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"Dollar Sign": How To Get A Good Deal On A Car During Winter Months
Aired November 08, 2003 - 16:31 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
KELLI ARENA, CNN ANCHOR: Welcome to "Dollar Signs" where we help you make the most of your money. With winter fast approaching and car dealers already showing off next year's models. We are going to talk about seasonal trends in car buying and how you can get the best deal. Here is our financial correspondent Ali Velshi.
(BEGIN VIDEOTAPE)
ALI VELSHI, CNN FINANCIAL CORRESPONDENT (voice-over): So it's time to buy a new car. Today's car buyer is armed with more tools than ever before. There are pricing books, Web sites, even car buying services, all of them designed to get you a new ride without being taken for a ride. But even if you already have your dream car picked out this car dealer says it's not as simple as heading down to the lot and cutting a check.
JOHN BRUNO, CAR DEALER: If I had to give any consumer any advice I would say do your homework.
VELSHI: With Web sites like consumerreports.org, caranddriver.com, and edmunds.com offering not only reviews of the latest models but also what the dealers originally paid the manufacturer for the car it's now easier than ever to match your dream car to your dream price and those same manufacturers may be driving your dream price lower than ever before.
BRUNO: The manufacturers want to make sure that from a retail standpoint you're moving vehicles and they help dealers a lot. They help the retailers, like myself, a lot, you know, by offering incentives, finance rates.
VELSHI: In fact there are deals available beyond those that the dealer may offer you. So how do you get the best deal? Edmunds.com editor Phil Reed offers some suggestions. First and foremost avoid the showroom floor.
PHIL REED, EDMUNDS.COM: Don't just walk onto the car lot because you have no control over who you're going to be dealing with. You may get a salesman who's very aggressive or who you don't like, so it's a good idea to shop on the phone first, set up an appointment and then go in and buy.
VELSHI: Second, Reed says, once you've settled on a car get at least three quotes from different dealerships giving you the bargaining power to call your salesperson and say...
REED: You know the lowest price I've got is this. If you can beat it you've got my business.
VELSHI: And, third, be realistic about your finances. Don't let the temptation of low rates and easy financing make you spend more than you should.
REED: Generally, experts advise that you spend only 20 percent of your total income on your car payment.
VELSHI: Reed says follow these tips and, this is easier said than done for some car buyers, keep your distance and never fall in love with a particular car. You should be able to get a pretty good deal.
For "Dollar Signs", I'm Ali Velshi, CNN Financial News, New York.
(END VIDEOTAPE)
ARENA: Well, we know to get at least three price quotes, but how do you know which car is right for you? Automotive expert Lauren Fix is the co-host of "Talk to DIY Automotive." She is with us from Buffalo, New York. And Rob Gentile is the manager of "Consumer Reports" new and used car price service. He is with us from New York. Thank you very much for joining United States us.
LAUREN FIX, RADIO HOST: Glad to be here.
ARENA: We do have some important points to remember. First, do your homework. Take advantage of Web sites. Lauren, talk to us more about that.
FIX: There are a lot of great Web sites out there besides the one you've listed. You can get on the Internet and search them everywhere, from AOL to, of course, Consumer Reports and Edmunds. What you want to do is find out the cars you want.
For example, on Edmunds, when you go and pick out a certain car, at the bottom, they give you other options at the bottom within the same price range and similar in that same category. Maybe you want to Honda Civic, but maybe there are other vehicles in the category you haven't thought of that could give you a better price and lower insurance rates too.
ARENA: Rob, what about our next point? Shop on the phone before you visit dealer showrooms. How should a person go about that?
GENTILE: What you want to do is not only use the Web site, but ultimately you want to be able to call a few dealers in your neighborhood and get a couple of different price quotes from dealers. Tell them what you're interested in. Tell them the kind of car you want, and also how you want that car equipped. And then ultimately ask them to meet your best price.
ARENA: Lauren, we've all heard it. Get at least three quotes from different dealerships. But what information do you need to be armed with before you're getting those quotes? I mean, you could get three really lousy quotes, couldn't you? FIX: You certainly could. It's very easy, especially if it's a brand new product that just came out. For example, when the Porsche Ceyenne, that sport utility came out, everyone was selling them as retail, right at the sticker price, but there was room to move.
