Autodecide

Buying that “New” car — payments or cash

Reading through a bunch of personal finance magazines recently and talking with some car dealers, it turns out that consumers have started to extend loan rates for those flashy, fancy new cars and trucks they are buying. New car loan rates have now extended to 60 months and some credit unions are even offering loans up to 72 months! This seems very strange to me. Why? Because 72 months is 6 years! Are you really going to own that vehicle in 6 years ???
However, there appears to be some mitigating factors for those new long loan rates — cars simply last longer. Which should be also a sign that you can expect to drive a car for more than 6 years and not worry about significant repairs in that time period. This is good news for all of us consumers (as long as we abstract ourselves from the cost of financing a loan at an average currently of about 6.2%)
Think about this — approximately the same financed amount could mean significant interest costs over the increased number of years. For example, if you would like to buy that nice new mid-size sedan with a price tag of about US$35K, put $5K down and finance $30K the difference between financing over 3 years vs. financing over 7 years could mean additional interest of approximately US$5K.

Auto Loan Deals at the Nation’s Largest Credit Unions

Navy Federal Credit Union is offering an auto loan rate for new vehicles as low as 3.50% APR for a 36-month term. The rate for a used car is 4.25% APR. The new-car rates for terms of 48, 60 and 72 months are as low as 5.00% APR.
Navy FCU is the largest credit union in the nation with branches all around the world. To be eligible to join this credit union, you or your immediate family member must have some affiliation with the Navy. See their eligibility checklist for more details. If you’re not sure if you are eligible, I recommend calling. Often the customer service representative will be able to give you more options to join.
Pentagon Federal Credit Union (Penfed) will be introducing new and lower auto loan rates in January. The rates will be as low as 5.49% APR for new vehicles and 5.79% APR for used vehicles.
Penfed is the third largest credit union in the nation. Unlike Navy FCU, anyone can be eligible to join Penfed by joining the National Military Family Association. This allows you to meet their field of membership. It costs $20 to join this association, but you only have to pay one time to join Penfed. You can also be eligible to join Penfed if you or an immediate family member has affiliation with the US Army, Air Force or Coast Guard. See Penfed How to Join Guide for more details.

This week’s Auto Loan Rates

A friend of mine is in the process of buying a car. So I decided to scan quickly the current Auto Loan rates from my favorite sources — the various Credit Unions. A quick check through some of the credit unions with larger membership shows the following:

USA Federal Credit Union (www.usafedcu.org) lowest rate for cars is currently 6.24%
SECU in Maryland (www.secumd.org) has their lowest rate for up to 60 month loans at 5.75%
Service Credit Union (www.servicecu.org) has their Auto loan rate at 5.74%
Educational Systems Federal Credit Union (www.esfcu.org) has the new Car loan rate at 6% and Used at 6.25%
NIH Federal Credit union (nihfcu.org) has currently (for new cars) a rate of 5.5% (for 48 month loan)
Market USA Federal Credit Union (www.marketusafcu.com) has a 48 month loan for new cars set at 5.25%

This is a fairly encompassing presentation of current loan rates. 5.25% appears to be the lowest one currently – of course not considering the manufacturers and dealers sponsored 0% loan financing for selected models (usually vehicles in oversupply).

Best Engines — Engines are an important buying factor

You may not know that, but based on research I came across years ago, in the US car buyers rank engine size and quality as one of the more important factors in their car selection. In Europe, styling is more important — a stronger factor in selecting a new car, while in the US, engines rule.
So, the recently published ranking Ward’s should be something of importance to readers in the States. According to Ward’s the best ranked engines are:
Audi AG 2L turbocharged DOHC I-4 (Audi A3)
BMW AG 3L DOHC I-6 (Z4 3.0si)
BMW AG 3L turbocharged DOHC I-6 (335i)
DaimlerChrysler AG 3L DOHC V-6 turbodiesel (Mercedes-Benz E320 Bluetec/Jeep Grand Cherokee CRD)
DaimlerChrysler AG Hemi 5.7L OHV V-8 (Chrysler 300C)
Ford Motor Co. Duratec 35 3.5L DOHC V-6 (Ford Edge/Lincoln MKX)
Ford Motor Co. 4.6L SOHC V-8 (Mustang GT/Mustang Shelby GT)
Mazda Motor Corp. 2.3L DISI turbocharged DOHC I-4 (Mazdaspeed3)
Nissan Motor Co. Ltd. 3.5L DOHC V-6 (Infiniti G35)
Toyota Motor Corp. 3.5L DOHC V-6 (Lexus IS 350)

If you notice the new Ford Edge uses one of the listed best engines. All in all you could use this list as another important selection criteria filter. So the Lexus IS 350, Infinity G35, Mazda speed 3, Mustang GT, Ford Edge, Chrysler 300C, Mercedes-Benz E320, Jeep Grand Cherokee, BMW 335i, Z4, Audi A3….are vehicles to consider in the final list…
Going forward we will look at additional criteria and data to help you make the important Car Purchase decision.

Renting a car overseas and dealing with car insurance

If you travel overseas you may need to rent a car. I have dealt with this problem in several countries – both in Europe and Asia. The process of booking a rental vehicle could be pretty confusing — much more so than if you are doing the rental in the US. So here are some things to watch out for:
1) If you are trying to rent from a US rental company overseas be sure to check if the rental company you are renting from is truly a US company or a representative. This summer we rented a car in Bulgaria. Initially we thought we are dealing with a US car rental company — we booked the car via the Web by using the US car rental company web site. Once we researched the options we selected the vehicle — a Grand Vitara SUV — and reserved for a rental fee estimate of about US$750 (for 10 days). Then a few days prior to the trip my wife was smart to actually call the company in Bulgaria to confirm — then the trouble started. The company in Bulgaria was just a rep — and No, they did not have our car…. Long story short we had to call on another (local) company to find a vehicle.
2) Make sure you understand if the price you are being quoted includes insurance or not. In most cases when renting in Bulgaria (or other countries) the mandatory insurance is NOT included. So you will need to negotiate that. The insurance (at least in Bulgaria) was mandatory and we had to purchase it from the rental company.
So all in all, always call the local number for the rental agency and confirm that you have a car waiting for you. Make sure your insurance is taken care of. Negotiate, negotiate, negotiate!

Some things that impact your car insurance

When you are ready to lease a new or buy a new or used vehicle you need to consder some things that will impact your insurance rate (besides your driving record):
* Are you buying a sports car or a family sedan or a SUV or a truck? If you consider one and the same BMW 3 series vehicle you will find out that buying a station wagon 325 might come at a considerable lower rate than lets say a sedan or coupe 325;
* The safety features that are part of the vehicle are also important – ABS brakes, Dynamic Stability Control or similar system, multiple airbags…all lead to rate reductions.
* Head injury protection systems — whether airbags, air-curtains, or head rests on the seats — all these add to potential rate reductions.
So shop for your next car with knowledge