If you think the new “Cash for Clunkers” program is going to help you buy a new car, think again. Our government’s latest, misguided attempt at saving the environment and boosting the economy isn’t all it’s cracked up to be.
What is the “Cash for Clunkers” Program?
Cash for Clunkers, officially known as the Car Allowance Rebate System (CARS), is a federal program passed by Congress and signed into law by President Obama will provide a voucher worth up to $4,500 to consumers trading in an old gas guzzler for new, more fuel efficient vehicle. The program is effective beginning July 1, 2009 and ending on November 1, 2009 (or when the funding runs out, whichever comes first).
Sounds pretty good, huh? Well… maybe not. The government vouchers for $3,500 or $4,500 are in replacement of — not in addition to — the ordinary trade-in value of the vehicle. If your trade is worth more than $4,500, forget it. If your trade is worth less than the voucher, then the program might benefit you. But, it’s only good for purchasing a new car, not a used one. Purchasing a good, used car will likely save you more money overall than buying a new car with the voucher.
What’s the Catch?
Your trade must also be drivable, must have been made in 1984 or later, owned, insured and operated by you for one year, and must get 18 mpg or less city/highway combined. The trade vehicle must be crushed, not resold. (The idea is to get them off the road) If that’s not enough restrictions for you, there’s more! You must purchase a new vehicle with a sticker price of $45,000 or less. If you buy a new passenger car, it must get at least 4 mpg MORE than your trade vehicle. If you buy a new SUV, minivan or small truck, it must get at least 2 mpg more than your trade. (Larger trucks have different requirements and restrictions.) Only one voucher is allowed per person. Confused yet? Visit the government’s website (www.cars.gov) or call a Women’s Automotive Solutions consultant for more information.
Who could benefit from this program?
Critics of this program (myself included) argue that this program won’t benefit most consumers. It doesn’t apply to used car purchases, and most people who drive “clunkers” do so because they can’t afford a brand new car in the first place. However, there are a few folks who could take advantage of it:
1. People who buy a new vehicle once in a blue moon, drive it until it almost dies, and then buy a new one again.
2. Students or young professionals driving an old, college clunker who now have a good job and are ready to buy their first, new car.
3. Parents who bought their teenager a piece of junk and now want a shiny new car for themselves.
The good news is that the voucher is in addition to (not in lieu of) any dealer incentives and rebates available on the new vehicle. If you are thinking about taking advantage of this program, contact a Women’s Automotive Solutions consultant to see if you qualify and if the program is right for you. Even if it’s not, Women’s Automotive Solutions will get you the best possible deal no matter what vehicle you buy – or what you trade in.
Let’s face it – the minivan is so passé! Here is a list of 10 Car Chick approved vehicles for today’s cool moms. (I realize that Mother’s Day is not until May, but this gives you a couple of months to start dropping hints!)
1. Audi A3 - A hot, luxury mini-wagon that will make the other moms drool!
2. Mazda 5 - The convenience of a minivan (sliding doors), but with the cooler styling of a hatchback. (It’s a minivan in disguise!)
