Car Buying and Car Loan Basics

By ERIC PETERS

Buying a new car is easy; getting a good deal often isn't.

Here's how to stack the odds a bit more in your favor:

Shop money first -- Many people make the mistake of shopping for a car, then worrying about how to pay for it. Instead, check into your financing options before you get near a dealership. You have many options -- from credit unions to banks to the captive financing arms (GMAC, Ford Credit, etc.) of the automakers themselves. Offers can vary considerably; as with a real estate loan, even a seemingly small difference in the interest rate being offered can cost (or save) you a lot of money over the life of a new car loan. And just as you'd haggle with the salesman over the price of the car itself, you can and should try to negotiate the best deal possible on your financing. Make them earn your business; don't just give it to them on a silver platter. If GMAC is offering 1.9 percent financing, you may have to forego an additional rebate to get it. Get the specifics and ask your bank/credit union if they can do better.

Top 10 Resale Cars
Model Overview
Acura TSX
BMW 5 Series
Honda Civic
Lexus IS
MINI Cooper
Pontiac Solstice
Scion tC
Toyota Prius
Volkswagen GTI
Volkswagen Eos

Data provided by Kelley Blue Book

Know the true cost of what you're buying (and what you can afford) -- There is more to the cost of a new car than the price you pay for the car itself. Things like insurance, property taxes (where applicable), annual fuel costs and so on should always be factored into your purchasing decision -- before you commit to buying anything. Insurance payments on a high-performance sports car may be more than you expected. People sometimes get into trouble by focusing on the car payment alone -- forgetting about the peripheral costs that come with the purchase of any new car or truck. If you buy "on the edge" -- with little cushion left for these unanticipated expenses -- you might end up getting a visit from the repo man.

Know your quarry -- Before you get near a dealer's lot, you should have spent some time online getting to know as much about the vehicle you're thinking of buying as possible. What are the standard and optional engines? Available equipment? The trim levels? What's the dealer invoice price for the vehicle -- and the various options? (Many people forget there's a big difference between the MSRP "sticker price" and actual dealer cost for individual options as well as for the car itself.)

The more informed you are, the less likely it is you'll end up with buyer's remorse -- or a bad deal. AOL Autos is one of several excellent resources for this research. Trade publications such as Automotive News and Consumer Reports are also a great resource for in-depth info about any new car on the road. It's a good idea to read as many new car evaluations of the model you're considering as possible. These expert reviews may enlighten you about good (and bad) points you might otherwise be unaware of until after you've already bought the car.

10 Most Fuel Efficient
Model Overview
Toyota Prius
Civic Hybrid
Camry Hybrid
Toyota Yaris
Toyota Corolla
Honda Fit
MINI Cooper
Escape Hybrid
Kia Rio
Hyundai Accent

Check into the available deals -- Year-end closeouts, cash back, special financing, etc. Each automaker publishes their current offers on their official web page (for example, General Motors' web site is www.gm.com). AOL Autos brings all these offers to you alongside other vehicle details to assist you in your shopping. These offers are constantly changing, vary from region to region -- and model to model -- so it's important to get the latest, most up-to-date info. Compare what's being offered by one automaker against the deals (or lack thereof) being offered by a competitor. A little digging could save you thousands before you even get to the dealer's lot. Also pay attention to the market. Slow-selling models (or final year models of vehicles about to be replaced or updated) are typically the ones dealers are most anxious to get rid of -- which means you can usually negotiate a great deal for yourself. On the flip side, avoid shopping for the latest, most trendy and popular models until the buzz has died down a little -- unless you don't mind paying every penny of full MSRP sticker, plus a little extra.

Never focus on the monthly payment -- "How much can you afford per month?" is a deceptive shuck and jive used by some car salesmen to get you to stop thinking about the total price of the car by focusing your attention on what appear to be "low" monthly payments. But ultimately, the only figure that matters is the bottom line cost of the car itself. Haggle over that figure -- and the monthly payments will take care of themselves

Worry about your trade-in later -- You're buying a new car; haggling over your trade can be distracting. With the focus on how much you'll be getting for your old car, it's easy to lose sight of how much you're paying for the new one. Haggling over one car is confusing enough; adding another to the mix is never a good idea. Estimate the value of your trade-in online using a service such as KBB brought to you by AOL Autos. This will give you a ballpark number to free your mind while you shop for a new car. The best thing to do is negotiate your best deal on the new car -- and once that's done, bring up the matter of your trade-in.

Always take an extended test drive -- Buying a new car or truck without spending at least a few hours behind the wheel is a lot like getting married after that first date. Things you didn't notice at first may soon come back to haunt you -- for example, seats that give you a back ache; or an under-powered engine. Or terrible blind spots. These are things you'll notice during an extended test drive -- and it's why you should never buy any new car without having spent a t least a couple of hours behind the wheel in a variety of driving environments, such as stop-and-go traffic and highway driving. If the car will be used by family members, they should come along for the ride, too. If everyone's not happy with the car, odds are you won't be happy with the car. Most dealers will be happy to let a serious buyer take a test drive. If the dealer won't allow it, you should think hard and long before buying the car -- from that dealer, anyhow.