Do you feel like you are going to be taken advantage of the moment you set foot on a car lot?  In many cases, this is a misconception.  Remember - a car dealership is a business, and even the most honest dealership has interests that are very different from yours.  The goal of a car dealership (and any business) is to sell its products in such a way that maximizes its profits.  You, on the other hand, want to get the best car at the best possible price.  Due to the “haggling” nature of the car buying process, you will eventually have to negotiate those conflicting interests. 

Buying a car is a lot like playing poker, and you need to play your cards close to the vest if you want to “win”.  Here are six “tells” that you should never let slip when you are shopping for a car:

1. “I LOVE this car!” - No matter how beautiful, fast, shiny or perfect the car is, keep your emotions in check.  It’s just like holding a pair of pocket aces - never let on how excited you are.  If you admit that you are smitten, you have essentially told the sales person that you are not likely to walk away from the table.  The sales person, in turn, will tell you that the car is really hot in the market, someone else was seriously looking it that very morning and the manager just won’t take less than sticker price.  Instead, remain calm and pretend you’re looking at a 2-7 off suit, which is the poker equivalent of a Yugo.  The less emotion you show, the cheaper the car will be.  There is no room at the negotiating table for emotions, so keep a poker face!

2. “I need a car today” — There is nothing worse than being in desperate need of a car.  Except letting on that you are in desperate need of a car.  This says to the salesman, “I won’t be applying any brain cells whatsoever to this purchase.”  He knows you won’t be scrutinizing the numbers and doing the math, and you aren’t likely to drive across town to try to get a better price. It also means you are likely to take whatever he happens to have in his inventory, even if it doesn’t fit your needs or is a piece of junk.  If you really do need a car quickly, BLUFF!  Act like you have several weeks to decide and shop for the best deal.  Tell the sales person you would consider buying today, but only if you found the right car at the right price.

3. “I need a monthly payment of $X”– Most car shoppers are “payment shoppers” because most of us have no clue how much car we can afford except by looking at how the payment fits into our monthly budget.  The catch is, there are many different ways to get to a certain monthly payment, and most of them are not to your financial benefit.  For example, you can get a $35,000 car for under $500 a month, but you have to finance it for 7 years!  With the loan terms that are available today, you can get to almost any monthly payment if you drag it out long enough.  So, do the math before you get to the dealership, and understand exactly how much car you can afford based on a realistic interest rate and loan term.

4. “I have my trade with me” - A savvy salesperson will usually want to know up front if you have a vehicle to trade. If you tell him, “Why, yes I do, and it’s parked right outside!”, he’ll ask you for the keys so the used car manager can assess its value while you’re shopping. Sounds good, right?  After all, it will save time!  The problem is, you have just handed the keys to your only means of escape to a person who wants to keep you there until you agree to buy a car.  You have just lost the ability to throw in your cards and leave the table. 

5. “I’m thinking about leasing, but I don’t know much about it” — Leasing is a whole ‘nother game compared to traditional car financing.  Like a friendly game of 5 card draw vs. a Texas Holdem tournament.  If you are considering leasing a vehicle, you must learn the special rules of that game and make sure it’s really the right decision for you.  The monthly payment calculations are very complicated, and the laws governing leasing vary by state.  You need to understand the unique terminology as well as the extra costs and fees involved.  You also need to know how many miles are included in the lease and the penalties for exceeding the mileage limits. 

6. “My credit isn’t very good” - Most people don’t know their exact credit score, much less what interest rate it qualifies them for.  Those are the people who are big moneymakers for car dealers (and anyone else who sells financing).  The dealership makes money on the “yield spread” - the difference between the wholesale interest rate offered by the lending institution and the interest rate the dealer charges you.   If you tell the salesman that your credit is less than perfect, he may be pleased to confirm your belief that you don’t qualify for a low interest rate. To make sure you get the best interest rate, shop for your own financing before you start shopping for the car.  Having a loan secured outside of the dealership gives you added negotiating power.  If the dealership can beat the interest rate - great!  If not, you have an ace in the hole.

The truth is that most car dealers do not “take advantage” of people — they are simply better at playing the sales game.  After all, they get more practice at it than you do.  To win the game, you must educate yourself, play smart and keep your emotions in check or risk losing all your chips.

The following luxury cars earned the highest marks for predicted reliability from Consumer Reports for the 2008 model year.  (Prices listed are the base model starting MSRP.)