What you should do is negotiate. You can do it on the phone, like Rob was saying, or in person you can do it too. Of course, once you're in person, you get the feeling that you're trapped in the showroom. So, make sure you make the phone calls, get all those quotes, get on the Internet find some other quotes. You can buy cars out of state through the Internet. There are plenty of options available.
One thing everybody forgets, when it's time to purchase the car, check out your insurance rates. It's always overlooked. When you're looking at something that's very expensive that doesn't have a lot of safety items on it could cost you more to get the car you truly want rather than get something you will pay more but save on the insurance. So you have to look at both sides of the card.
ARENA: And that brings us to another point, be realistic about your finances. You should not spend more than you can. Rob, talk to me about what is a realistic car payment for someone?
GENTILE: Well that, varies obviously, depending on how much you make and your financial situation. Typically, the 20 percent number that we heard earlier is a good fair start. Obviously, you want to also take a look at whether you're financing the car or leasing the car.
If you're leasing a vehicle, typically, your monthly payments tend to be lower, but, obviously you don't own the vehicle the at the end of the lease term. If you're financing, your monthly payments could be higher but ultimately you own the car at the end of your loan term.
ARENA: Lauren, we heard, don't fall in love with a car until after you buy it. What is up with that?
FIX: Well, a lot of times you'll fall in love with a color, maybe that blue just -- I've just got to have that blue car. And that car sort of draws you in. But you know what, that red car may have one less option and can fall into your budget, just like Rob was saying. That 20 percent of your income, you shouldn't go over that unless you've got a ton of expendable income where you have more cash coming in from other sources.
So with that choice, figure out the model you want first, then figure out what options you absolutely want, and then have that dream list of options. If I don't get them, it's not the end of the world. Power windows a requirement? Well that's great. Once you've got that down, then decide these colors are acceptable, these aren't, and start narrowing your choices by what's available on the lot, or you can order a vehicle and still get a good deal.
ARENA: All right, both of you, stay right where you are. Your calls and e-mails next on "Dollar Signs" And of course, you can still send your questions to dollarsigns@CNN.com or just call in. That number is 1-800-807-2620. We'll be right back.
(COMMERCIAL BREAK)
ARENA: Welcome back to "Dollar Signs." Well, never get your heart set on one particular model. That is one tip on how to get the best deal on a new car. Automotive expert Lauren Fix is with us from Buffalo, and "Consumer Reports" Rob Gentile is with us from New York. We start with an e-mail from David in Tempe, Arizona. He writes in, "in order to keep in your budget, is there a formula, based on your salary, to determine how much money you can spend on a car."
Rob, why don't we start with you.
GENTILE: Sure. Again, we looked at the 20 percent number as one way to decide on whether -- you know, how much you can afford to pay. Again, you want to look at whether you're going to finance a car or even lease a car because, because obviously, you can afford a much more expensive car if you lease. But there are, again, pros and cons of leasing as well. So those are some general rules of thumb you want to look at.
Also if you're going to finance the car, you want to look at interest rate and the length of your loan. As you extend your loan, you're obviously lowering your payments but you're paying much more interest at the end of the day.
ARENA: Lauren, what's your advice?
FIX: Well, I agree with everything that Rob said. There's a few things you can look at. I'm always big on the insurance rates, because they've gone up so much over the years. But the other thing is maintenance. If you're going to own that the vehicle, sometimes maintenance packages are included if you buy a more luxury vehicle and sometimes they're not.
So find out the cost for oil change tires or wheels. Whatever you need. I'm going to put snow tires on it because I live in a snow climate. Whatever it is, all those maintenance items add up too. You've got to figure out what it's going to cost in your budget. Obviously, a Mercedes is going to be a lot more than a Kia.
So you have to keep that in mind, both insurance and in maintenance areas. And also, when you do go to the dealer and they offer you a rebate. Remember, it's still negotiable beyond that rebate.
ARENA: All right. We're next going to take a phone call from Dean in Florida. Dean, are you there?
CALLER: Yes. Good afternoon, folks. My question is regarding child safety features in family cars with a small children. I've seen reports that say backseat latches are now being redesigned, child side air bags and front air bags are being redesigned. What vehicles for 2004 would you recommend for families with small children, perhaps with safety features more designed to protect children?
ARENA: Lauren.
FIX: All right. I guess it depends what market are you looking at? Are you looking at a sport utility vehicle or are you looking more at a minivan?
CALLER: More or less, kind of a minivan, SUV type vehicle. Something that's like a family vehicle, but also can be used for say a family of four or five.