3. Honda Accord - Reliable, comfortable, great gas mileage – it’s popular for a reason!
4. Ford Taurus X - Has the roomy 3rd row seating of a larger SUV, but with a lower ride height and easier handling.
5. Lexus ES350 - For the business mom who wants to travel in style!
6. Pontiac Vibe - A slightly funky hatchback that is inexpensive but reliable.
7. Subaru Forester - 2009 Motortrend SUV of the Year. Need I say more?
8. Volvo XC90 – Safety, safety, safety!
9. Toyota Venza - Part sedan, part hatchback, entirely new and cool.
10. Maxda CX9 – For moms who want to have a little fun while hauling the kids. Zoom Zoom!
“May you live in interesting times.” With automobile sales down nearly 40%, tighter credit markets, and the Big Three American automakers on the verge of bankruptcy, this old Chinese proverb has never been more true. (Even the almighty Toyota reported its first full-year loss in more than 70 years!) The challenges facing the automotive industry today are unprecedented, and that can mean both challenges and advantages for the consumer. Here are five things you need to know in order to successfully navigate today’s uncharted market:
1. Deals, deals and more deals! For perhaps the first time in history, the supply of new automobiles far exceeds the demand. Even after production cutbacks, there are still more cars than can fit onto already the overstocked dealer lots. So, what do businesses do when they have too much inventory? They have a REALLY BIG SALE! The level of incentives, including rebates, financing specials and manufacturer-to-dealer bonuses, is astounding - which is good news for you! Even small, fuel efficient cars, which rarely need incentives to move, are being discounted. Be sure to negotiate hard on the price of the car even before the incentives are applied. The car dealers are hungry for your business, and they know they must compete to earn it.
2. Beware of creative advertising! When car dealers are desperate to make sales, they often get very creative with their advertising campaigns in order to entice you into their showrooms. Offers such as “buy one, get one free” and “$12,000 minimum for your trade” may technically be valid, but they usually come with a stack of fine print that would make an attorney faint. Be sure to weed through that fine print before signing on the dotted line. And, remember the old adage, “if it sounds too good to be true, it usually is”.
3. Credit is tighter, but still available. Just six months ago, you could get a no-money-down auto loan with a credit score of just 650. You will likely need at least a 720 credit score to get that same deal today. The credit crunch has hit the automotive industry, with banks and manufacturer finance companies alike tightening the strings on subprime lending. Rates on subprime car loans are higher and may require a 10-20% down payment. You may have a hard time finding those longer 72 and 83 month loan terms, or you may pay a one to two point premium to get one. However, if you have excellent credit, then you can take advantage of incredibly low rates for 36 to 60 month loans – under 5% at some credit unions!
4. Fewer lease deals. Over the past decade, insanely cheap lease deals have allowed Americans to drive far more expensive cars than they could otherwise afford. Those days are over – at least for the foreseeable future. The leasing companies are being killed by the number of vehicles coming off lease that have depreciated much more than expected. Most manufacturers are raising lease rates or even suspending lease programs entirely. Luxury car makers, like BMW, whose business depends heavily on leasing, will still have good lease programs – but probably not as good as they used to be.
5. Watch what you buy. Many cash-starved automakers are looking to cut costs by downsizing their lineups. Manufacturers are canning poor selling vehicles, consolidating twinned models and even axing entire brands in order to stop the bleeding. (See side bar for vehicles “on the chopping block”.) So, is it still safe to buy American, even if it’s a steal? Yes, it is. Even in the event of a bankruptcy, the manufacturers will still do everything possible to honor your warranty, and mechanics will still be able to service and repair your vehicle. (Heck, they still make parts for the Model-T!) While there are no guarantees, vehicle makes and models always come and go. It’s just part of the business. However, the biggest risk is depreciation – orphaned vehicles typically lose their value faster than normal.
Truly, there has never been a better time to buy a car. With great deals everywhere you turn, purchasing a new car can save you a ton of cash. And, more importantly, it will also help revive our economy.
Women’s Automotive Solutions needs your help to grow in 2009! Did you know that car dealerships often spend as much as $250,000 or more PER MONTH on advertising?!? Yikes! We would rather spend our precious marketing dollars rewarding YOU for spreading the word about our valuable services.
Anyone who refers a client to Women’s Automotive Solutions will receive a $25 gas card! The person who refers the most clients to Women’s Automotive Solutions in 2009 will win the GRAND PRIZE – a $500 VISA gift card!
The internet can be a wonderful tool for buying and selling automobiles. You can shop for thousands of new and pre-owned vehicles, 24 hours a day, from the comfort and convenience of your own home – even in your pajamas. Online marketplaces like AutoTrader, eBay, AutoConsign and Craigslist connect buyers and sellers across the world, but not all of those buyers and sellers are honest. Thousands of people each year still fall victim to fraud when buying and selling vehicles online.
The most common scam that people encounter when selling a vehicle online is the “419 Nigerian Scam”, also known as the “Advance Fee Scam”. A prospective buyer emails you (often in very poor English) and says that he is interested in your vehicle and agrees to your selling price. He claims that he a previous deal fell through, and he has a cashier’s check in an amount that is several thousand dollars more than your selling price. He says that he will FedEx you the cashier’s check and asks that you wire the difference back to him via Western Union, once the funds have posted to your account. How trusting of him, right? Not so much.
