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CNN Live Saturday
"Dollar Signs": Buying A New Car
Aired March 27, 2004 - 16:30 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.
FREDERICKA WHITFIELD, CNN ANCHOR: Music hit maker Jan Berry has died. As a member of the duo Jan and Dean, he created a string of surf music tunes in the 1960s, including "Surf City." His family said Berry had a seizure yesterday and stopped breathing following years of poor health from a 1966 car accident. He was 62.
Israeli television reports prosecutors are recommending Israeli Prime Minister Ariel Sharon be indicted. The recommendation stems from allegations that Sharon took $690,000 in payoffs in the late 1990s when he was foreign minister. Israel's attorney general is expected to take a month to decide whether to follow the recommendation.
NASA hopes the second time does the trick. A short time ago the B-52 took off from Edwards Air Force Base in California. It's cargo, an unpiloted hypersonic jet called the X-43A. It's designed to reach speeds of about 5,000 miles an hour. The jet is programmed to intentionally crash into the Pacific Ocean after its flight. A similar test failed three years ago.
Disappointment on ice. Michelle Kwan's reign at the world championships ended today. She was chasing an American record of six titles but finished third. The gold goes to Japan's Shizuka (ph) Arakawa who was awarded a perfect score for technical merit. America's Sasha Cohen finished second.
Welcome to "Dollar Signs," where we help you make money and save money and spend money wisely. Today we'll be helping you with one of the biggest purchases any of us can make, a new car. Spring is here and this is the time of year when new car buying traditionally starts to really pick up. And this year carmakers are hoping the combination of higher income tax refunds and continued dealer incentives, will create a big springtime boost in sales. Income tax refunds are averaging almost $2200 and the latest figures on dealer incentives show that they're averaging more than $2400. So if all that makes the time right for you to go shopping, what should you do to get the best deals?
The number one piece of advice is, do your homework. And the number one way to do that is to use the Internet apparently. The well- respected consumer survey organization J.D. Power and Associates found that 64 percent of all new car buyers now use the Internet and they spend an average of five hours doing research on everything from engines to air bags, from colors to cost.
We'll give you some of the most used Web sites for car shopping later on in "Dollar Signs," but now some tips that can save you money when it's time to buy. Number one, get your credit score before you start. A higher score can mean lower interest rates. Shop around for interest rates, comparing among car dealers, banks and credit unions. You should also shop around for the best price. Get as many price quotes as you can, either in person, on the phone, by fax or by e- mail. and finally, keep all negotiations separate. Settle on a price first, then you can consider questions about trade-ins, financing or service contracts.
Our guests today have even more useful information to help you get the best deal on a new automobile. Lauren Fix, the co-host of "Talk 2 DIY," do it yourself automobile is with us in Buffalo, New York. And auto writer Lawrence Ulrich is with "Money" magazine in New York. Good to see both of you.
LAUREN FIX, "TALK 2 DIY": Glad to be back.
WHITFIELD: All right. So we try to give folks an idea of some tips on just how to start that shopping. Usually folks just kind of see a car passing by or a car they've been dreaming about and say I want to get that one. So is it indeed the case that once you make a decision on a model, you can go to just about any dealer and perhaps the prices might vary, Lauren?
FIX: There's a lot of places you can go. I like the Internet, but I also think one of the things that you can do is ask friends. Stop someone in a parking lot and say what do you think of this car? Get some feed from that perspective as well as read as many articles as you can from all the magazines and get on the Internet. There's tons of websites to go to. I'm sure you'll mention some of them. They'll even deliver the car to the door, so use it as one of your negotiating tools. And like you said earlier the more quotes the merrier and if you don't like one dealership, go to another because they're not owned by the manufacturers. They're franchises. So you have a lot of places to go.
WHITFIELD: And Lawrence, a lot of these dealers are offering all kinds of incentives these days from zero financing, you know, to competitive prices, et cetera. So how do you really make the best, you know, negotiating power with these dealers?
LAWRENCE ULRICH, "MONEY" MAGAZINE: Well, it's an interesting point. When it comes to incentives these days, obviously it's a great world for buyers. There's so many great models available and manufacturers are just beating their brains out on price. They'll do anything it takes to keep sales up and keep the models moving. There's a dark side of rebates, as well and that is, it's just like any bargain Basement. Some of the very best models you can buy offer little or no rebates. The market has judged them worthy of paying full price. So rebates can be a great thing, but they can be a distraction, as well. There's no free lunch in automobiles. If someone's offering you $3,000 cash back that's usually a sign that it can't sell at full price. It's not competitive. It's not one of the best models in its class and there's a real - the rebates -- vehicles at the highest level of rebates, it directly damages the resale value of that vehicle. So that's something to watch out for.