FIX: There's a couple of choices. First thing you want to look at is things like side impact air bags. I'm a big fan of those. I'm not sure what Rob's take is on that. But I can tell you that they don't blow out like a front air bag, they're actually are air curtains. The Honda Odyssey and a lot of Ford Products.
But what you want to look for, is crash test ratings, which are available at NHTSA.gov. That's the Government National Highway Traffic Safety Association. They'll give you crash test ratings. So you want the highest number, five star is the best. You want side impact and front impact ratings. That's the first thing you're going to look at. And then once you decide the vehicle you want, once you've got that, then you can go from there.
ARENA: Rob, what's your advice? Any more to add?
GENTILE: I would agree to that. And actually, I would -- "Consumer Reports" always recommends side impact air bags on a vehicle in order to protect consumers in the event of a crash. More and more models, are starting to become standard with side impact air bags, particularly the 2004 models that you just mentioned. So you want to look at a newer model because you may find the side impact air bags are actually standard equipment. But if not, we certainly recommend that you opt for it even though.
ARENA All right. Thanks for that phone call. Next, we go to New York. Joe is on the line. What's your question?
CALLER: Yes, you used to be able to go to advent.com and find out about dealer cash. Also, how do you find out about -- you owe money on the car and want to trade it in, how do you make sure the dealer pays off your previous loan?
ARENA: Rob.
GENTILE: I'm sorry. Could you repeat the question?
CALLER: You used to be able to go to advent.com and find out about dealer cash. And if you owe money on a present car and you want to trade it in, how do you make sure they pay off your previous loan, because a couple dealers here in upstate New York weren't doing that?
GENTILE: Well, you want to be, obviously, sure that that loan is, in fact paid off. Typically, when you're looking at -- dealer cash programs, they're basically incentives that are given to the dealer to sell the vehicle.
In many cases what you want to do is, if you're going to opt for something like that, or if the dealer decides to give that to you, you definitely want to make sure your entire loan obligation is paid off before you enter into the next transaction.
ARENA: All right. Anything to add, Lauren?
FIX: The other thing is ,I know that same thing that Rob was saying, as far as making sure it's paid off, if you've got a title and own that vehicle, in New York state, there are titles. So you want to make sure you get the lien release off of that also. Make sure that's all covered. There's also UCC filings. Again, you can check with yor bank or whoever you got the original loan through, and they can make sure it's clear.
The other thing is on dealer holdback or dealer cash, you have to understand the dealers can't give it up. Sometimes they can give it up a little bit, but on a new 2004, you're probably not going to get into that hold back. That covers their advertising cost and what they call -- to put them on the lot, it costs them money.
So the dealer holdback is usually not a negotiable area. So, even though the information is available to you, they can sell a vehicle to you as dealer invoice and they're still making money even though they say they're not. The salesperson may say that, but the truth is they do make some money off of it.
ARENA: All right, moving on, we've got an e-mail from Vance in San Diego. He writes in, "When is it better to pay more and buy a new car and save with 0 percent interest or buy used and save on the depreciation?"
Lauren?
FIX: I think it depends on the vehicle and where you live in the country. For example, if you live in the snowier climates, having a 4 by 4, it's a better deal to have that, spend a little extra money and get a quality vehicle. Your resale at the end of the term will be worth it. If it's a lease, you can buy it. Or if you're using it as a loan, it's a good deal.
There are cases, though, if you buy vehicles that are extremely trendy that would be harder to get rid of, and their resale would be lower. If that's the case, you want something unusual, maybe a sports car, you can probably get away with buying the vehicle and holding its value. If you buy something that is trendy, down the road it's going to be a problem reselling it. So the value will be less and a used car would be the way to go then.
ARENA: Rob, any other words of wisdom?
GENTILE: Well, what I would add is once you made your decision, you want to look at 0 percent financing and see whether you even qualify for that. In many cases there are strict requirements where you have to have a top credit score in order to qualify. So, that's something you need to keep in mind if you want to go that route.
ARENA: All right. We are going to take a call from John in Arizona. John. What's on your mind?
CALLER: I was just wondering how much more price you have to pay than manufacturer? Manufacturer tag, how much more percent do you have to pay?
ARENA: Rob.
GENTILE: I'm sorry. Is the question how much more should you be paying above what the dealer paid?
CALLER: Yes, right.
ARENA: That's what he's asking.
