Financial Education Resources RE: Auto Related

Soaring Car Payments and 0% Financing: Know the Risks

You've seen the ads touting 0% financing offers at the car dealership. They sound like a good deal, but are they? Experts warn that when consumers get good financing--and many believe 0% is the best deal available--they don't negotiate on price. As a result, car payments can be much higher than the budget can bear. Some 17% of consumers shell out between $500 and $700 a month for new cars, not counting insurance, gas, and maintenance costs. Another 43% pay $300 to $500 a month for their vehicles, and just 32% pay less than $300 a month. According to the National Automobile Dealers Association, the average new automobile retailed for more than $28,450 in 2006. Combine soaring car prices with lower down payments and dealership incentives to get consumers into the showroom, and car buyers could be walking into a trap. According to a recent Cambridge Consumer Debt Index, 56% of Americans say their monthly car payments are putting a squeeze on their budgets, preventing them from making other big-ticket purchases. Don't let dealership incentives lure you into a trap that leaves you cash-strapped. Visit us today to help you figure out the best financing for your car—and your cash flow. We also offer a great auto financing "Beat Rate Guarantee". Call or stop by today.

Begin Auto Search With Manufacturers Web Sites

How did your last search for a new car begin? If you're like a lot of shoppers, you started with auto manufacturers' Web sites. Manufacturers' sites provide the most accurate information on their models, including detailed photos and information on features and options, according to industry analysts. This information is especially useful if you have a specific brand or model in mind. The 2006 New Autoshopper.com Study, released by J.D. Power and Associates, reports that 59% of consumers start their shopping at manufacturers' sites before buying a new vehicle. The survey found that online shoppers are most interested in researching dealer cost and invoice information, vehicle options and features, MSRP (manufacturer's suggested retail price), and reliability ratings. Respondents also increasingly researched trade-in values online. Many consumers also search independent sites such as www.edmunds.com for an unbiased look at market-value pricing and vehicle ratings. You can even compare vehicles side-by-side at www.kbb.com or jdpower.com. Call 224-4960 for current auto loan rates.

Looking for a new or used car? Give Autowise Buying Services Inc. a try.

Sharpen Pencils, Then Kick Tires

It takes 23.6 weeks' pay for a median income family making $58,000 a year to buy a new car. That's kind of interesting--but it doesn't answer the question: How much car can you afford? Here's how to find out:

* Check your budget:
- List all income; list fixed and variable expenses
- Keep all monthly payments--including your rent or mortgage--to less than 40% of monthly take-home pay.

* Check other personal finance goals:
- Are you saving for a down payment on a house? For a college education? Can you defer buying a car longer while you focus on those goals?

* Remember other car expenses:
- License, registration, insurance, gas, maintenance, and repair

* Factor in:
- Down payment, carmaker rebates, trade-in value, and how much you can afford to borrow.

* Test-drive your car payment
- Divert the amount of your expected car payment into your credit union savings toward your down payment. Try it for three to four months or more. See how tight the payment is with the rest of your obligations and goals.

* Ask a FSU Credit Union loan officer to help you run the numbers to see what monthly car payment you can live with.