Two Harbors Federal Credit Union

good news for you

There is another upside to the auto industry bankruptcies: low prices on brand new cars. In some cases, new cars don't cost much more than one to two-year-old used vehicles. But, keep in mind, these historically low prices don't necessarily mean you should go running for your wallet.

"If you can do some maintenance and hold onto your current vehicle longer, do it," says Roger Ball, chief executive officer at Call Federal Credit Union in Richmond, Va. "Don't just go out on a limb and buy a new car because the price is good, especially in this poor economy."

If you do decide to buy a car, the experts I talked to recommend the following guidelines before you sign anything.

• Research before you make a decision -
  "There's no such thing as too much personal research in a quickly changing, turbulent market," according to Laura Levine, executive director of the Jump$tart Coalition for Personal Financial Literacy in Washington D.C. "Now, more than ever, you need to know everything you can."
  
  This includes paying attention to your financing, purchase options, and the pricing of the car, according to Levine.
  
  Be sure to read reviews by people who have recently purchased the model you are looking to buy. Good Web sites to look to for reviews are MSN.com and motortrend.com.
  
  Also, keep up on purchasing recommendations by credible sources such as the Better Business Bureau (BBB).
  
• Don't get roped in by dealerships going out of business -
  This doesn't mean you can't buy from them, but it does mean you need to keep your wits about you.
  
  Be careful if you're thinking about trading in vehicles. According to the BBB, there is some concern that dealerships will take your vehicle as a trade-in and default on the loan you took out on the vehicle. This means they won't pay off the remainder of the loan on the vehicle, and you could be held liable.
  
  One more thing: if you do buy a car, call your lender before your loan approval. Ask them to read to you the full description of the vehicle from the "buyer's orders." According to Ball, there have been reports of dealerships adding accessories to this list. Dealers do this to make sure the loan will be approved, defrauding the lender and customer in the process.
  
• Shop around town -
  Right now, every dealership is in a different position. Some are going out of business while others aren't. For this reason, you should be sure to contact as many dealerships as possible. The dealership that needs to sell its inventory as quickly as possible will save you the most money.
  
• Buy only the accessories you need -
  Extra options create an added expense that may not be worth it with the unstable economy threatening job security.
  
• Always take used vehicles into account -
  These days, the difference in price between used and new vehicles isn't all that much. This may be one of the first times in history where this scenario is true, so keep in mind that used will usually get you better pricing.
  
  Also, new cars depreciate quickly. By simply driving a new car off the lot the value of the car can decrease by as much as $5,000!
  
• Get the best fuel efficiency -
  "People started buying large vehicles once the price of gas went down and this is a very short sighted decision," says Ball. "These people will probably run into trouble if they try to sell these vehicles in the future."
  
  Keep an eye out for affordable hybrids, because they might be your best bet. A hybrid might cost extra up front, but it will save on gas expenses, and a hybrid will most likely fetch a better resale price if fuel prices climb over the next few years.
  
• Scale back the size of the vehicle, if you can -
  Think about what you will need your new vehicle to do. How many people will it usually need to fit? Will you have to tow anything? After considering these questions, decide if there is any way you can feasibly cut back on size. If so, do it!
  
  The reason: chances are fuel prices will be on the rise in the future, so a small car will probably hold its value better than a large vehicle. If that does end up to be the case, you won't regret the decision when the time comes to sell.  

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