WHITFIELD: All right. And Lauren, perhaps, you know, one real hurdle that a lot of car buyers are facing is they go in, they think they want to buy and maybe a dealer says, you know what, I can offer you a better car, a pricier car but instead you can lease it for cheaper than you would buy it.
FIX: Well, I think it depends on what your situation is. It depends on how many miles you drive, number one. If you're driving less than 10,000 miles a year, you don't want to lease that vehicle because you're going to end up paying for miles that you're never going to use. If you drive, on the other hand, you're on the road. You have 50,000 miles a year it would not be wise to lease a vehicle. So you have to look at our mileage that you're driving on a regular basis first and then when you figure out the cost of the car, what the payment is going to be and then on the other thing you need to figure out, if you change to a different model or a different type, check the insurance cost. That's one of the things that people forget about. Yeah I jumped up to a larger vehicle. Well it could cost you more in insurance. It's going to cost you more also possibly in maintenance. Those are the things you need to look at. Got to be car care aware.
WHITFIELD: All right, Lawrence and Lauren, hold on a minute. We're going to take a short break and we're accepting your calls and your e-mails next on "Dollar Signs." And of course you can still send your questions to "Dollar Signs" at cnn.com or you can call in. The number is 1 800 807-2620.
(COMMERCIAL BREAK_
WHITFIELD: Welcome back to "Dollar Signs." We're helping you fine tune your negotiating skills to get the best deal on that brand new car. Lauren Fix is with us in Buffalo, New York and Lawrence Ulrich is in New York. All right, good to see both of you. Larese (ph) in Michigan has a question about leasing and I know Lauren we touched on the whole leasing issue a moment ago. But she more specifically wants to know what to do at the end of her lease.
FIX: Larese, you had a question?
WHITFIELD: All right, looks like no Larese right there. Let's get to our first e-mail question. Is it worth waiting until December for the year-end sales and can we expect a better deal if we pay cash? That from Barbara in Ventura, California. Lawrence, let me let you tackle that one.
ULRICH: When it comes to year-end deals, I don't agree with everyone on this theme sometimes. I'm a little skeptical. When an outgoing model year, say you come into the dealership at the end of this summer or fall looking at '04s, the '05 models are already rolling into dealerships. Dealer may offer you say $1,000 off, $1500 off to buy the '04 model. Three years down the road the difference in resale value between that '04 and the '05 is going to be significantly more than $1,500. So I would say, unless you get a really, really significant deal, these are some of the traps that I've seen consumers fall into, especially for cars that are expensive to begin with.
WHITFIELD: All right. And Lauren, Michael in Dallas is on the phone with us. Let's see if we can hear Michael. What's your question? CALLER: I wanted to find out if the so-called finance manager actually has any room to negotiate or is he only relaying the interest rate that the computer tells him he can relay to me.
FIX: There is room to negotiate Michael and don't think that you're forced to deal specifically with the dealer too. If you're going to lease a vehicle, there are other places you can lease a vehicle. If you're going to purchase that vehicle, look at other places you can go to. Your bank that you've already get your mortgage with is a great place to go, because they want your business or where you're doing your banking on a regular basis. So look at other places and it comes to just using that F&I manager, that financing and insurance guy or gal, make sure that you ask them, hey, you know, that rates seems a little higher. That payment seems high. Bring it down to where you need it to be and yes you can negotiate with them.
WHITFIELD: Oftentimes, Lauren, the dealers may say well, what do you want to pay per month, but what you don't get to hear until it's time to sign the dotted line, what the interest rate is. So how do people respond to that question when they get it?
FIX: I don't think that they need to give that information if they feel it's necessary. You kind of should go in there like you said in the beginning. You should know your credit rating. You should know what your payments are in your head and can calculate all that on the Internet in advance. So when you walk in, you should know the year, make and model, know the items that you want and then say, you know, there's these few items that are questionable. It would be nice to have that extra cool stereo or those really nice wheels or some special type of paint. But if that's not going to fit into your budget, you can still use it as negotiating room. In other words, know the number. Yes, you can give it to them, but the thing is, if you do - a lot of times they'll say, well, you know what, for (INAUDIBLE) you can afford X amount per month, let's move you into this other car. Again, that's when you have to look at all the other variables, the lease cost, the insurance cost and the maintenance cost could get you in the end.
WHITFIELD: All right. And Lawrence, this one's for you. Roberta in New Jersey is on the phone with a question. Roberta.