GENTILE: It really varies from one car to the next and one manufacturer to the next. Generally, 10, 12 percent is an average number. Again, that can vary. Also, part of that depends on what kind of dealer incentives or customer incentives may exist on that specific car. So, the wiggle room really depends on the car.
ARENA: All right. We're going to take a little break right now. More of your calls and your e-mails right after this break. Stay with us.
(COMMERCIAL BREAK)
ARENA: All right. Welcome back to "Dollar Signs." We're taking your calls and your e-mails with "Consumer Reports" Rob Gentile and automotive expert Lauren Fix, to help you get the best deal on a new car. We thank you both for being here with us. I'm told we have an e-mail from Tom, which I cannot -- here we go. Tom in Kenosha wants to know, "if I purchase a new 2003 car in November of 2003 can I expect the purchase price to be below invoice?"
Rob, what do you know?
GENTILE: Maybe yes, maybe no, it really depends on the car that you're negotiating for. Typically, at the end of the model year -- and right now, we're at the end of the 2003 model year. Manufacturers and dealers are incenting these cars pretty heavily. So maybe you can get a really good deal maybe even below invoice.
But again, that depends on the type of car you're shopping for. If you're looking for a really popular model and one where the 2004 hasn't yet been released, you may have to pay more than invoice price.
ARENA: Lauren, anything to add?
FIX: I agree with you. There's a lot of rebates out there. A lot of times if you're a first-time buyer, there's rebates, if your freshly out of college, there's rebates. Ask what's available on top. Sometimes they'll stack the rebates where you can get two or three. My father in law got a great deal on the vehicle. I was shocked they could go that low, and I told him to still negotiate and there was still room.
So now is the time to buy the 2003 models left on the floor. They need to get rid of them, the 2004's are getting shipped in. So, now's a great time to buy a vehicle.
ARENA: All right, we've got Roberta from New York on the phone. Roberta, go ahead.
CALLER: Good evening. I'm a handicapped person, and I want to buy a van that's handicapped equipped for driving hand controls, et cetera. Where do I start to get this? Do dealers do this, or do I go to a conversion place? How do I start?
ARENA: Interesting, Lauren?
FIX: That's a really good question, because a lot of people are asking those questions. I would start with the dealer, at least start on the phone. Make it easy for yourself and find out how much they would charge to convert it for whatever controls you need, whether it be hand controls, foot controls, whatever your specialty need is.
Then, once you've got a price from the dealer, call some of the independent places and find out how much they would charge if you had a vehicle delivered to them. The dealer can actually deliver the vehicle before you take the delivery, to a handicapped place, have them modify the vehicle to meet your needs, and then return it to the dealer for you to pick it up, because obviously you want the ability to do that.
So find out both ways, find out what works best. And againg the phone calls will make it most convenient for you.
ARENA: Rob, any more advice for a handicapped driver?
GENTILE: You want to take a look at obviously what kind of van -- you know, she's particularly looking at. Some are probably going to be better adept and more convenient than others. There's a wide variety of minivans out there today, so you want to look at all the different choices and then go the route that Lauren just mentioned.
ARENA: All right, we've got another phone call from John in California -- John. Can you hear us?
CALLER: My question is -- would you explain dealer holdback, and is there any way to find out what the dealer holdback amount is on a particular vehicle?
ARENA: Rob, why don't you tackle that one.
GENTILE: That's a great question. Dealer holdback, think of it as basically a refund the dealer gets back from the manufacturer for selling that car. Typically, it varies anywhere from 2 to 3 percent of the MSRP or the sticker price. In some cases there are no holdbacks. There are some makes and models out there.
There are a great number of Web sites where you can actually find dealer holdback, one being "Consumer Reports" of course, but other sites provide that information to you. But keep in mind, that information does vary from time to time. You want to make sure you're getting an up to date number right before you buy.
ARENA: Lauren a quick final word?
FIX: I think that's a very good question he had about holdback. You have to keep in mind you can't negotiate that. If you're going to buy a brand new 2004 model and you think you can get it below the dealer's holdback, you probably won't have good luck with that. Try to work with the rebates, negotiate, make the phone calls, shop around, and come in armed and prepared. Use the Internet and use all those great magazines out there, of course, including "Consumer Reports."
ARENA: Unfortunately, no more time for questions. We'd like to thank our guests. "Consumer Reports" Rob Gentile, automotive expert Lauren Fix. Thanks to both of you.
FIX: Thank you.
