your car. True or false. Number two the biggest single expense of owning a car is maintenance. True or false number three you usually do better by trading in your old car rather than selling it yourself. True or false. Now let's see how you did it. Number one is falls below replied undercoating. Usually promoted as an essential for rust proofing your car too often does very little to protect it from rust. In fact some experts believe that if improperly applied optional undercoating promotes rust and similar Reports magazine finds that at best under coating insulates against road noise. But most guys leave the factory sufficiently under coded

to handle that problem. The additional undercoat sprayed on by dealers can add as much as 40 lbs to the weight of your car and as much as $50 to the weight of your bill. All for a little additional soundproofing. They may decide it isn't worth the money unless the dealer backs up his rest proofing claims with a guarantee. If not you can take your car to a professional rustproof or a good job will cost around $130 for a full sized sedan and look for a lengthy warranty say five years against rust. Number two is faults. Generally the biggest single expense of owning a car is not maintenance it's depreciation. Although you may not think of depreciation as being an expense it is your new car starts losing value the day you drive it away and within two or three years it's worth only half of what you paid for it. But as your car gets older depreciation takes progressively smaller bites out of its value. That's why some experts feel that rather than buy a new car you're better off buying a mechanically sound late model used

car that's already undergone the heavy and Michelle depreciation loss. But if you prefer to buy your car new either for warranty protection or aesthetic value keep in mind that the U.S. Department of Transportation Studies show it's usually more economical to run the car until it dies rather than retire it to an early trading. Also consider depreciation when you're thinking about buying a new car just before the next year's models are introduced. A $5000 car might depreciate some fifteen hundred dollars. The very day that next year's model replaces an on the showroom floor the hefty price reductions probably won't offset that year's worth of depreciation the older car loses automatically. But that's not to say that such a deal is a bad one. It could be a bargain if you plan to get maximum mileage out of the car rather than trade it in after a year or two. Just remember to take depreciation into account while you're deciding. Number three is falls rather than trading in your old car. You'd probably find selling it yourself more profitable.

Unless your car is on the very brink of death you can probably get substantially more by selling it on your own. Of course doing so takes a little more effort than making a trade in. You have the paperwork to contend with transferring the title and reporting the sale to your state motor vehicle department. Some states require you to have the car inspected before a sale and you want to do a major cleanup on your auto to make it presentable to prospective buyers. But once you run a classified ad for several days you'll probably find a buyer who will pay more for your car than a dealer will. The difference in dollars is often well worth the time and trouble. The new car business is extremely competitive. Dealers know that getting you into their showroom is half the battle and many of them will do just about anything to accomplish this goal. One of the most useful tools is local television advertising. Often Stein the dealer him self friendly Fred Happy Jack will

appear to tell you all about their wealth. Let's take a look. Big doings of Leroy's today folks we got rebates. We got bargains. We got discounts. And how do I know why I am loveable. Oil coops. Why get vans to go. Now you'll love the car and your love. Fortunately most car dealers have considerably better taste but many of them do have a few things in common when it comes to sales pitches. No doubt you've heard all of them one time or another. We give you the highest trading price in town. You see we need used cars to restock the depleted used car lot so we just have to give you the best deal going. High trade in low new car prices make me the most loveable guy in town. Chances are I doesn't really need guys he's just trying to get you into his new car showroom dealers are always interested in tracking a little floor traffic people coming

in and exposing themselves to sales pitches. People asked me why I can sell my cars at such weak prices the answer is simple I didn't business so long and I'm so lovable that the people in Detroit love me. So I get my cars from L.A. and pass the savings on to you. No wonder the most lovable guy in town. As the old friend at the factory pitch dealers in the same area pay the same prices for their cars. The automakers in Detroit don't play favorites. The new models are in that the lots are just brimming with cars. So to make paupers purse the down payment down and the easiest terms for yourself you believe you and you may not want to labor I didn't get into the actual dollars and cents of his deal because truth in lending regulations now demand full disclosure when installment plan prices are advertised. The no money down and low monthly payment schemes are a lot less attractive when