CALLER: I would like to know, I'm contemplating purchasing a new car. Is it best to sell your car on your own or trade it in? Part two if you have a moment, what would be the going fair price be for a 2002 Honda EX with approximately 30,000 some odd thousand miles.
ULRICH: I'm sorry. Say that again, a Honda EX how many miles?
CALLER: About 33,000 miles on it.
ULRICH: Without being a salesman and looking at the exact condition of your car, I would recommend that you look at sources like Kelly blue book and edmunds.com and you can see what actual consumers are receiving as trade-in values for used cars of your make, your model, even specific options and color of your vehicle. But, getting into trading in, that's something that every person has to ask themselves. Selling your own car takes a serious investment in time, and research and you obviously have to deal with people over the phone. You have to ask yourself, do you have the time to spend investing it advertising your vehicle, being your own marketer of your vehicle? For a lot of people just simply trading in to the dealer is the convenient way to go. But of course a dealer is going to give you less money. So if you want to maximize your trade-in value, selling it yourself is definitely the way to go.
WHITFIELD: All right. David in Brooklyn, Lauren, writes in this question. I have the cash to purchase a new or previously owned car. Is it better to lease and keep the cash on hand? How do I decide between owning and leasing?
FIX: Well, that's a very important question I think a lot of people do ask. I think it depends again, how much money. If you're going to go and buy a car for cash, I think it depends the mileage you're going to drive. If you're going to be a high mileage driver, yes, you should own that car and purchase that car. And at that point, if you're driving a lot of high miles, look at a certified pre-owned car through the dealers and through the manufacturers. It's a great deal to get a great car that's maybe a year old. So that's a good investment. If you don't drive a lot of miles, you just want to have a new vehicle, it might be best to lease. Again, it depends on your financial circumstances, and knowing a limited amount of information about that. Leasing is what I do, but that doesn't mean in every single case. If I drive high miles on a certain vehicle, I'll definitely buy it. So you have to keep those variables in mind.
WHITFIELD: All right. And Lawrence, Ernie from Oregon is on the phone with his question.
CALLER: Hi. I'm seriously considering a hybrid vehicle, one of the two brands that are currently out and I guess Ford is coming out with an Escape hybrid pretty soon too. But I've done a lot of research and I'm reading that the dealers aren't dealing on these at all. Is that true and what's going on with that?
ULRICH: It's absolutely true. Right now the Toyota Prius is just one of those hot vehicles. It's a media darling. It's a darling among buyers. Dealers are charging list price and in some cases above. So I would urge you, if you are really interested in a green car and one that has low emissions and one that gets great gas mileage, the hybrids have got a little PR running in their favor. But what many people don't know about is there's quite a few models out there that achieve nearly as much mileage as the hybrids for lower initial cost and have almost as low emissions and these are strictly gas vehicles. What you want to look for are what called partial zero emissions vehicles and that ranges everything from a BMW 3 series to Ford Focus (INAUDIBLE) versions, Nissan Sentras. There's about a dozen vehicles that you can find that combine very high mileage with extremely low emissions and you might find a better deal out there than you can on the Prius right now, because it's just so hot in the marketplace. WHITFIELD: Out in Nevada, Michelle is on the telephone with a question. Michelle?
CALLER: Hello. Good afternoon. My question is, I'm considering to go buy a car cash. Is that a good idea? And if so, is it best to go in with a credit card, check, or actual dollar bills?
WHITFIELD: Lauren?
FIX: Well, I think that's a good question, Michelle. Going in with actual dollar bills I don't think is going to make much of a difference. If you've got a check or cash or credit card and you're going to buy, it's a cash deal or a clean deal as the dealers call it, you have no trade-in, is that correct Michelle?
CALLER: That's correct.
FIX: You're just coming in to buy a vehicle. That is your best negotiating tool because when you have a vehicle to trade-in they're going to try and say well we'll give you wholesale but we want retail. So this gives you a clean deal. You have the ability to negotiate the price on that vehicle. Now keep in mind, if it's a high-end vehicle or if it's a vehicle that's in high demand, you're not going to be able to negotiate as much. But because you've got a cash deal, I would just say right up front when you walk in, I'm looking to make a clean deal on a vehicle, what do you have available? This is what I'm looking for and work it that way. But don't make your first decision when you go in there, Michelle. What you want to do is go to that dealership and maybe drive two or three other vehicles. Check online. There's some great deals because you've got a bargaining tool in your favor.
WHITFIELD: All right. Great advice. Lauren and Lawrence hold on a minute. We're going to take a short break. We're continuing to take your calls and e-mails, however. We'll be right back.
