Is Now the Time To Drive Off With a New Family Car?
We talk to a car guy for some answers.
I spoke with New York-based automotive journalist Steve Williams, who covers cars for such publications as Newsday and AutoWeek. This father of three offers his insight on where to turn if you are in the market for a new family car.
Is now the time for families to buy a new car or should people try to fix and keep driving what they already own as long as possible?
It's a totally subjective thing. Has your family outgrown your present car? Is it about to go out of warranty or is potential mechanical trouble coming? I don't believe in putting good money into bad prospects. Is there a car out there that you've just got to have? The fact is that loan interest rates are low, and promotions are all over the place, and that's a consideration.
If you have to buy now, would you buy new or used?
I think used is still a good bet in this economy. Used cars have more attractive price points initially, of course, and this year a lot of cars are coming into dealers off lease, so larger inventories in used-car lots give dealers more incentive to move them out quickly. Also, dealerships in general are being more aggressive with used cars, since new car sales are suffering so badly.
Perceptions will change again, but I'd look at used, and be fairly aggressive in trying to bargain, since used car prices are generally set artificially high.
How about leasing? Is that a better option deal-wise?
No. The big benefit of leasing is lower initial out-of-pocket costs -- leasing rarely requires any significant down payment and monthly payments are usually lower than they would be with a major auto loan. Leasing is another word for renting, so at the end of the lease, while there is usually a purchase price offered to acquire the car, you are left with nothing.
I believe in this economic environment, with low (and in some cases, 0%) financing options on a loan to buy or the option of cash back, the attraction of a buy outweighs the lease. Also, on a purchase, insurance payments are usually lower, and there's no limit on mileage. For families who plan to keep a car longer than 30 or 36 months, well, it's yours to keep.
Do the recession and general industry chaos mean consumers hold the negotiating power now?
Absolutely, although dealers will always try to deal. Even some foreign luxury brands – Lexus (TM), BMW, Audi -- that historically aren't heavy discounters, are doing what it takes to move cars off lots. And the American brands are making even more aggressive cuts, with low or 0% financing on some models, and/or cash back. This is a good time of year to pick up 2009 model-year cars, since dealers have to start making room for 2010 models. And, as always, the best time to shop is at the end of the month, when dealers are trying to make their "number" for the month.
How low can you negotiate these days?
Until the dealer says, "See ya."
Given recent upheaval at General Motors (GM) or Chrysler, do you see those nameplates as a safe bet for long-term warranty/repairs or would you shop at Ford (F) and the imports instead?
My feeling about brands is that if you wanted a GM car in the past, there should be one in your future. All warranties will be honored going forward. The only drawback I can see is if you hold onto a car for only a short time. A Chevy or a Cadillac may drop in resale value in the short term more quickly than a car from another company. For those who hold onto a car for a longer time, it's not really an issue.
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