dealers reveal how long such payments have to be made and how much more you pay for longer term installments. And by the way if you add all credit worthy chances are you can save a lot of money by financing the car elsewhere. More on that later. Thanks I've got the Lowes prices in town but you don't have to take my word for it. Just listen to what my customers have to say. Not over Leroy gave me the best deal in womanly Roy and lovable Leroy put me behind the wheel of a lever immobile. And he's down in pennies a day. He's really keen testimonials of any kind of meaningless. Often they're done by paid actors and actresses even when they're not there often done by customers who are paid to read the cute guys this week only we have a special deal this shiny new can be yours for the unbelievably low price of twenty nine ninety five. Let me see that again. Twenty nine ninety five. And this beauty

has bucket seats white walls and lots of extras some specials or specials. There's a just bait to get you in the show room and if shoppers find to their dismay that by the time they get to the show room the special of which there is only one is sold. Again the idea is to generate slower traffic. If you're sure you want a new car start your shopping in magazines like these instead of the show room. Now in sum just about every facet of the new models is tested for safety performance and comfort and then compared to competitors. Most of these publications also include the base price of each vehicle. You'll also want to make special note of each model's gas efficiency. Every year the Environmental Protection Agency publishes the results of tests run on every new model being sold. You can get a copy from almost any dealer and there's a reprint in our survival kit of these test results are the ones quoted in advertisements for new cars. Thing to remember is that the figures are based on laboratory tests with professional drivers so you

can expect your own mileage to be as good as EPA estimates. Nonetheless the EPA figures can serve as a useful guideline to compare one car against another. After you now are your selection is down to two or three in the size and price range you think will suit your needs. You'll have to decide on options which ones you need and which ones you can live without. You. Hold on to your hats. Bob's about to hang one on with a little honey that stripped it to the bare essentials. That's right. I'm about to hang these wheel covers his radio. These fog lights on all these other gadgets to my brand new Smith. You see you can save money by adding a few of the options you want yourself after you buy the car. One of the biggest gimmicks going is to advertise sticker prices on stripped down cars then overcharge like crazy on the options then put some of the

options into package deals to buy more than you really want. For example wheel covers coveting might come in one option package. But what if you only want the place along the side for protection against parking lot nicks and scrapes rather than buy the whole package that could cost $450. You can just buy them from an auto supply store or a body shop and apply it for $35. Why waste money on don't need. Or maybe you want a car radio that the dealer sells for 70 bucks. You can buy the same radio for less or a better one for the same dough from an outfit that specializes in radio equipment. But don't assume that every old thing you can buy elsewhere is going to be a bargain. The important thing is to compare prices and try not to get stuck with packages of stuff when you only want the good part. There are some items that you're better off having factory installed like air conditioning at on air conditioners are

hard to install and generally don't perform as well as built in. Of course you gotta think of gas mileage too. Lots of folks try to save on gas by trading in their large cars for a more economical smaller burden a little big and small that costs too much. Way too much and drink too much gas that it's in the long run. A small car overloaded with option saves little if anything on gas. On some cars an automatic transmission can eat up 7 percent more gas than a man will. Air conditioning power steering and the like also make big demands on your gas tank. You'd be surprised how many people get that when they're ordering all that optional stuff. You also want to consider safety when selecting options. A real window defogger is a valuable safety feature. And so our front brakes on the right also choose color with safety in mind. A light colored car is easy for other motorists and pedestrians to see. Generally cream and yellow

are best black and red. Much harder to see at night. Also avoid fully tinted windshields. They reduce night vision. Well time to get back to work. Just remember whether you're holding the line on big options or hanging on some smaller ones. Choose carefully. It can save you a lot of money. You can find out the dealer cost of every option you want before you go to the showroom periodicals such as new car prices provide that information. Do some homework and you should be able to estimate the cost of a car equipped the way you want it. Now if you're ordering the car your salesperson will list the features you select item by item along with the cost of each on a purchase agreement similar to this one. Have him sum up the total cost of these options and make sure you check it yourself so that nothing is left out. Also make sure the sales manager signs it the agreement isn't valid otherwise the next step is to see if the car they deliver comes close to the one you ordered.