(COMMERCIAL BREAK)
WHITFIELD: Welcome back to "Dollar Signs." Lauren Fix and Lawrence Ulrich are answering your car buying questions via e-mail and telephone. And Don asks are extended warranties worth the money? Lawrence?
ULRICH: In most cases absolutely not. This is one of these areas you get into the finance officer's room and a good deal turns into a bad deal at that point. You want to really resist a lot of the add-ons that dealers will try to sell you at the end of the deal, things like extended service contracts, being one of the worst. If you can get one for maybe $400 or $500 on a very expensive say a luxury or a high end sports model, sometimes that can be a bad deal, I mean a good deal. But, most cars have very long warranties at this point, five years, 60,000 miles, sometimes more on power trains and really expensive working parts of your car.
WHITFIELD: So you say save your money?
ULRICH: Absolutely. It's usually just throwing money down the drain.
WHITFIELD: All right. George from Florida is on the line, Lauren and he's got a question about sticker prices. Go ahead.
CALLER: Going to a dealership to check the sticker price and somehow or other I don't know if it's true or not and I'll buy the car and when I come out of the dealership, somehow or other I think I've been had.
FIX: Well, the window sticker, the Monroney (ph) as they call it, is the number that's there is a retail price. Now, I always think that - I have a rule that I never pay retail. That's why you want to use the Internet. Go to a place like intellichoice or edmunds.com. All these web sites will give you the dealer's cost. Now that's something that you need to know. There's tons of websites that will give you that. You can actually build the car as you want it. So check out what you want, go back to your computer, get that information and George, here's the neat thing. You'll know what the difference is between what they're paying for it and what the window sticker is. That's your negotiating room. Now keep one thing in mind, if it is a model that's in high demand like when the Toyota Siena came out, they wouldn't sell it for anything but its sticker. If you're really desperate to get it, then you'll have to pay that. If you said, you know what? I can wait a few months until more vehicles come on the lot, then you've got more negotiating room. So just keep that in mind. The only thing you will hear is when you do look out there is there's something called holdback. You cannot get holdback off the cost of the vehicle. That is what the dealer gets as sort of payback for stocking that vehicle on the lot from the manufacturer. So use those invoice or dealer invoice numbers to your advantage.
WHITFIELD: Hmm. But you know that you'll probably have to pay a little bit more than what their purchase price is. You can never get what their purchase price is, right?
FIX: It depends on the time of year, because that's not really their true purchase price. If what Lawrence had said earlier, depending on when you buy. If it's the end of the month they may have a deal going on an incentive, pay us $100 over dealer invoice, then you've got some room to work. So keep that in mind. Make sure, the end of the month is still the best time to buy a car.
WHITFIELD: All right. And Lawrence, Peggy in Ohio has a question as she shops around. Peggy.
CALLER: Thank you. I'm interested in purchasing a Chrysler PT Cruiser convertible. The dealers in our area are charging much more than the list price. Is there a way to avoid the dealer and purchase direct from say Chrysler?
ULRICH: No, we only wish that we lived in an auto world like that. No, unfortunately auto dealers are all franchisees of the manufacturer. And in most states they are the middle men and there's just no getting around them. And unfortunately the PT cruiser convertible just hitting the streets. It's in the public eye right now. Dealers are loathe to offer deals on it. They maybe only have a few on their lot and they can sell them at sticker and in some cases from what we've been hearing even $500, $1000, $1500 above sticker. So if you're willing to be patient and wait a few months, you'll see those prices start to come down. But if you have to be first on your block to buy a hot vehicle, it's just the game you're going to have to play. WHITFIELD: All right. We've got another e-mail. This one from Sean in Casper, Wyoming, who says, where should I go to find accurate pricing? Is the Kelly blue book a reliable source? If no, who is? Lauren?
FIX: There's some great websites. I use intellichoice.com. They're accurate. They're all accurate, but what Edmunds and intellichoice and a lot of them do is they get the information, that's why you enter your zip code. They get the information from the department of motor vehicles from different states and they enter in buying and selling prices. Edmunds has a huge department, that's all they do is key in that information. I've been there, it's quite impressive. So you are getting quite accurate information on used vehicles and also on new vehicles. So all that stuff is available to you, use it. Please use it. Do your homework.
WHITFIELD: Wow. Lots of resources out there. Lauren Fix of "Talk 2 DIY" automobile and Lawrence Ulrich of "Money" magazine, thanks to both of you for joining us and helping us save money as we shop around trying to buy a car.
