Your rates of bank

Dear Terry,
My girlfriend drives a 2005 Jeep Wrangler that eats gas like no other — she gets 14 miles per gallon in the city and 18 mpg on the highway. She currently owes $20,000 with a 16 percent annual percentage rate and now wants to sell her vehicle or trade it in for a Toyota Prius.
She has $2,000 for a down payment, but in the end she will still be in an upside-down situation. Do you have any creative ideas on acquiring a new Prius that is gas-efficient with this scenario?
— Tomas

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Dear Terry,
We may be in need of a third car for several months because of our son’s summer job and, possibly, school-year internship. We don’t really want to lease a vehicle for three years but need the car for more than just a few days’ rental.
Is there something in-between the usual leasing and renting programs that would work for us?
— Beth

Dear Beth,
I would check some local car rental companies not affiliated with the national chains. They often can offer a month-to-month rental. (more…)

A Miami-based company this month has taken the unusual step of providing motorists with a hedge against rising gasoline prices.

However, it also has generated major controversy about whether or not the service is a scam.

MyGallons.com is offering drivers the chance to pre-buy gasoline at the current price and fill up later when prices — presumably — are higher.

Much of the blame for rising gasoline prices has been attributed to oil speculators who are betting a future barrel of crude will cost even more than it does now.

Drivers have been left at the mercy of such speculators because few can play the futures game and cash in on ever higher oil prices.

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Dear Terry,
I have a loaded 2004 Kia Sorento that went from a lease to a loan with three years left on payments. I need something a little smaller and more economical with payments not more than $300 a month. Is this possible?
— Karen Haggas

Dear Karen,
To get to $300 a month in payments, you’re looking at a loan of $15,000 for 60 months. There are a number of fuel-efficient vehicles you can get in that price range, such as the Toyota Yaris. The big question here is whether you have any equity in the Kia Sorento and whether you’ll have to pay that off first. (more…)

In these days of tighter credit in virtually all markets, consumers with less-than-perfect credit who shop new car dealerships are increasingly being steered to used vehicles rather than new vehicles.

The reason is that someone with a relatively low credit score — usually less than 700 — may not qualify for the higher monthly payment of a new vehicle.

A salesperson who doesn’t want to lose the customer may recommend a “certified” used vehicle. Typically, such a vehicle is no more than 3 years old and has the added benefit of being inspected and brought up to a manufacturer’s standard for a used car. It also typically comes with an extended warranty.

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Dear Terry,
We purchased a 2003 Cadillac CTS with a loan amount of $23,442 at 7.75 percent. Our monthly payment is $474 over five years. The car has 32,000 miles and is in excellent condition.
My husband wants to trade for a car that uses less gas. We don’t average more than 40 miles a week, since we’re retired. I think he is wrong. Please advise.
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Dear Terry,
We owe $17,379.40 on our auto loan. We have already purchased a smaller vehicle that gets better gas mileage and has a slightly lower monthly payment. You said to give back the original car to the dealer or the finance company only as a last resort. Help.
— Gregory Merkel

Dear Gregory,
If you simply turn the old vehicle back to the finance company without paying off the balance, it will damage your credit score the same as a repossession. Try selling the old vehicle. Since I assume you owe more than it’s worth, try to find the cash to cover the shortfall. (more…)

Dear Terry,
I bought a car in 2006 and my daughter bought a similar car in 2006. My car was purchased June 29 and hers was purchased around July.
Something went wrong with the paperwork on my car and I had to redo it. There was also a problem later with my daughter’s paperwork. According to the salesman, they needed my signature on both papers and my daughter had to also re-sign her papers.

My daughter defaulted on her car loan, and now her loan company is after me for payment. According to her loan company, my name is the only one on the deal. They came and took her car and sold it.

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Dear Terry,
I recently went into a dealer looking to buy a car. When we started talking about financing, the dealer brought me interest rates that were higher than usual.
When I confronted the dealer about how high the rates were, he asked what I would like to see. I told him in the range of between 4 percent to 5 percent.

About two minutes later, he came back to me with about what I wanted. Do the dealers get any kind of bigger kickback to finance autos at a higher rate? Or do they just not care and go with the lender they normally work with?

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Dear Terry,
I have severe buyer’s remorse after taking delivery of a new Mazda 3i three days ago. I’ve only driven the car 15 miles since I bought it, and actually did not take it to work today out of fear.
The day after I bought the car (mind you it is a newer model than the one I traded in), I saw that it is not as well rated for safety as other cars of its size and class. I am concerned because I am on the road 100 miles a day (50 to and from work). (more…)

Dear Dr. Don,
I’m 19 years old and have a big problem on my hands. I work as a civilian for the government and need a way to save money on gas.
My current ride is a 2004 Chevy Silverado LS extended cab. I’m paying $400 a month on a loan that is in my uncle’s name, with a loan balance of $12,500.

The truck gets about 15 miles per gallon in the city and 25 mpg on the highway. I live about 30 miles from work and there aren’t any mass transit or carpool options available to me.

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It long ago ceased to be news that the new-car industry is in disarray. It looks like overall car and truck sales will fall to levels not seen since the early 1990s, and manufacturers are offering all manner of incentives.

But one thing that may surprise shoppers when they go to a dealer is that it’s possible to find 2007, 2008 and even 2009 versions of the same model on the lot, all carrying various incentives to lure buyers. (more…)

A few weeks ago, I responded to a reader’s question about the possibility of putting the purchase of a new car on a credit card.

Based on my personal experience — and that of several friends who tried to do this — I replied that most dealerships won’t allow the full purchase price of a car to be put on a credit card.