It is a common misconception that cashier’s checks are as good as cash, and that they clear the bank within 48 hours. In reality, your bank is required to make the funds available in your account within 48 hours. However, it may take up to two weeks for the check to actually clear. The counterfeit cashier’s check will eventually bounce, and then you are in real trouble. Not only will you have lost the thousands of dollars that you wired to the scammer, but depositing or cashing a counterfeit check, even unknowingly, is a felony.
Sellers of automobiles are not the only ones at risk online. Scammers target eager buyers by posting popular vehicles for sale at enticing prices. The post looks perfectly legitimate, complete with pictures, VIN and even a free Carfax report. The seller claims that the vehicle is being stored in the warehouse of a transportation company that will ship the vehicle and handle all DMV paperwork. To appear even more genuine, the seller says that he will process the transaction through the “eBay Safe Trade”, or similar, department. No such department exists, nor does the vehicle! The pictures, VIN and Carfax report have been expertly fabricated or stolen from another seller’s post. Some scammers even create elaborate, professional websites to make you think that the transportation company, escrow company and “safe trade department” are real.
The online market places work hard to try to protect buyers and sellers from these scams, but there is only so much they (and the authorities) can do. Most of the scammers live in foreign countries (as evidenced by their abysmal English) and use “spoofed” email addresses. Even if the authorities could track them down, they are almost always outside US jurisdiction. So, it is up to you to protect yourself! Here are five tips to help you avoid falling victim to an internet automobile scam:
1. Never sell your vehicle to someone in a foreign country. Think about it – they have cars in Nigeria and other countries, so why would someone want to buy yours and incur the shipping costs and import fees? Why would someone in the UK, where they drive on the left side of the road, want to buy an American car with the steering wheel on the wrong side?
2. Never trust someone who offers to pay you more than you are asking for your car. If an honest person had a certified check for the wrong amount, he or she would simply return to the bank and get a new one.
3. Be wary of a buyer who insists on using an escrow service to “safeguard” the transaction. Scammers often setup fake escrow services that claim an affiliation with AutoTrader, eBay, or eTRUST. None of these companies operates or partners with an escrow service.
4. Never ship your car to the buyer or allow a seller to ship a car to you (unless the seller is a legitimate car dealership). The buyer and seller should arrange to meet and complete the transaction in person.
5. Secure payment for a vehicle before transferring the title to the buyer. Insist on certified funds, and verify the check with the issuing bank before you release the vehicle.
Buying or selling a vehicle online can be a fun and financially rewarding experience, but it is not without risk. Before you buy or sell, review the fraud awareness information provided by the various online marketplaces. And, above all, trust your instincts. If something feels hinky, it probably is.
Want to avoid online car scams altogether? Women’s Automotive Solutions can help you buy OR sell a vehicle! We’ll make sure you get the best possible price without having to worry about online scams, fraudulent deals, and unscrupulous characters with bad grammar.
My “Pick of the Show” for the 2008 Charlotte International Auto Show is the 2009 Mazda CX-9. Believe me, I was as surprised as you are. The CX-9 hasn’t changed much since its introduction in 2007, so don’t ask me how I missed it last year. Mazdas, in general, have always been solid cars (with a few exceptions), but they have never held my attention for more than a few seconds. Yet, this year, I found myself enthralled with their sleek, sporty designs and impressive interior styling.
The CX-9 is a large, 7-passenger crossover SUV that looks like it wants to be a luxury sports car when it grows up, and it is truly fun to drive. As nimble as a vehicle this size can be, the CX-9 is powered by a 3.7-liter V6 with 273 hp, 270 lb-ft of torque, and a respectable zero to 60 time of 7.4 seconds. A six-speed automatic transmission is standard, and all trim levels are available in either front- or all-wheel drive. A stiff suspension system makes for tight handling, which is considered sporty by some, but can be construed as uncomfortable by others. Estimated fuel economy is 16 mpg city/22 mpg highway, which is average for the class.