That's all we have time for right now.
(COMMERCIAL BREAK)
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Aired March 27, 2004 - 16:30 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
FREDERICKA WHITFIELD, CNN ANCHOR: Music hit maker Jan Berry has died. As a member of the duo Jan and Dean, he created a string of surf music tunes in the 1960s, including "Surf City." His family said Berry had a seizure yesterday and stopped breathing following years of poor health from a 1966 car accident. He was 62.
Israeli television reports prosecutors are recommending Israeli Prime Minister Ariel Sharon be indicted. The recommendation stems from allegations that Sharon took $690,000 in payoffs in the late 1990s when he was foreign minister. Israel's attorney general is expected to take a month to decide whether to follow the recommendation.
NASA hopes the second time does the trick. A short time ago the B-52 took off from Edwards Air Force Base in California. It's cargo, an unpiloted hypersonic jet called the X-43A. It's designed to reach speeds of about 5,000 miles an hour. The jet is programmed to intentionally crash into the Pacific Ocean after its flight. A similar test failed three years ago.
Disappointment on ice. Michelle Kwan's reign at the world championships ended today. She was chasing an American record of six titles but finished third. The gold goes to Japan's Shizuka (ph) Arakawa who was awarded a perfect score for technical merit. America's Sasha Cohen finished second.
Welcome to "Dollar Signs," where we help you make money and save money and spend money wisely. Today we'll be helping you with one of the biggest purchases any of us can make, a new car. Spring is here and this is the time of year when new car buying traditionally starts to really pick up. And this year carmakers are hoping the combination of higher income tax refunds and continued dealer incentives, will create a big springtime boost in sales. Income tax refunds are averaging almost $2200 and the latest figures on dealer incentives show that they're averaging more than $2400. So if all that makes the time right for you to go shopping, what should you do to get the best deals?
The number one piece of advice is, do your homework. And the number one way to do that is to use the Internet apparently. The well- respected consumer survey organization J.D. Power and Associates found that 64 percent of all new car buyers now use the Internet and they spend an average of five hours doing research on everything from engines to air bags, from colors to cost.
We'll give you some of the most used Web sites for car shopping later on in "Dollar Signs," but now some tips that can save you money when it's time to buy. Number one, get your credit score before you start. A higher score can mean lower interest rates. Shop around for interest rates, comparing among car dealers, banks and credit unions. You should also shop around for the best price. Get as many price quotes as you can, either in person, on the phone, by fax or by e- mail. and finally, keep all negotiations separate. Settle on a price first, then you can consider questions about trade-ins, financing or service contracts.
Our guests today have even more useful information to help you get the best deal on a new automobile. Lauren Fix, the co-host of "Talk 2 DIY," do it yourself automobile is with us in Buffalo, New York. And auto writer Lawrence Ulrich is with "Money" magazine in New York. Good to see both of you.
LAUREN FIX, "TALK 2 DIY": Glad to be back.
WHITFIELD: All right. So we try to give folks an idea of some tips on just how to start that shopping. Usually folks just kind of see a car passing by or a car they've been dreaming about and say I want to get that one. So is it indeed the case that once you make a decision on a model, you can go to just about any dealer and perhaps the prices might vary, Lauren?
FIX: There's a lot of places you can go. I like the Internet, but I also think one of the things that you can do is ask friends. Stop someone in a parking lot and say what do you think of this car? Get some feed from that perspective as well as read as many articles as you can from all the magazines and get on the Internet. There's tons of websites to go to. I'm sure you'll mention some of them. They'll even deliver the car to the door, so use it as one of your negotiating tools. And like you said earlier the more quotes the merrier and if you don't like one dealership, go to another because they're not owned by the manufacturers. They're franchises. So you have a lot of places to go.
WHITFIELD: And Lawrence, a lot of these dealers are offering all kinds of incentives these days from zero financing, you know, to competitive prices, et cetera. So how do you really make the best, you know, negotiating power with these dealers?
LAWRENCE ULRICH, "MONEY" MAGAZINE: Well, it's an interesting point. When it comes to incentives these days, obviously it's a great world for buyers. There's so many great models available and manufacturers are just beating their brains out on price. They'll do anything it takes to keep sales up and keep the models moving. There's a dark side of rebates, as well and that is, it's just like any bargain Basement. Some of the very best models you can buy offer little or no rebates. The market has judged them worthy of paying full price. So rebates can be a great thing, but they can be a distraction, as well. There's no free lunch in automobiles. If someone's offering you $3,000 cash back that's usually a sign that it can't sell at full price. It's not competitive. It's not one of the best models in its class and there's a real - the rebates -- vehicles at the highest level of rebates, it directly damages the resale value of that vehicle. So that's something to watch out for.
