New and Used Auto Loan Rates
by Broderick Perkins
DeadlineNews Group
(5/27/2011) Erate Exclusive - Don't forget what you learned about
shopping around for auto loans.
And get busy shopping if you are planning to buy a used car soon.
Some used car prices are appreciating faster than homes did during the
housing boom.
In a single month the National Automobile Dealers Association (NADA) is
forecasting trade-in values on popular gas-sipping models could rise by as
much as 17 percent.
In a single month.
That means what you pay at the dealer could rise even more, given dealers
know there's a demand for high-mileage vehicles and will be looking to drive
hard bargains.
Obviously, gasoline prices hanging around the $4 mark is the culprit.
Even though gas prices have begun to fall and are expected to continue to
ease through Memorial Day, the die is cast.
Also, anyone who has felt the pinch and has a gasoline squeezer isn't
about to trade it in right now.
What's more, Japan's dual quake-tsunami disaster has stemmed the flow of
new high-mileage models.
"Strong consumer demand for small used cars is driving up prices," says
Jonathan Banks, senior analyst with the NADA Used Car Guide.
"The NADA Guide increase in trade-in values for June should come as no
surprise because it reflects a shortage of both new and used cars entering
the market," he added.
Overall, through the first six months of 2011, trade-in values for small
cars are projected to rise an average 18 percent compared to the same time
period last year, NADA forecasts.
Expect the greatest markups on Kia Rios and the Hyundai Accent Hatchback
GS, which will see a one month jump in trade-in value at 17 percent
each.
For actual dollars, the "stealth" (because you can hardly hear the hybrid
coming)Toyota Prius will increase in value by almost $2,000. The Honda Civic
Coupe DX will garner a $1,775 boost in trade-in value, NADA says.
"Fewer new cars have been produced as a result of the crisis in Japan,
which has shifted consumer demand to the used car market," said Banks,
almost vocalizing the twinkle in his eyes.
May vs. June 2011 Trade-In Values of Some Popular Small
Cars
| Model
Year | Make |
Model | May '11
Value | June '11
Value | June '11
Increase |
Increase
% |
| 2009 | Kia Rio | $6,400 | $7,500 |
$1,100 | 17% |
| 2007 | Hyundai Accent Hatchback GS |
$5,125 | $6,000 | $875 | 17% |
| 2007 |
Toyota Prius | $13,400 | $15,350 | $1,950 |
15% |
| 2009 | Ford Focus S |
$9,375 |
$10,700 | $1,325 | 14% |
| 2005 | Subaru Impreza RS | $6,650 |
$7,575 | $925 |
14% |
| 2010 | Honda Civic Coupe
DX | $12,300 | $14,075 |
$1,775 | 14% |
| 2009 | Chevy Cobalt | $7,450 |
$8,550 | $1,100 | 15% |
| 2009 |
Chrysler PT Cruiser | $9,225 |
$10,350 | $1,125 | 12% |
Source: National Automobile Dealers Associatio
Tips to help you drive a hard bargain
• Check your credit first. You need to know and correct, if
necessary, your credit report before the lender takes a gander. There's only
one federally sanctioned place to accomplish that for free: AnnualCreditReport.com.
• Get a loan, then buy a
car. A guaranteed auto loan in your pocket helps you avoid a common
sales tactic -- mixing vehicle price and financing negotiations. Mixing
allows the dealership to give you a favorable figure in one area, while
inflating a figure in another area. Shop around.
• Test drive, but don't shop. Know what type of car you want
and your price range, before you shop around for financing. If you do,
there's a greater chance you can get pre-approved.
• Watch out for rate mark ups. The car dealer may initiate
the loan, but later attempt to sell the loan to a third-party lender, at
your expense. Be prepared to walk if the dealer doesn't offer you a rate for
which you know you qualify.
• Shop online. The Internet can help you shop around for
sticker prices on the car, financing, insurance and any other related
products.
• Avoid add-ons. Vehicle service contracts, guaranteed auto
protection insurance, credit life and disability insurance, and a host of
other add-ons typically are overpriced and unnecessary.
• Watch for tricks and
traps.
In the "yo-yo" the dealer will offer you a low-low rate, let you drive a
new car home and later tell you the financing fell through, hoping you'll
fall in love with the car and accept a higher interest rate once you bring
the car back.
"Buy Here-Pay Here" dealers finance used auto loans in-house to borrowers
with no or poor credit. The loans have much higher interest rates than banks
or credit unions, are often unsustainable and more likely to result in
defaults and repossessions.
Ignore dealers who attempt to mask the true cost of the loan by focusing
on the monthly payment. Shorter terms loans are cheaper over the life of the
loan. Compare the total cost of all the loans you've compared and choose the
one that's cheapest over the full term of the loan.
Other related articles:
How to drive a
hard auto loan bargain
Special
Report: Hitting the Brakes on Auto Dealer Loans
Get a
CLUE about your home and auto insurance claims
Steer clear
of car title loans
Driving a
hard bargain on car insurance