GENTILE: Thank you.
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Winter Months>
Aired November 8, 2003 - 16:31 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
KELLI ARENA, CNN ANCHOR: Welcome to "Dollar Signs" where we help you make the most of your money. With winter fast approaching and car dealers already showing off next year's models. We are going to talk about seasonal trends in car buying and how you can get the best deal. Here is our financial correspondent Ali Velshi.
(BEGIN VIDEOTAPE)
ALI VELSHI, CNN FINANCIAL CORRESPONDENT (voice-over): So it's time to buy a new car. Today's car buyer is armed with more tools than ever before. There are pricing books, Web sites, even car buying services, all of them designed to get you a new ride without being taken for a ride. But even if you already have your dream car picked out this car dealer says it's not as simple as heading down to the lot and cutting a check.
JOHN BRUNO, CAR DEALER: If I had to give any consumer any advice I would say do your homework.
VELSHI: With Web sites like consumerreports.org, caranddriver.com, and edmunds.com offering not only reviews of the latest models but also what the dealers originally paid the manufacturer for the car it's now easier than ever to match your dream car to your dream price and those same manufacturers may be driving your dream price lower than ever before.
BRUNO: The manufacturers want to make sure that from a retail standpoint you're moving vehicles and they help dealers a lot. They help the retailers, like myself, a lot, you know, by offering incentives, finance rates.
VELSHI: In fact there are deals available beyond those that the dealer may offer you. So how do you get the best deal? Edmunds.com editor Phil Reed offers some suggestions. First and foremost avoid the showroom floor.
PHIL REED, EDMUNDS.COM: Don't just walk onto the car lot because you have no control over who you're going to be dealing with. You may get a salesman who's very aggressive or who you don't like, so it's a good idea to shop on the phone first, set up an appointment and then go in and buy.
VELSHI: Second, Reed says, once you've settled on a car get at least three quotes from different dealerships giving you the bargaining power to call your salesperson and say...
REED: You know the lowest price I've got is this. If you can beat it you've got my business.
VELSHI: And, third, be realistic about your finances. Don't let the temptation of low rates and easy financing make you spend more than you should.
REED: Generally, experts advise that you spend only 20 percent of your total income on your car payment.
VELSHI: Reed says follow these tips and, this is easier said than done for some car buyers, keep your distance and never fall in love with a particular car. You should be able to get a pretty good deal.
For "Dollar Signs", I'm Ali Velshi, CNN Financial News, New York.
(END VIDEOTAPE)
ARENA: Well, we know to get at least three price quotes, but how do you know which car is right for you? Automotive expert Lauren Fix is the co-host of "Talk to DIY Automotive." She is with us from Buffalo, New York. And Rob Gentile is the manager of "Consumer Reports" new and used car price service. He is with us from New York. Thank you very much for joining United States us.
LAUREN FIX, RADIO HOST: Glad to be here.
ARENA: We do have some important points to remember. First, do your homework. Take advantage of Web sites. Lauren, talk to us more about that.
FIX: There are a lot of great Web sites out there besides the one you've listed. You can get on the Internet and search them everywhere, from AOL to, of course, Consumer Reports and Edmunds. What you want to do is find out the cars you want.
For example, on Edmunds, when you go and pick out a certain car, at the bottom, they give you other options at the bottom within the same price range and similar in that same category. Maybe you want to Honda Civic, but maybe there are other vehicles in the category you haven't thought of that could give you a better price and lower insurance rates too.
ARENA: Rob, what about our next point? Shop on the phone before you visit dealer showrooms. How should a person go about that?
GENTILE: What you want to do is not only use the Web site, but ultimately you want to be able to call a few dealers in your neighborhood and get a couple of different price quotes from dealers. Tell them what you're interested in. Tell them the kind of car you want, and also how you want that car equipped. And then ultimately ask them to meet your best price.
ARENA: Lauren, we've all heard it. Get at least three quotes from different dealerships. But what information do you need to be armed with before you're getting those quotes? I mean, you could get three really lousy quotes, couldn't you? FIX: You certainly could. It's very easy, especially if it's a brand new product that just came out. For example, when the Porsche Ceyenne, that sport utility came out, everyone was selling them as retail, right at the sticker price, but there was room to move.
What you should do is negotiate. You can do it on the phone, like Rob was saying, or in person you can do it too. Of course, once you're in person, you get the feeling that you're trapped in the showroom. So, make sure you make the phone calls, get all those quotes, get on the Internet find some other quotes. You can buy cars out of state through the Internet. There are plenty of options available.