You want to make sure that everything's in functioning condition so another test drive is in order before you close the deal. The rules are the same as when you're trying out a car and stuff. First asked the salesman if the car has been serviced since its delivery to the dealership. Make sure you ask before the drive. If he says yes there is no reason the engine should be sluggish or unresponsive. Be sure that you do the driving on a route you select for its similarity to the kind of driving you're used to. If you have any qualms about the car after the test drive don't hesitate to report them to your sales person to have problems corrected before you leave the dealership. If you detect a major defect don't accept the car at all. You don't have to. It's the dealer's responsibility to provide you with a car that functions properly no matter what your purchase agreement may say to the contrary. You'll forfeit your deposit. That's far better than getting stuck with a lemon. Of course it isn't this critical if you're disappointed after test driving a car in stock then it's simply a lot of trying other cars different models all the same one with another engine or transmission until you find the one you like.

That's when you'll be ready to do some degree. To get. Well. Right when you come.

Back but. Your best defense against unrealistically low ball estimates is to know the approximate cost of the vehicle equip as you'd like plus a reasonable allowance for the dealer's profit. But the question is what's reasonable. While experts are finding that no one formula is accurate for every situation. The best way to get a sense of the high and low prices in your area is basic comparison shopping. To be sure that you're not comparing apples to oranges. Look at one or two comparably equipped models at least three different dealers. Barter aggressively at each may improve your chances by staging your visits in the dead of winter during a blizzard of possible dealers can see they're far more congenial and eager to please when their showroom stand empty for days on end because of bad weather or the Christmas holiday.

Don't jump too quickly at any deal that sounds too good to be true. Visits to several dealers will give you some sense of realistic pricing. If a salesman makes an offer well below the average you've either found a truly rare deal or a lowball estimate the salesman won't come through it. Expect the worst. Pursue the deal and if the price starts hedging steadily upward take your business to an honest dealer. Another common practice is to highball that is to offer an unusually generous price for your old car to get you into the showroom or bring you back after you discover no one else can offer as much. Of course when you return you learn that the high trade in offer was as phony as a lowball estimate on a new car. Avoid dealers who played this game too. By the way another useful weapon is to know beforehand how much your old car is worth. Check that out with a loan officer at your bank. I want you and your salesmen agree on what you'll pay for your new car. It's up to you to decide how you'll pay for it. Most of us don't have the spare cash lying around to pay for a new car right.

Especially with today's prices. But it's surprising how many people don't realize that it's just as important to shop carefully for your loan as it is for the car itself. The difference between a reasonable and inexpensive loan can be hundreds of dollars. In the past it was difficult to compare the terms of different loans. One lender would quote discount interest rates. Another simple interest. A third add on interest. It was like comparing apples with oranges. The truth in lending laws changed all that. Nah lenders have to quote you a PR or annual percentage rate. So comparative shopping for money is easy if you ask for the a PR. Then compare the lower the AVR the better. The most convenient source of financing of course is the dealer. You can buy the car and arrange the financing all in one fell swoop. But the dealers a PR is usually pretty high though not always. If you're a credit worthy chances are you can probably do better elsewhere. Commercial banks are a good bet. Their interest rates are among the lowest.

Sometimes they even have loans sales for usual rates for a limited time. Keep your eye out for this bargain. If you have a sizeable savings account you ought to consider a lower cost passbook loan the money account serves as collateral and continues to earn interest too. If you're lucky enough to belong to a credit union you owe it to yourself to at least check out their rates. Some credit unions offer the best deals on the market and it's often easier to get a loan from to another low cost source of money. Is Your Life Insurance Company. Depending on the policy you may be able to borrow against the accumulated cash value. If you're a member of triple A. You may be in luck. Some local Triple-A affiliates offer car loans to members at rates bank rates. Your last resort is a small loan company. Use them only if you've been turned down everywhere else. These finance companies are high risk lenders so their rates are the highest you'll find anywhere.

No matter where you get the loan make sure you check the contract carefully. Look for the annual percentage rate and make sure it's the same figure you were quoted by the loan officer. Also check the total finance charge. This is the dollar and cents figure that you're actually paying for the loan. According to law it must also be listed on the contract. Remember the cost of money varies widely. For thirty five hundred dollar loan for three years at 2 percent AP Are you pay six hundred eighty four dollars in finance charges at 9 percent. The charge would be five hundred six dollars of one hundred seventy eight dollars. So when you finance a car don't be taken for a ride. Shop around and borrow only as much as you need at the lowest rate you can get. Naturally you want your car to last at least as long as you're paying for it. And that brings us to another important consideration. The warranty generally the warranty