WHITFIELD: All right. And Lauren, perhaps, you know, one real hurdle that a lot of car buyers are facing is they go in, they think they want to buy and maybe a dealer says, you know what, I can offer you a better car, a pricier car but instead you can lease it for cheaper than you would buy it.
FIX: Well, I think it depends on what your situation is. It depends on how many miles you drive, number one. If you're driving less than 10,000 miles a year, you don't want to lease that vehicle because you're going to end up paying for miles that you're never going to use. If you drive, on the other hand, you're on the road. You have 50,000 miles a year it would not be wise to lease a vehicle. So you have to look at our mileage that you're driving on a regular basis first and then when you figure out the cost of the car, what the payment is going to be and then on the other thing you need to figure out, if you change to a different model or a different type, check the insurance cost. That's one of the things that people forget about. Yeah I jumped up to a larger vehicle. Well it could cost you more in insurance. It's going to cost you more also possibly in maintenance. Those are the things you need to look at. Got to be car care aware.
WHITFIELD: All right, Lawrence and Lauren, hold on a minute. We're going to take a short break and we're accepting your calls and your e-mails next on "Dollar Signs." And of course you can still send your questions to "Dollar Signs" at cnn.com or you can call in. The number is 1 800 807-2620.
(COMMERCIAL BREAK_
WHITFIELD: Welcome back to "Dollar Signs." We're helping you fine tune your negotiating skills to get the best deal on that brand new car. Lauren Fix is with us in Buffalo, New York and Lawrence Ulrich is in New York. All right, good to see both of you. Larese (ph) in Michigan has a question about leasing and I know Lauren we touched on the whole leasing issue a moment ago. But she more specifically wants to know what to do at the end of her lease.
FIX: Larese, you had a question?
WHITFIELD: All right, looks like no Larese right there. Let's get to our first e-mail question. Is it worth waiting until December for the year-end sales and can we expect a better deal if we pay cash? That from Barbara in Ventura, California. Lawrence, let me let you tackle that one.
ULRICH: When it comes to year-end deals, I don't agree with everyone on this theme sometimes. I'm a little skeptical. When an outgoing model year, say you come into the dealership at the end of this summer or fall looking at '04s, the '05 models are already rolling into dealerships. Dealer may offer you say $1,000 off, $1500 off to buy the '04 model. Three years down the road the difference in resale value between that '04 and the '05 is going to be significantly more than $1,500. So I would say, unless you get a really, really significant deal, these are some of the traps that I've seen consumers fall into, especially for cars that are expensive to begin with.
WHITFIELD: All right. And Lauren, Michael in Dallas is on the phone with us. Let's see if we can hear Michael. What's your question? CALLER: I wanted to find out if the so-called finance manager actually has any room to negotiate or is he only relaying the interest rate that the computer tells him he can relay to me.
FIX: There is room to negotiate Michael and don't think that you're forced to deal specifically with the dealer too. If you're going to lease a vehicle, there are other places you can lease a vehicle. If you're going to purchase that vehicle, look at other places you can go to. Your bank that you've already get your mortgage with is a great place to go, because they want your business or where you're doing your banking on a regular basis. So look at other places and it comes to just using that F&I manager, that financing and insurance guy or gal, make sure that you ask them, hey, you know, that rates seems a little higher. That payment seems high. Bring it down to where you need it to be and yes you can negotiate with them.
WHITFIELD: Oftentimes, Lauren, the dealers may say well, what do you want to pay per month, but what you don't get to hear until it's time to sign the dotted line, what the interest rate is. So how do people respond to that question when they get it?
FIX: I don't think that they need to give that information if they feel it's necessary. You kind of should go in there like you said in the beginning. You should know your credit rating. You should know what your payments are in your head and can calculate all that on the Internet in advance. So when you walk in, you should know the year, make and model, know the items that you want and then say, you know, there's these few items that are questionable. It would be nice to have that extra cool stereo or those really nice wheels or some special type of paint. But if that's not going to fit into your budget, you can still use it as negotiating room. In other words, know the number. Yes, you can give it to them, but the thing is, if you do - a lot of times they'll say, well, you know what, for (INAUDIBLE) you can afford X amount per month, let's move you into this other car. Again, that's when you have to look at all the other variables, the lease cost, the insurance cost and the maintenance cost could get you in the end.
WHITFIELD: All right. And Lawrence, this one's for you. Roberta in New Jersey is on the phone with a question. Roberta.