1.  Infiniti M ($43,900)
2.  Acura TSX ($28,960)
3.  Acura TL ($33,725)
4.  Lexus IS ($30.855)
5.  Infiniti G35 ($32,250)
6.  BMW 328i ($32,700)
7.  Acura RL ($46,280)
8.  Lexus LS ($62,900)
9.  Lincoln MKZ ($30,980)
10. Volvo S60 ($30,975)

The following luxury cars earned the lowest marks for predicted reliability from Consumer Reports for the 2008 model year.  (Prices listed are the base model starting MSRP.)

1.  Cadillac STS V8 ($53,275)
2.  Mercedes CLS ($67,950)
3.  Audi A8 ($70,690)
4.  Mercedes E-Class ($51,200)
5.  BMW 5-Series ($44,600)
6.  Mercedes C-Class ($31,600)
7.  Saab 9-3 ($28,445)
8.  Cadillac CTS ($33,675)
9.  Lexus GS AWD ($46,500)
10. Cadillac DTS ($43,175)

(Source: ConsumerReports.org)

As gas prices rapidly approach four bucks a gallon, Americans are feeling pain at the pump.  So are the automobile manufacturers and dealers.  Rising gas prices and their negative impact on the economy are causing consumers to put off vehicle purchases or to trade in their gas guzzlers for smaller, more fuel efficient cars.  As a result, automakers and dealers are experiencing a significant decrease in sales and profits.  Although small car sales rose over 7% the first four months of this year, SUV sales have dropped 28%, minivan sales fell 20% and pickup truck sales dropped nearly 18%.

This trend is especially hard on the American auto manufacturers whose profits depend heavily on sales of large trucks and SUVs.  Although the “Detroit Three” (GM, Ford and Chrysler) now offer dozens of smaller cars that get around 30 miles per gallon (with much improved quality), they still build far more trucks and SUVs than their Asian competitors.  While Detroit can shift its production to the more fuel-efficient vehicles to some extent, it can’t just turn on a dime.  The development cycle for new cars (from research to design to production) can run anywhere from three to ten years, severely hampering an automaker’s ability to adjust to sudden market changes.

Since the auto manufacturers can’t magically replace their inventory with more fuel-efficient vehicles, they have to develop more creative ways to market the vehicles they already have.  The traditional solution is to offer large cash rebates and zero-percent financing to make slow selling vehicles more attractive to consumers.  This year, that hasn’t been enough.  So, some automakers have created a new type of incentive – discounted gas!  This program is very clever, as it speaks to consumers’ greatest area of pain.  But, is it really a good deal?

To answer that question, we have to read the fine print, make some comparisons, and actually do the math.  (Yuck!)  Most programs limit the amount of gas that can be purchased at the discounted price to cover fuel for 12,000 miles per year for three years.  Most Americans drive closer to 15,000 miles per year, so the discount will not last the entire year.  The discounted gas program uses the combined city/highway fuel economy estimates for each vehicle to calculate how many gallons of gas add up to 12,000 miles.  For example, an SUV with a combined rating of 15 mpg will give you an allotment of 800 gallons of gas per year.  At the discounted price of $2.99, that comes to $2,392 per year.  If gas prices stabilize at $4.00 per gallon (which some economists say is likely – yeah, right), you would save $808 per year or $2,424 over three years. 

That sounds like a pretty good deal.  However, we must consider that the vehicles offering the special gas program tend to have lower fuel economy ratings than their competitors (which is why they aren’t selling in the first place).  Going back to our example above, if you instead purchase an SUV that gets 22 mpg, you would only need 545 gallons of gas to get you 12,000 miles.  At $4.00 per gallon, you would spend $2,180 – that’s $212 less per year (or $636 over three years) than what you would have spent with the discounted gas program.  If gas prices soar to over $4.50 per gallon, then it’s probably a push.   Of course, if you keep the gas program vehicle for more than three years, you will go back to paying the same high price for gas as everyone else, while driving a less fuel efficient vehicle.  Any amount of money you saved under the discounted gas program will be quickly lost. 
Furthermore, the gas deals typically reduce the amount of the cash-back incentives you can apply to the purchase of the vehicle.  Sometimes the gas savings makes up for the difference in the incentives, but sometimes it doesn’t—particularly for vehicles with large cash incentives.

Unfortunately, there is no magical solution to the gas price predicament.  If you have your heart set on one of the vehicles offering a discounted gas deal, and the gas savings is greater than the cash incentives, then take advantage of it.  However, if your goal is simply to save money at the pump, then you are better off purchasing a more fuel efficient vehicle.  Or maybe a bicycle.