offers limited protection against defects in workmanship and the cost of having those defects repaired. Of course there's a time or mileage limitation on the duration of that protection. The American Motors buyer protection plan is currently generating a good deal of attention because it's considered the most comprehensive car warranty available and some competitors have recently broadened warranties on their cars. But the test of any warranty is not so much what it says on paper but what happens when you take your car in for warranty work. And that will largely depend on the dealer not the manufacturer. The test of any dealer is his service reputation for warranty work because economically speaking it's not to his advantage to spend a lot of time on it. But a dealer who is interested in keeping your business makes that sacrifice to find out how any dealer in your area measures up on a windy test. You can consult your Better Business Bureau for the number of unresolved complaints registered against his operation. Or consult your local consumer protection agency

and there may also be a number of local independent consumer groups who keep similar files in quiet. And if you can check with people who are having service work done while you're visiting the dealer obviously the best evidence is a satisfied customer. It may be a good idea to buy from a dealer with a good service reputation even if it means paying more for your car. If he does a good warranty work it'll be worth it. And here with a service you can always depend on is friend. It's. A good investment. As prices rise that question becomes harder and harder to answer. This week's survival can help you answer at many other questions about new cars. One article covers the pros and cons of trading for a smaller new car. We have charts that route you figure out the guidelines that will help you determine how much of your income can realistically be allotted to a new car.

Explain why you can't plan on getting the mileage when it tested the car. The highlights of a government study on the cost of owning a car also included and we have information on the newest wrinkle in the business new car leasing instead of fine. You know how to shop for a loan and a new car warranties. They can be deceptive if you don't know what to look for and look at the dealers news. Ordering your car with $200 worth of gas for when their car arrives after six weeks you have the choice of the extra $200 or another six weeks. You know how to avoid this and other traps. For your survival kit on new cars. Send $1 to cover production costs. Two new cars. Seventy five. I learned to 1 1 7 plays are now three to four weeks from delivering. That's $1 to a new car.

Seventy five. And the frustration of owning a new car that consistently misbehaves isn't made any easier when you have to haggle with the dealer over his obligation to with the car in the shade. But these days buyers and dealers alike are finding that they can settle their disputes by sitting down to talk things over in voluntary arbitration. One of the newer developments in that area is an outfit called whole cat. It was established by dealers themselves because they recognize that it's in their interest as well as the consumers to resolve disputes fairly. There are some thirty four chapters of Autocad in 31 states. If there's one in your area you're invited to bring in your dealer to discuss grievances. Some chapters have a panel of five dealers and five consumers to mediate a settlement. That decision is not binding but since most disputes are relatively simple misunderstandings odds are you can iron things out. Autocad claims a 75 to 80 percent success rate. To find out

of Theres a chapter near you. And if they can help with your new car problems contact your state or local New Car Dealers Association. Your Better Business Bureau or your local chamber of commerce. If there's no auto caps or your dealer doesn't agree to arbitration there are other steps you can take in your own community. One of the major advantages of owning a new car is your warranty protection but it means very little if the service you're getting is poor. When you're dissatisfied your dealer should be the first to know. It's possible that a complaint to the managing office will get things moving in the right direction. If not send your complaint to the dealer's zone manager who may bring pressure to bear for a settlement. Your dealer will more than likely supply you with a name and address of the zone manager. You can also write to the manufacturer's customer complaint department for that information. All four major U.S. companies offer this service which is designed to direct you to the nearest assistance and if all else

fails you're still entitle to legal recourse in small claims court. Buying a new car is probably one of the biggest investments you make. So here are the points to remember while you shop for a good deal. Start your shopping before you get to the showroom. Consumer and auto magazines can help you compare prices gas efficiency and safety. Prepare yourself for bartering by studying publications that list the dealer cost of cars and their options. Now are your selections to two or three cars that fit your needs. Then visit several short ones to price some comparably equipped models. Don't order more options than your wallet or your gas tank can handle comfortably. Consider a dealer's warranty service reputation. When it's good it may be worth paying more for your car. And be sure to shop carefully for financing know exactly how much you're paying to borrow money. Always drive carefully. We'd like to see you every week on consumer survival kit.

Consumer survival kit was produced by the Maryland Center for Public Broadcasting which is solely responsible for its content. And was made possible by public television stations and by grants from the Ford Foundation and the Corporation for Public Broadcasting. Thanks.

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