All 2009 CX-9s come standard with antilock disc brakes with brake assist, stability control with a rollover sensor, front-seat side airbags and full-length side curtain airbags. (A blind-spot warning system is standard on the Grand Touring model.) The CX-9 aced the front and side crash tests administered by the National Highway Traffic Safety Administration testing, scoring five out of five stars.
The CX-9 also boasts excellent build quality inside and out. Available with beautiful two-tone leather, red and blue instrument lighting, brushed nickel-look accents and elegant piano black or wood trim, the CX-9’s interior boasts a sporty style that easily competes with many luxury SUVs. The cockpit hugs the driver, lending to the sports-car feel, and most of the controls are ergonomically friendly and easy to use. My only complaint is that the CX-9 doesn’t have many useful cubby holes for storage. At least there is a decent amount of storage space (about 17 square feet) behind the third row.
Speaking of the third-row, it’s one of the roomiest you’ll find, and is quite suitable for two, normal-sized adults. This third row is easily assessable for those two adults, thanks to large rear-door openings and fold-and-slide second row seats. (The long rear doors can be hard to open in tight parking spaces, but I wouldn’t want to park this beauty anywhere near door-dingers and shopping carts anyway!)
The 2009 Mazda CX-9 is available in three trim levels. The entry-level Sport starts around $30,000 and comes standard with 18-inch alloy wheels, air-conditioning, full power accessories, a tilt/telescoping steering wheel with audio and cruise controls, a trip computer, Bluetooth phone connectivity, a CD player and an auxiliary audio jack. The more upscale Touring model adds heated mirrors, two-tone leather seating and heated, powered front seats for around $32,000. The $34,000 Grand Touring boasts 20-inch wheels, xenon headlights, rain-sensing wipers, keyless ignition/entry, memory driver seats, interior wood accents, an auto-dimming rearview mirror, funky blue cabin illumination, and a blind spot warning system. Available options (on most trim levels) include a surround-sound Bose audio system with a six-CD changer, a sunroof, a power rear liftgate, a navigation system with a rearview camera, a stand-alone rearview camera (with rearview mirror display), satellite radio, remote engine start, video game docking station and a rear-seat DVD entertainment system.
For all you moms (and dads) who need to haul around kids but still want to have fun and look good doing it (without breaking the bank) – this is the one to buy! Zoom Zoom, indeed.
Safety is a high priority for most drivers when they set out to purchase a new vehicle. Each year the Insurance Institute for Highway Safety puts the model year’s newest vehicles through a list of rigorous testing and then selects its Top Safety Picks, recognizing vehicles that do the best job of protecting people in front, side, and rear crashes. Safety Pick winners also have to be equipped with electronic stability control, which research shows can significantly reduce the risk of crashing.
Thirty-four vehicles received the top pick designation for 2008, as compared with only 13 in 2007:
Large Cars
Audi A6
Cadillac CTS
Ford Taurus
Mercury Sable
Volvo S80
Midsize Cars Audi A3
Audi A4
Honda Accord
Saab 9-3
Subaru Legacy
Midsize Convertibles
Saab 9-3
Volvo C70
Small Cars
Subaru Impreza
Minivans Honda Odyssey
Hyundai Entourage
Kia Sedona
Midsize SUVs Acura MDX
Acura RDX
BMW X3
BMW X5
Ford Taurus X
Honda Pilot
Hyundai Veracruz
Hyundai Santa Fe
Infiniti EX35
Lincoln MKX
Mercedes M Class
Saturn Vue
Subaru Tribeca
Toyota Highlander
Volvo XC90
Small SUVs Honda CR-V
Honda Element
Subaru Forester
Large Trucks Toyota Tundra
Ford and Honda boast the most vehicles on the list, and the 2008 Ford Taurus snagged the award for the number one safest vehicle on the market. (Source: IIHS.org)
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.
Don’t have the time or the desire to play the game? Call in a professional instead! Women’s Automotive Solutions will stack the deck in your favor and get you the best deal!
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.)
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.
creative, inc.