CALLER: I would like to know, I'm contemplating purchasing a new car. Is it best to sell your car on your own or trade it in? Part two if you have a moment, what would be the going fair price be for a 2002 Honda EX with approximately 30,000 some odd thousand miles.
ULRICH: I'm sorry. Say that again, a Honda EX how many miles?
CALLER: About 33,000 miles on it.
ULRICH: Without being a salesman and looking at the exact condition of your car, I would recommend that you look at sources like Kelly blue book and edmunds.com and you can see what actual consumers are receiving as trade-in values for used cars of your make, your model, even specific options and color of your vehicle. But, getting into trading in, that's something that every person has to ask themselves. Selling your own car takes a serious investment in time, and research and you obviously have to deal with people over the phone. You have to ask yourself, do you have the time to spend investing it advertising your vehicle, being your own marketer of your vehicle? For a lot of people just simply trading in to the dealer is the convenient way to go. But of course a dealer is going to give you less money. So if you want to maximize your trade-in value, selling it yourself is definitely the way to go.
WHITFIELD: All right. David in Brooklyn, Lauren, writes in this question. I have the cash to purchase a new or previously owned car. Is it better to lease and keep the cash on hand? How do I decide between owning and leasing?
FIX: Well, that's a very important question I think a lot of people do ask. I think it depends again, how much money. If you're going to go and buy a car for cash, I think it depends the mileage you're going to drive. If you're going to be a high mileage driver, yes, you should own that car and purchase that car. And at that point, if you're driving a lot of high miles, look at a certified pre-owned car through the dealers and through the manufacturers. It's a great deal to get a great car that's maybe a year old. So that's a good investment. If you don't drive a lot of miles, you just want to have a new vehicle, it might be best to lease. Again, it depends on your financial circumstances, and knowing a limited amount of information about that. Leasing is what I do, but that doesn't mean in every single case. If I drive high miles on a certain vehicle, I'll definitely buy it. So you have to keep those variables in mind.
WHITFIELD: All right. And Lawrence, Ernie from Oregon is on the phone with his question.
CALLER: Hi. I'm seriously considering a hybrid vehicle, one of the two brands that are currently out and I guess Ford is coming out with an Escape hybrid pretty soon too. But I've done a lot of research and I'm reading that the dealers aren't dealing on these at all. Is that true and what's going on with that?
ULRICH: It's absolutely true. Right now the Toyota Prius is just one of those hot vehicles. It's a media darling. It's a darling among buyers. Dealers are charging list price and in some cases above. So I would urge you, if you are really interested in a green car and one that has low emissions and one that gets great gas mileage, the hybrids have got a little PR running in their favor. But what many people don't know about is there's quite a few models out there that achieve nearly as much mileage as the hybrids for lower initial cost and have almost as low emissions and these are strictly gas vehicles. What you want to look for are what called partial zero emissions vehicles and that ranges everything from a BMW 3 series to Ford Focus (INAUDIBLE) versions, Nissan Sentras. There's about a dozen vehicles that you can find that combine very high mileage with extremely low emissions and you might find a better deal out there than you can on the Prius right now, because it's just so hot in the marketplace. WHITFIELD: Out in Nevada, Michelle is on the telephone with a question. Michelle?
CALLER: Hello. Good afternoon. My question is, I'm considering to go buy a car cash. Is that a good idea? And if so, is it best to go in with a credit card, check, or actual dollar bills?
WHITFIELD: Lauren?
FIX: Well, I think that's a good question, Michelle. Going in with actual dollar bills I don't think is going to make much of a difference. If you've got a check or cash or credit card and you're going to buy, it's a cash deal or a clean deal as the dealers call it, you have no trade-in, is that correct Michelle?
CALLER: That's correct.
FIX: You're just coming in to buy a vehicle. That is your best negotiating tool because when you have a vehicle to trade-in they're going to try and say well we'll give you wholesale but we want retail. So this gives you a clean deal. You have the ability to negotiate the price on that vehicle. Now keep in mind, if it's a high-end vehicle or if it's a vehicle that's in high demand, you're not going to be able to negotiate as much. But because you've got a cash deal, I would just say right up front when you walk in, I'm looking to make a clean deal on a vehicle, what do you have available? This is what I'm looking for and work it that way. But don't make your first decision when you go in there, Michelle. What you want to do is go to that dealership and maybe drive two or three other vehicles. Check online. There's some great deals because you've got a bargaining tool in your favor.
WHITFIELD: All right. Great advice. Lauren and Lawrence hold on a minute. We're going to take a short break. We're continuing to take your calls and e-mails, however. We'll be right back.
