BUY THE BEST CAR FOR YOUR NEEDS

The auto industry sets out to sell an image as well as a car. Too often we get so caught up in the image that we lose track of the financial implications of buying a car.

The most economical way to own a car:

Examine your motives. The motive to buy a car springs from the emotional rather than the rational side of human nature. Do you really need a new car or is your present one sufficient? Just because your car needs some major repairs or it's a few years old does not justify the purchase of a new car.

Determine your needs. Costs (payments, insurance, maintenance) for a new mid-range car commonly run in excess of $450 a month. Place quality and reliability above looks and model year. Seriously consider purchasing a good used car for greatest savings.

Become an informed buyer. Do your homework. Publications such as Consumer Reports report on the safety, maintenance, and value of the various car models. Remember, too, that buying cheaper does not always mean a better deal.

Pay cash. The best way to finance a car is not to finance it; the best policy is to save the money and pay cash for your car.

If you do need to finance your car, don't go through a car dealership, if at all possible. Arranging a loan through a bank can allow you to negotiate with the dealer on a cash basis. When you do arrange a loan, be sure it is a simple interest loan with no payoff restrictions.

Do not trade in your old car; sell it. If a car dealer can sell your car and make a profit, so can you. It takes more time and effort to sell your car, but it is worth it.

If your old car is not paid off, keep it until it is. If you trade in a car with a mortgage on it, you are taking your current debt and refinancing it into a new car, effectively doubling the amount of interest you have been paying on your old loan.

Stay within your budget. About 15 to 17 percent of your Net Spendable Income (NSI) should be allotted for auto expenses. That includes payments, gas, oil, maintenance, and insurance.

Don't be lured into a car lease. It often seems attractive since it involves little or no money down, low interest rates, and low monthly payments for the length of the lease. At the end of two or three years, the lessee is urged to turn the car back to the dealer and lease another new car, rather than finance the remaining debt on the car. If you decide to keep a car when the lease is over, you'll discover you owe a lot more than the car is worth and may have difficulty finding financing for the balance. When you lease, you never own the car. It belongs to the leasing company, and it holds the title. That means if you run into unexpected financial problems during the lease, you can't sell the car.

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