One thing everybody forgets, when it's time to purchase the car, check out your insurance rates. It's always overlooked. When you're looking at something that's very expensive that doesn't have a lot of safety items on it could cost you more to get the car you truly want rather than get something you will pay more but save on the insurance. So you have to look at both sides of the card.
ARENA: And that brings us to another point, be realistic about your finances. You should not spend more than you can. Rob, talk to me about what is a realistic car payment for someone?
GENTILE: Well that, varies obviously, depending on how much you make and your financial situation. Typically, the 20 percent number that we heard earlier is a good fair start. Obviously, you want to also take a look at whether you're financing the car or leasing the car.
If you're leasing a vehicle, typically, your monthly payments tend to be lower, but, obviously you don't own the vehicle the at the end of the lease term. If you're financing, your monthly payments could be higher but ultimately you own the car at the end of your loan term.
ARENA: Lauren, we heard, don't fall in love with a car until after you buy it. What is up with that?
FIX: Well, a lot of times you'll fall in love with a color, maybe that blue just -- I've just got to have that blue car. And that car sort of draws you in. But you know what, that red car may have one less option and can fall into your budget, just like Rob was saying. That 20 percent of your income, you shouldn't go over that unless you've got a ton of expendable income where you have more cash coming in from other sources.
So with that choice, figure out the model you want first, then figure out what options you absolutely want, and then have that dream list of options. If I don't get them, it's not the end of the world. Power windows a requirement? Well that's great. Once you've got that down, then decide these colors are acceptable, these aren't, and start narrowing your choices by what's available on the lot, or you can order a vehicle and still get a good deal.
ARENA: All right, both of you, stay right where you are. Your calls and e-mails next on "Dollar Signs" And of course, you can still send your questions to dollarsigns@CNN.com or just call in. That number is 1-800-807-2620. We'll be right back.
(COMMERCIAL BREAK)
ARENA: Welcome back to "Dollar Signs." Well, never get your heart set on one particular model. That is one tip on how to get the best deal on a new car. Automotive expert Lauren Fix is with us from Buffalo, and "Consumer Reports" Rob Gentile is with us from New York. We start with an e-mail from David in Tempe, Arizona. He writes in, "in order to keep in your budget, is there a formula, based on your salary, to determine how much money you can spend on a car."
Rob, why don't we start with you.
GENTILE: Sure. Again, we looked at the 20 percent number as one way to decide on whether -- you know, how much you can afford to pay. Again, you want to look at whether you're going to finance a car or even lease a car because, because obviously, you can afford a much more expensive car if you lease. But there are, again, pros and cons of leasing as well. So those are some general rules of thumb you want to look at.
Also if you're going to finance the car, you want to look at interest rate and the length of your loan. As you extend your loan, you're obviously lowering your payments but you're paying much more interest at the end of the day.
ARENA: Lauren, what's your advice?
FIX: Well, I agree with everything that Rob said. There's a few things you can look at. I'm always big on the insurance rates, because they've gone up so much over the years. But the other thing is maintenance. If you're going to own that the vehicle, sometimes maintenance packages are included if you buy a more luxury vehicle and sometimes they're not.
So find out the cost for oil change tires or wheels. Whatever you need. I'm going to put snow tires on it because I live in a snow climate. Whatever it is, all those maintenance items add up too. You've got to figure out what it's going to cost in your budget. Obviously, a Mercedes is going to be a lot more than a Kia.
So you have to keep that in mind, both insurance and in maintenance areas. And also, when you do go to the dealer and they offer you a rebate. Remember, it's still negotiable beyond that rebate.
ARENA: All right. We're next going to take a phone call from Dean in Florida. Dean, are you there?
CALLER: Yes. Good afternoon, folks. My question is regarding child safety features in family cars with a small children. I've seen reports that say backseat latches are now being redesigned, child side air bags and front air bags are being redesigned. What vehicles for 2004 would you recommend for families with small children, perhaps with safety features more designed to protect children?
ARENA: Lauren.
FIX: All right. I guess it depends what market are you looking at? Are you looking at a sport utility vehicle or are you looking more at a minivan?
CALLER: More or less, kind of a minivan, SUV type vehicle. Something that's like a family vehicle, but also can be used for say a family of four or five.