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WHITFIELD: Welcome back to "Dollar Signs." Lauren Fix and Lawrence Ulrich are answering your car buying questions via e-mail and telephone. And Don asks are extended warranties worth the money? Lawrence?
ULRICH: In most cases absolutely not. This is one of these areas you get into the finance officer's room and a good deal turns into a bad deal at that point. You want to really resist a lot of the add-ons that dealers will try to sell you at the end of the deal, things like extended service contracts, being one of the worst. If you can get one for maybe $400 or $500 on a very expensive say a luxury or a high end sports model, sometimes that can be a bad deal, I mean a good deal. But, most cars have very long warranties at this point, five years, 60,000 miles, sometimes more on power trains and really expensive working parts of your car.
WHITFIELD: So you say save your money?
ULRICH: Absolutely. It's usually just throwing money down the drain.
WHITFIELD: All right. George from Florida is on the line, Lauren and he's got a question about sticker prices. Go ahead.
CALLER: Going to a dealership to check the sticker price and somehow or other I don't know if it's true or not and I'll buy the car and when I come out of the dealership, somehow or other I think I've been had.
FIX: Well, the window sticker, the Monroney (ph) as they call it, is the number that's there is a retail price. Now, I always think that - I have a rule that I never pay retail. That's why you want to use the Internet. Go to a place like intellichoice or edmunds.com. All these web sites will give you the dealer's cost. Now that's something that you need to know. There's tons of websites that will give you that. You can actually build the car as you want it. So check out what you want, go back to your computer, get that information and George, here's the neat thing. You'll know what the difference is between what they're paying for it and what the window sticker is. That's your negotiating room. Now keep one thing in mind, if it is a model that's in high demand like when the Toyota Siena came out, they wouldn't sell it for anything but its sticker. If you're really desperate to get it, then you'll have to pay that. If you said, you know what? I can wait a few months until more vehicles come on the lot, then you've got more negotiating room. So just keep that in mind. The only thing you will hear is when you do look out there is there's something called holdback. You cannot get holdback off the cost of the vehicle. That is what the dealer gets as sort of payback for stocking that vehicle on the lot from the manufacturer. So use those invoice or dealer invoice numbers to your advantage.
WHITFIELD: Hmm. But you know that you'll probably have to pay a little bit more than what their purchase price is. You can never get what their purchase price is, right?
FIX: It depends on the time of year, because that's not really their true purchase price. If what Lawrence had said earlier, depending on when you buy. If it's the end of the month they may have a deal going on an incentive, pay us $100 over dealer invoice, then you've got some room to work. So keep that in mind. Make sure, the end of the month is still the best time to buy a car.
WHITFIELD: All right. And Lawrence, Peggy in Ohio has a question as she shops around. Peggy.
CALLER: Thank you. I'm interested in purchasing a Chrysler PT Cruiser convertible. The dealers in our area are charging much more than the list price. Is there a way to avoid the dealer and purchase direct from say Chrysler?
ULRICH: No, we only wish that we lived in an auto world like that. No, unfortunately auto dealers are all franchisees of the manufacturer. And in most states they are the middle men and there's just no getting around them. And unfortunately the PT cruiser convertible just hitting the streets. It's in the public eye right now. Dealers are loathe to offer deals on it. They maybe only have a few on their lot and they can sell them at sticker and in some cases from what we've been hearing even $500, $1000, $1500 above sticker. So if you're willing to be patient and wait a few months, you'll see those prices start to come down. But if you have to be first on your block to buy a hot vehicle, it's just the game you're going to have to play. WHITFIELD: All right. We've got another e-mail. This one from Sean in Casper, Wyoming, who says, where should I go to find accurate pricing? Is the Kelly blue book a reliable source? If no, who is? Lauren?
FIX: There's some great websites. I use intellichoice.com. They're accurate. They're all accurate, but what Edmunds and intellichoice and a lot of them do is they get the information, that's why you enter your zip code. They get the information from the department of motor vehicles from different states and they enter in buying and selling prices. Edmunds has a huge department, that's all they do is key in that information. I've been there, it's quite impressive. So you are getting quite accurate information on used vehicles and also on new vehicles. So all that stuff is available to you, use it. Please use it. Do your homework.
WHITFIELD: Wow. Lots of resources out there. Lauren Fix of "Talk 2 DIY" automobile and Lawrence Ulrich of "Money" magazine, thanks to both of you for joining us and helping us save money as we shop around trying to buy a car.
That's all we have time for right now.
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