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Start with the assumption you'll sell your old car privately. Otherwise, the salesperson can offset
a good deal on the new car with a bad deal on the old or vice versa. If you decide later you want
to trade it in after all, at least you'll know how much the dealer is willing to pay.
Advertising and showing your old car involves some trouble, but you'll probably get a much
better price. The Blue Book or N.A.D.A Official Used Car Guide can give you a rough
indication of what your old car is worth. This book is available in libraries, banks, auto
insurance offices, and some bookstores. You can also access the retail value of your vehicle via
the internet on the Kelley Blue Book website, located at www.kbb.com.
You'll probably need an auto loan. Again, keep that transaction separate. Major car dealers offer
low percent financing for many models. This promotional rate can save you hundreds of dollars
in interest. However, the dealer knows that as well as you do and may try to add some of these
dollars to the price. So nail down a good price before negotiating borrowing through the dealer.
If there is no promotional financing, you'll probably do better at a bank or credit union.
The next step is to decide how long a term you will want the loan to extend: 1 year, 2 years, 4
years, or longer. The longer the term, the smaller the monthly payment and the greater the total
interest to be paid. The shorter the loan period, the greater the monthly payment and the less the
overall interest paid.
When you arrange the loan, look for terms, which allow you the greatest protection from
repossession upon default. Also look for terms, which allow you to reduce the total interest to be
paid by paying the loan off early. Finally, don't sign any purchase or loan agreement without
carefully reading it. Don't be embarrassed about taking the salesperson's time. Sales and loan
agreements vary. If you don't like the terms, ask for a change in the wording. Make sure the
agreement includes a statement that says you can get your deposit returned if something goes
wrong with the deal - for example, if the car isn't delivered by a specified date.
HOW TO FIND THE RIGHT USED CAR
If you are interested in buying a used car, here is a checklist to help you find a quality car at a
good price:
1. Do a little research on repair frequency, owner satisfaction, repair cost, gas mileage, etc., for
the cars that interest you. Most libraries have consumer magazines, which report such tests
results.
2. Know the "Blue Book" value of the car before you go to look at it and negotiate a lower
price. You can determine the blue book value of the car you would like to purchase by going to
www.kbb.com and entering information, such as make, model and year, about the car.
3. ALWAYS SHOP FOR USED CARS IN THE DAYLIGHT.
4. Check the car for wavy lines by looking down the side of the car. Wavy lines and off-color
paint are signs that the car has been involved in an accident.