FIX: There's a couple of choices. First thing you want to look at is things like side impact air bags. I'm a big fan of those. I'm not sure what Rob's take is on that. But I can tell you that they don't blow out like a front air bag, they're actually are air curtains. The Honda Odyssey and a lot of Ford Products.
But what you want to look for, is crash test ratings, which are available at NHTSA.gov. That's the Government National Highway Traffic Safety Association. They'll give you crash test ratings. So you want the highest number, five star is the best. You want side impact and front impact ratings. That's the first thing you're going to look at. And then once you decide the vehicle you want, once you've got that, then you can go from there.
ARENA: Rob, what's your advice? Any more to add?
GENTILE: I would agree to that. And actually, I would -- "Consumer Reports" always recommends side impact air bags on a vehicle in order to protect consumers in the event of a crash. More and more models, are starting to become standard with side impact air bags, particularly the 2004 models that you just mentioned. So you want to look at a newer model because you may find the side impact air bags are actually standard equipment. But if not, we certainly recommend that you opt for it even though.
ARENA All right. Thanks for that phone call. Next, we go to New York. Joe is on the line. What's your question?
CALLER: Yes, you used to be able to go to advent.com and find out about dealer cash. Also, how do you find out about -- you owe money on the car and want to trade it in, how do you make sure the dealer pays off your previous loan?
ARENA: Rob.
GENTILE: I'm sorry. Could you repeat the question?
CALLER: You used to be able to go to advent.com and find out about dealer cash. And if you owe money on a present car and you want to trade it in, how do you make sure they pay off your previous loan, because a couple dealers here in upstate New York weren't doing that?
GENTILE: Well, you want to be, obviously, sure that that loan is, in fact paid off. Typically, when you're looking at -- dealer cash programs, they're basically incentives that are given to the dealer to sell the vehicle.
In many cases what you want to do is, if you're going to opt for something like that, or if the dealer decides to give that to you, you definitely want to make sure your entire loan obligation is paid off before you enter into the next transaction.
ARENA: All right. Anything to add, Lauren?
FIX: The other thing is ,I know that same thing that Rob was saying, as far as making sure it's paid off, if you've got a title and own that vehicle, in New York state, there are titles. So you want to make sure you get the lien release off of that also. Make sure that's all covered. There's also UCC filings. Again, you can check with yor bank or whoever you got the original loan through, and they can make sure it's clear.
The other thing is on dealer holdback or dealer cash, you have to understand the dealers can't give it up. Sometimes they can give it up a little bit, but on a new 2004, you're probably not going to get into that hold back. That covers their advertising cost and what they call -- to put them on the lot, it costs them money.
So the dealer holdback is usually not a negotiable area. So, even though the information is available to you, they can sell a vehicle to you as dealer invoice and they're still making money even though they say they're not. The salesperson may say that, but the truth is they do make some money off of it.
ARENA: All right, moving on, we've got an e-mail from Vance in San Diego. He writes in, "When is it better to pay more and buy a new car and save with 0 percent interest or buy used and save on the depreciation?"
Lauren?
FIX: I think it depends on the vehicle and where you live in the country. For example, if you live in the snowier climates, having a 4 by 4, it's a better deal to have that, spend a little extra money and get a quality vehicle. Your resale at the end of the term will be worth it. If it's a lease, you can buy it. Or if you're using it as a loan, it's a good deal.
There are cases, though, if you buy vehicles that are extremely trendy that would be harder to get rid of, and their resale would be lower. If that's the case, you want something unusual, maybe a sports car, you can probably get away with buying the vehicle and holding its value. If you buy something that is trendy, down the road it's going to be a problem reselling it. So the value will be less and a used car would be the way to go then.
ARENA: Rob, any other words of wisdom?
GENTILE: Well, what I would add is once you made your decision, you want to look at 0 percent financing and see whether you even qualify for that. In many cases there are strict requirements where you have to have a top credit score in order to qualify. So, that's something you need to keep in mind if you want to go that route.
ARENA: All right. We are going to take a call from John in Arizona. John. What's on your mind?
CALLER: I was just wondering how much more price you have to pay than manufacturer? Manufacturer tag, how much more percent do you have to pay?
ARENA: Rob.
GENTILE: I'm sorry. Is the question how much more should you be paying above what the dealer paid?
CALLER: Yes, right.
ARENA: That's what he's asking.