Some will allow part of the purchase price — sometimes as much as $5,000 — to be put on a card. But they balk at putting the full price of a car on a credit card because the dealership must pay the credit card company a fee that ranges from 2 percent to 3 percent of the purchase price.

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Dear Dr. Don,
Please help! I have been divorced for more than eight years, and I was stupid enough to allow my ex-husband to put his car and motorcycle in my name. The car doesn’t have a lien on it, but the motorcycle does because he’s still making payments on it. Both are under my insurance.
He refuses to put them in his name because he has bad credit. What am I supposed to do? Sometimes he doesn’t give me the money and I end up making the payments so I don’t get bad credit!
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Dear Terry,
In an earlier piece, you advised rebuilding your credit by getting a high-interest credit card. I have an auto loan that I was able to keep despite my bankruptcy. Does this qualify as credit rebuilding?
Also, I checked my credit score recently and it is 580. Could this score possibly get me an auto lease or is it too low?
— Sherri

Dear Sherri,
Making payments on a current auto loan will help your credit in the long run, but you can’t expect your credit score to rebound quickly. And I’m sorry to say that a 580 score probably won’t get you a lease or even a conventional loan that doesn’t carry a painfully high interest rate. (more…)

Dear Terry,
Is there anything to beware of when it comes to gap insurance coverage?
— Steven

Dear Steven,
Gap insurance usually comes into play on a leased vehicle. It’s supplemental insurance to cover the difference between what a vehicle is worth and what is owed in the event the leased vehicle is totaled in a crash or is stolen and not recovered. The cost is usually a part of the lease. (more…)

Dear Dr. Don,
Let’s say I have a car loan at 4.9 percent interest and still owe $10,000 on the car. I also have a 15-year mortgage with a $65,000 principal balance at 5.125 percent.
What would be the better option to put the money toward? If I had $5,000 to put down toward one loan, which loan should I choose to save me more in the long term?
— Mark Misgauging

Dear Mark,
It’s an interesting question. Assuming you can use the mortgage-interest deduction on your income taxes, the home loan has a lower after-tax cost than the car loan. Conventional wisdom would have you pay down the higher-cost car loan. (more…)

Suppose you’re nearing the end of the lease on your luxury sedan, and you’re pondering your options.

You can simply turn the vehicle back in and walk away or get into a new lease.

Or, you could buy the vehicle and possibly turn a profit.

Until recently, people leasing some luxury cars often found that their vehicles were worth more than the lease contract’s residual — the amount the car can be bought for at the end of the lease. This was particularly true if they had fewer miles on the odometer than allowed by the end of the lease.

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Sales of new cars are a good bellwether for how the economy is affecting the average consumer — and the indication is that a significant number of people are too concerned about their financial situation to buy a new vehicle this year.

In addition, sales of collector and exotic cars may be an equally good sign of how the well-heeled among us are doing.

Last month’s sixth annual Barrett-Jackson Collector Car Event in West Palm Beach, Fla., showed there’s still plenty of money being tossed about by people who want to buy cars they coveted as kids.

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Dear Terry,
Are you aware of any Web sites or publications that provide an honest listing of the best leases (including special programs and manufacturer support, etc.) currently available? I have been having trouble locating this type of information.
— Matt

Dear Matt,
I have found the Edmunds.com is the best site for this information. They detail any special lease deals, rebates, etc., according to the make and model you’re considering.
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Dear Terry,
I am looking to purchase an Acura RSX Type-S, and it is an out-of-state purchase. I’m currently located in Connecticut, but the deal will take place in New Jersey.

I am completely clueless about interstate private-party auto loans. Do they differ from other auto loans? Or will I need to apply for a personal loan?
—

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Dear Terry,
I have a question about voluntary repossession. I got ripped off over a 2002 Chevrolet Tahoe. Now that I want to trade this car for something smaller, the car dealers won’t give me anything because of the high payments.
I have good credit. So, I was thinking about voluntarily repossessing this car and buying another one. Please give me advice. Am I stuck with this Tahoe for a couple more years?
— Nicole

Dear Nicole,
You may have good credit now, but you won’t if you simply dump this vehicle back on the lender. A voluntary repossession is as bad on your credit as having the repo guy snatch the vehicle in the middle of the night. (more…)

If you’re looking for a good used car that gets great gas mileage, you’ve probably shopped for what conventional wisdom says is the “best” on the market: Honda and Toyota.

When buying used, it’s hard to go wrong with a Honda or Toyota. However, the downside is that those cars tend to be at the high end of the price ranges for their classes.

So what’s a bargain hunter to do?

Looking deeper into the market, you’ll find cars that are overlooked gems. These bargains have good reliability records, offer space and value for the money, and get at least 20 miles per gallon and as much as 36 mpg, according to federal government ratings.

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Dear Terry,
Is there such a loan for cars where the payment increases over the loan period? Right now, the job I have won’t allow me to pay a normal car loan payment. However, I’m studying to be a certified nursing assistant, so eventually I’ll make more money and will be able to afford a higher payment.
The reason I’m asking is I have 373,000 miles on my present car with bad tires, bad rear axle, bad rear-axle bearing, transmission slippage and so on. It would cost more than my 1994 Jeep Cherokee is worth to repair it.
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Dear Terry,
I own a 2004 Ford Expedition that I purchased used in September 2007 for $24,000. I didn’t expect gas prices to get where they are.
Since the Expedition only gets 13 miles per gallon, I wanted to dump the car for a smaller, more fuel-efficient vehicle. However, I am completely upside down on my loan. I owe $23,000 and the Ford dealership told me they would only give me $10,000, even though Kelley Blue Book rates it at $16,000. (more…)