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2019 Memorial Day Car shopping will find some sweet deals for consumers willing to do their homework.
Dealers and carmakers are offering first month free*, 0% interest rates and higher than KBB.com trade-in offers.
FIRST MONTH CAR PAYMENT FREE:
The truly FREE first month payment is not the same as dealers who push the first payment to the end, making a 60 month loan now 61 months. Be careful of the language and make sure you are getting a true no payment for 30 day offer.
0% is BACK on CAR LOANS
0% is not a typical manufacturer offer these days. The average interest rate for GREAT (+720 FICO AUTO SCORE) credit is now hovering around 4.50% for 60 months and 5.99% for 72 months. Dealers are “BUYING DOWN” the rate this time round, for those with great credit scores and limited monthly budgets. The BUY DOWN is done using the discount and incentives available to lower the price of the car. The critical difference between (a.) using the cash to lower the price of the car or (b.) lower the interest rate is in the BACK-END or end of the contract. Option a. says you got all the discounts upfront, allowing you to terminate, payoff or trade in the vehicle at anytime, without a payoff penalty. Option b. Says you are paying no interest for the life of the loan, and if you are inclined to keep the car and loan until the end of the term, this may be a better deal for you, providing the car isn’t totalled or stolen before the loan is over.
HIGHER TRADE-IN OFFERS:
Used cars are in HIGH DEMAND, especially those with less than 60k miles and 5 years or newer. Consider the hottest used cars are those for $10,000.00 or less. However, even the $12,000-$15,000 SUV or truck is in high demand. The mid-size sedan and coupe are lagging behind in demand, but at a price of $12,000 or less, everything with under 80,000 miles is selling quickly. Check your car value on kbb.com, craigslist and carGurus before heading to the dealership. If you have a payoff or open car loan you will be best off trading the car. The dealer will handle the paying off of the loan, even rolling the balance onto the new loan.
CLEAR TITLE TRADES:
If you have a free and clear trade-in, consider selling the car yourself. You will get a few more dollars, but, you must calculate the lost sales tax credit** in your selling price.
TRADE-INS with OPEN RECALLS and BAD CARFAX REPORTS:
If your trade-in has a BAD CARFAX (accident or damage) listed… Get ready for a 10% – 20% drop in appraised value, depending on the extent of the problem.
Or your car has an open (unfixed or unfixable) recall, you will have to adjust your value expectations accordingly. Many car makers have discontinued models rather than spend money fixing recall issues. Go to www.safercar.gov recalls defects, put in your 17-digit Vehicle Identification number and see what recalls your car may have. To get the most trade-in value, get the recalls fixed BEFORE trading the car.