GENTILE: It really varies from one car to the next and one manufacturer to the next. Generally, 10, 12 percent is an average number. Again, that can vary. Also, part of that depends on what kind of dealer incentives or customer incentives may exist on that specific car. So, the wiggle room really depends on the car.
ARENA: All right. We're going to take a little break right now. More of your calls and your e-mails right after this break. Stay with us.
(COMMERCIAL BREAK)
ARENA: All right. Welcome back to "Dollar Signs." We're taking your calls and your e-mails with "Consumer Reports" Rob Gentile and automotive expert Lauren Fix, to help you get the best deal on a new car. We thank you both for being here with us. I'm told we have an e-mail from Tom, which I cannot -- here we go. Tom in Kenosha wants to know, "if I purchase a new 2003 car in November of 2003 can I expect the purchase price to be below invoice?"
Rob, what do you know?
GENTILE: Maybe yes, maybe no, it really depends on the car that you're negotiating for. Typically, at the end of the model year -- and right now, we're at the end of the 2003 model year. Manufacturers and dealers are incenting these cars pretty heavily. So maybe you can get a really good deal maybe even below invoice.
But again, that depends on the type of car you're shopping for. If you're looking for a really popular model and one where the 2004 hasn't yet been released, you may have to pay more than invoice price.
ARENA: Lauren, anything to add?
FIX: I agree with you. There's a lot of rebates out there. A lot of times if you're a first-time buyer, there's rebates, if your freshly out of college, there's rebates. Ask what's available on top. Sometimes they'll stack the rebates where you can get two or three. My father in law got a great deal on the vehicle. I was shocked they could go that low, and I told him to still negotiate and there was still room.
So now is the time to buy the 2003 models left on the floor. They need to get rid of them, the 2004's are getting shipped in. So, now's a great time to buy a vehicle.
ARENA: All right, we've got Roberta from New York on the phone. Roberta, go ahead.
CALLER: Good evening. I'm a handicapped person, and I want to buy a van that's handicapped equipped for driving hand controls, et cetera. Where do I start to get this? Do dealers do this, or do I go to a conversion place? How do I start?
ARENA: Interesting, Lauren?
FIX: That's a really good question, because a lot of people are asking those questions. I would start with the dealer, at least start on the phone. Make it easy for yourself and find out how much they would charge to convert it for whatever controls you need, whether it be hand controls, foot controls, whatever your specialty need is.
Then, once you've got a price from the dealer, call some of the independent places and find out how much they would charge if you had a vehicle delivered to them. The dealer can actually deliver the vehicle before you take the delivery, to a handicapped place, have them modify the vehicle to meet your needs, and then return it to the dealer for you to pick it up, because obviously you want the ability to do that.
So find out both ways, find out what works best. And againg the phone calls will make it most convenient for you.
ARENA: Rob, any more advice for a handicapped driver?
GENTILE: You want to take a look at obviously what kind of van -- you know, she's particularly looking at. Some are probably going to be better adept and more convenient than others. There's a wide variety of minivans out there today, so you want to look at all the different choices and then go the route that Lauren just mentioned.
ARENA: All right, we've got another phone call from John in California -- John. Can you hear us?
CALLER: My question is -- would you explain dealer holdback, and is there any way to find out what the dealer holdback amount is on a particular vehicle?
ARENA: Rob, why don't you tackle that one.
GENTILE: That's a great question. Dealer holdback, think of it as basically a refund the dealer gets back from the manufacturer for selling that car. Typically, it varies anywhere from 2 to 3 percent of the MSRP or the sticker price. In some cases there are no holdbacks. There are some makes and models out there.
There are a great number of Web sites where you can actually find dealer holdback, one being "Consumer Reports" of course, but other sites provide that information to you. But keep in mind, that information does vary from time to time. You want to make sure you're getting an up to date number right before you buy.
ARENA: Lauren a quick final word?
FIX: I think that's a very good question he had about holdback. You have to keep in mind you can't negotiate that. If you're going to buy a brand new 2004 model and you think you can get it below the dealer's holdback, you probably won't have good luck with that. Try to work with the rebates, negotiate, make the phone calls, shop around, and come in armed and prepared. Use the Internet and use all those great magazines out there, of course, including "Consumer Reports."
ARENA: Unfortunately, no more time for questions. We'd like to thank our guests. "Consumer Reports" Rob Gentile, automotive expert Lauren Fix. Thanks to both of you.
FIX: Thank you.
GENTILE: Thank you.
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