The following 13 vehicles are rated the most fuel efficient in their class, according to EPA estimates and Forbes.com:

strong>Two-Seater:  Smart Fourtwo (33 mpg city / 41 mpg highway)
Subcompact:  Toyota Yaris (29 mpg city / 36 mpg highway)
Compact:  Mini Cooper (28 mpg city / 37 mpg highway)
Hybrid:  Honda Civic Hybrid (40 mpg city / 45 mpg highway)
Midsize:  Toyota Prius Hybrid (48 mpg city / 45 mpg highway)
Large Car:  Honda Accord (22 mpg city / 31 mpg highway)
Hatchback:  Honda Fit (28 mpg city / 34 mpg highway)
Wagon:  Volkswagen Passat (21 mpg city / 29 mpg highway)
SUV:  Ford Escape Hybrid (34 mpg city / 30 mpg highway)
Minivan:  Mazda 5 (22 mpg city / 28 mpg highway)
Truck:  Ford Ranger Pickup (21 mpg city / 26 mpg highway)
Sports Car:  Audi TT Coupe (23 mpg city / 31 mpg highway)
Luxury: Mercedes E320 Bluetec (23 mpg city / 32 mpg highway)

It doesn’t take a genius to figure out that gas prices have a huge impact on the car market.  When gas prices jump up, it sends consumers into a frenzy to trade in their gas guzzler for a more fuel efficient ride.  This causes a flood of 8 and even 6 cylinder vehicles on the secondary market, and a high demand for smaller, 4 cylinder vehicles.  On the new car market, dealers are having more trouble selling the big vehicles, so the manufacturers are offering significant incentives to move them.  This further reduces the value of similar vehicles on the secondary market. 

Those of us that took economics classes in school remember that when supply exceeds demand, as with the big gas guzzlers, prices plummet.  On the other hand, when demand increases (think little Honda), prices also increase. The recent gas hikes, combined with the overall state of the economy, have certainly caused a shift in the supply and demand for various vehicles.   Not surprisingly, the prices of large SUVs have dropped.  Pickups have also dropped in price, but there is still a demand for work trucks.  On the flip side, the price of 4 cylinder cars, like Hondas and Toyotas, has increased.  I went to auction last week to buy a Honda Element for a client.  I looked at the auction report and saw that they were selling for around $15,500 (auction price).  A vehicle with the exact same year, mileage and options sold for $17,300 just two weeks later!  Even the dealers are shaking their heads.  You can pretty much throw “book value” out the window. 

So, what does this mean for the average consumer?  Determining an accurate value for your trade is a little more challenging than usual right now.  So is determining a fair price to pay for a used car.  It also makes it harder to find a dealer who is willing to give you decent money for your gas guzzling trade.  Therefore, it is even more important to work with a consultant, like Women’s Automotive Solutions, to make sure you get the best price for both your trade and your new (or used) car.  We understand the current market conditions, and we know who is buying and selling what types of vehicles.  You can trust us to get you the best overall deal.  Just give us a call

Over the years, automobile manufacturers and their research partners have spent millions of dollars trying to resolve the age old dilemma of Mars vs. Venus - at least as it pertains to cars.  Marketing research firms have crunched a myriad of numbers, including vehicle sales volumes, vehicle registrations, and survey data in order to understand what cars each gender buys and why.  The results probably won’t come as a big surprise.

Much of the data relating to men’s automobile preferences is clear.  Findings from market research firms such as AutoPacific and NOP World show that large trucks and sports cars are purchased predominately by men.  In fact, males own about nine out of 10 heavy-duty pickup trucks, including the Chevy Silverado, Ford F-350 and Dodge Ram.  This is due to a combination of masculine marketing campaigns (i.e. “Built Ford Tough”) and a need to haul lots of stuff either at home or on job sites in male-dominated professions.  Sports cars at the top of the testosterone scale include the exotic Ford GT, Porsche 911, BMW 6-series, Dodge Viper, and Mercedes SL65 AMG.  In other words, if it’s big and strong or stupid fast, guys like it.  They also like expensive.   I guess that sign my mother bought for my father years ago that said, “The difference between men and boys is the price of their toys” was dead on.

Women’s tastes, on the other hand, tend to be a little more refined.  The cars that are more popular with women are affordable, practical and safe, but with a dose of design sophistication.  AutoPacific found that female buyers most often choose models by Saturn, Honda, Hyundai and Volkswagen.  It comes as no surprise that 65% of VW Beetle Convertible buyers are female, although Volkswagen denies that they were consciously trying to make a women’s car.  I guess they thought that a flower vase on the dash and colors such as “gecko green” and “sunflower yellow” would appeal equally to men.  Yeah, right.

But, don’t think that men are the only ones who prioritize luxury and high performance.  Girls like to have fun, too.  Four of the top “girl cars” are sports cars - the Saturn Sky, Audi TT, BMW Z4 and Mitsubishi Eclipse.  In the luxury segment, women also gravitate towards the Lexus IS, Volvo C70, and Audi A3.  The common denominator with most of these cars is that they are sophisticated, refined vehicles with good safety ratings and reasonable price tags.   They also get decent gas mileage.  Market experts expect to see women buying more luxury and sports cars in the near future, as the baby boomers hit the post-family stage and can finally spend money on themselves.

Not all cars fall clearly into one gender camp or another.  Even though the Mitsubishi Eclipse is extremely popular among women, approximately 39% of the 2006 models were sold to men.  The Honda Accord and CRV, Ford Taurus, Toyota Camry and RAV4 also span gender lines.  These tend to be family-oriented vehicles that offer a balance of safety, reliability, function and value.  Since women still hold the primary responsibility for transporting their families, they usually place practical needs above personal desires.  And, even if men might prefer a flashy vehicle for themselves, they still place a high priority on safety when it comes to their families.  Maybe men and women are both from Earth after all.  

Which vehicles do Women’s Automotive Solutions clients prefer?  About half of our business is Honda and Toyota.  The Honda Accord, CRV and Pilot are extremely popular, as are the Toyota RAV4, Highlander and Prius.  We also purchase many new and pre-owned luxury cars for our clients.  Among the most popular makes are BMW, Lexus, Acura and Volvo.

Most people simply turn in their leased vehicles when the lease comes due, even if they are under their mileage limit.  Did you know that you can SELL your leased car to a dealer and MAKE MONEY? 

Remember – leasing is just another form of financing a vehicle.  At any time during your lease, you can sell it to a dealer and buy or lease another car, as long as the market value of the car is greater than or equal to the payoff amount of the lease.  If the market value is less than the payoff amount, but you are not over your mileage limit, then you should wait and turn it in at the end of the lease.  The “negative equity” is then the leasing company’s problem, not yours.  However, if the market value is greater than the payoff amount, then you should sell the car and pocket the difference!  Most leasing companies don’t advertise this option because they want you to turn in the car so they can keep those profits!

If you are nearing the end of your lease, contact Women’s Automotive Solutions to see if you have any positive equity in the vehicle.  Why just turn it in when you can make money!

I am frequently asked by my clients, “When is the best time to buy a car?”  Some people think that rainy days will deter car shoppers from trudging through lots, and make dealers more desperate to make a sale.  On the other hand, if you are slopping around in the rain, the salesman may think that you are desperate for a car and push for a higher price!  Many highline dealers (BMW, Mercedes, Porsche, etc.) insist that rainy days are great sales days because their customers would rather spend the warm, sunny ones on the golf course instead of in their showroom.  At any rate, I wouldn’t recommend making a major financial decision based solely on the weather report.
 
Weekdays are typically better for car shopping, since most people peruse the lots on the weekends.  Car dealers refer to weekends as the “tuna run” — there are so many customers on the lot, they just pull them into the net.  It’s harder to demand a low price when the salesman can simply turn to the next customer in line.  You stand a better chance during the week, when there are fewer fish in the sea.

An even better time to shop is the end of the month or quarter when dealers are trying to make their quotas.  The number of cars a dealer sells each month determines the number of cars he can get from the manufacturer next month.  It also affects the types of cars he gets (models and colors that are selling well vs. ones that are not) as well as marketing support dollars.  If a dealer is falling short of a quota for the month, he may forgo a profit on the car just to make his numbers.

The end of the model year and the end of the calendar year are often good times to buy.  Dealers need to clear out the previous model year vehicles in order to take delivery of the new ones from the manufacturer.  Many customers would rather have the newest model year, especially if there has been a re-design (like the new 2008 Honda Accord), so dealers must make the older vehicles more attractive by reducing the price.  The manufacturers will usually offer incentives in the form of customer rebates, cash discounts and low finance rates to help dealers move the old inventory.  But, don’t think this is the only time to find great incentives.  Manufacturers will offer them any time during the year when they feel the need to increase sales.

To confuse matters further, certain types of cars tend to sell better at certain times of the year.  Trucks and SUVs are popular fall and winter buys for customers living in snowy climates.  Conversely, convertibles command higher prices in the spring and summer, save for those sunny states where going topless is feasible year-round.  

The bottom line is that the price of any given vehicle depends on supply and demand.  (Remember high school economics?)  If the dealer needs to move a car, you can get a better deal.  If a car is hot in the market and flying off the lots, be prepared to pay accordingly.  To make sure you get the best possible deal on the vehicle you want, contact Women’s Automotive Solutions.  Our strong relationships with the car dealers combined with our knowledge of the buying process ensure that you will get a great deal without the frustration and time commitment that can come with shopping on your own.

Do you know your credit score?  If you don’t, you should.  Your credit is the most important factor in obtaining any type of loan, including an auto loan.   Although most people don’t like to think about the subject of auto financing (they would much rather focus on the shiny new car), it is actually the most important part of car buying.  Your credit can not only make a significant difference in your interest rate and monthly payment, but it can even dictate what car you are “allowed” to buy!  So, how does your credit score affect your auto loan?

Let’s first take a minute to discuss what is meant by “good credit” and “bad credit”.  Your credit score can range from 300 to 850, and it is an indicator of how likely (or unlikely) you are to repay a loan.  Every lender looks at scores a little differently, but most consider 720 and above to be “excellent” credit.  With a credit score in this range, you are considered highly responsible and trustworthy and, therefore, qualify for the best interest rates available.  (Today, that’s around 6-7% for a new car loan.)  The average score in the U.S. today is 680.

Most lenders consider scores below 620 to be “subprime”, and consumers in this category must pursue what is known as “secondary financing”.  Secondary financing lenders charge higher interest rates (currently anywhere from 12% to 25%), depending on your score and the factors that contributed to it.  If your score took a hit due to a life event like divorce or becoming self-employed, but you are otherwise financially responsible, then lenders will still give you a decent rate.  If your score is low, but your income is high and you make a significant down payment, then you may also come away with a reasonable rate.  On the other hand, if you have a history of not paying your bills, then lenders will consider you “high risk” and charge you an equally high rate.

Lenders may also place restrictions on the type of car you can purchase if your credit is less than perfect.  Why do they care what kind of car you buy?  Since there is a higher risk that you will not repay the loan, the lender needs to be sure it can recoup its money by selling the car for a good price after repossessing it.  Therefore, most secondary financing lenders will restrict the borrower to a newer car with low miles (i.e., 2002 or newer with less than 70,000 miles.)   The lender may also require the borrower to purchase the vehicle from a franchised dealer (i.e. Heimlich Honda) instead of from a private, used car lot (i.e. Bubba’s Auto Sales).  Oddly, this often makes it easier for someone with bad credit to buy a newer, more expensive car than an older, cheaper car!  Strange, huh?

If your credit score is extremely low due to multiple repossessions or if you have no credit history and little income, then you may not qualify for a traditional loan at all!  Unless you can get a relative with perfect credit to co-sign the loan, you will have to purchase a vehicle from a “buy-here/pay-here” lot.  Buy-here/pay-here dealers use their own money to provide financing to customers with really bad credit.  They usually sell lower quality vehicles and charge interest rates as high as 30-40%!  The maximum loan term is 24 months, and most dealers report payment history to the credit bureaus to help you build credit.  Many buy-here/pay-here dealers are honest people, but there are still some unscrupulous, loan-shark types who take advantage of desperate consumers.  Hopefully, you won’t find yourself in the buy-here/pay-here space, but if you do, Women’s Automotive Solutions works with several reputable dealers in the Charlotte area.

Your credit can mean the difference between a low monthly payment on a swanky, new car or a high monthly payment on a piece of junk.  Be sure you know your credit score before setting out to purchase a vehicle (or anything else that you plan to finance)!  Thanks in part to the rising threat of identity theft, a plethora of services now exist (some of which are very inexpensive or even free) that allow you to stay on top of your credit.  You can get your online credit report by visiting the nation’s three credit bureaus:  Experian, Equifax and Trans Union at www.annualcreditreport.com.  If you need help understanding your credit report, talk to your financial advisor.  Don’t have a financial advisor?  Contact Women’s Automotive Solutions for a great referral!

Myth #1:  You have to pay sticker price when you lease.  Unless the dealer is offering a special advertised deal in which the price and other factors of the lease are already set to attract your business, the selling price of the vehicle is negotiable.  Since the selling price is the most important factor in determining what your monthly payment will be, you should negotiate the price of the vehicle with the dealer before discussing the financing.  Remember that the dealer is not the leasing company, but simply a broker acting on their behalf.  The leasing company may be the financing company owned by the manufacturer (such as Ford Motor Credit) or a traditional bank or other lending institution.

Myth #2:  You cannot get out of a lease.  Most people think that you are stuck in a lease for the full term.  This is not true.  You can get out of a lease the same way you “get out of” any car loan – you must sell the car for the amount of the lease payoff, cover the difference with cash or rollover the negative equity into a new lease or loan.  If you feel like you are stuck in a lease, contact a Women’s Automotive Solutions consultant to discuss your options.