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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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Dear Terry,
Why is it that in all of these articles about fuel-efficient vehicles, no one ever points out the fact that we have had cars in the past with better fuel economy than those you list in the seven sippers article?
I have a 1998 Pontiac Grand Prix GTP Supercharged. It is a full-size car with numerous luxury items — head-up display, automatic dual-zone climate control, heated six-way adjustable driver seat, sun roof, electric everything, to name a few. (more…)

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,
We are thinking about returning our car to the credit union. My husband had a big salary cut 10 months ago and over this period we have struggled to make the payments but managed to make them on time.
However, we are digging ourselves into credit card debt trying to keep our credit in good standing. How much will this affect our credit and is there a better option for us, like selling the car and making payments for the gap with the bank?
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Dear Terry,
My husband co-signed an auto loan for our son. The car is registered in my son’s name — my husband’s name appears on the loan only.
If our son was involved in an accident with injury to another party, could we be sued or in some way held responsible?
— Susan

Dear Susan,
In our litigious society, almost anyone can sue anyone else. So, there is always the risk that your husband could become involved. (more…)

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…)

Dear Terry,
I used a balloon payment loan to buy a car and I am coming up on the due date. If I take out a loan to finance the balloon payment, which category of annual percentage rate applies — the rate for buying a used car or the rate for a lease buyout?
— Brad

Dear Brad,
Each lender treats this situation differently. You can likely find one that will treat it as either a refinance or a lease buyout, each of which should have a lower rate than a straight used-car loan.

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A good price on a car or truck is no deal at all if you don’t like the vehicle.

Each year, I drive between 50 and 70 new vehicles. These come from the manufacturers’ press fleets and I drive many of them for a week in the sort of everyday situations that most drivers experience.

I rate them not only for fuel economy and performance, but for their overall value and the driving satisfaction they deliver.

So, with the 2008 model year officially coming to a close — and with manufacturers and dealers slashing prices — here are some of my picks for vehicles you should consider purchasing. My picks include sedans, crossover SUVs, full-size SUVs and even a sports car.

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Dear Terry,
My FICO score is 500 and I was supposed to take over my girlfriend’s car, a 2005 BMW 645 that she agreed to buy for me on the assumption that I would get financing in three months. We owe $57,000. I can’t get financing, but I make $130,000 a year. What can I do?
– Robert

Dear Robert,
I won’t ask how someone who makes $130,000 a year has such a low FICO score. But to address your main question, there are subprime lenders who may be willing to make you a loan. Expect the interest rate to be as high as 21 percent, which could mean payments well above $1,000 a month. (more…)

What a strange summer.

Gasoline prices skyrocket above $4 a gallon and car buyers scramble to switch to smaller, more fuel-efficient cars — or stop buying new vehicles altogether.

Meanwhile, Detroit manufacturers pull back or stop offering leases because of huge losses on SUVs and pickups.

Then, gasoline prices slowly start to fall back below $4 a gallon.

So what does the future hold for consumers?

Some clues started to surface this week.

Chrysler — the manufacturer that gave its dealers a week’s notice before pulling all leases starting Aug. 1 — has started doing what it can to make its vehicles more affordable by cutting sticker prices, by as much as 40 percent on its Dodge Ram 1500 pickup.

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Dear Terry,
I co-signed a car note for my son and he is five months behind on the car. Do you have any suggestions for him to bring the car note current? Neither he nor I have all the money to bring it current. He could do weekly payments, possibly.
— Mary

Dear Mary,
If your son is five months behind, I’m surprised he still has the car. (more…)

Dear Terry,
We are thinking of buying a new car. Would it build my credit if I apply for a car loan separately instead of doing a joint loan?
My husband has a 20- to 30-point higher credit score, so he is getting a better interest rate. But I would still like to apply for a loan in my name as I am thinking that would help build my credit history.

Am I right in assuming that? Or am I wasting a few dollars every month just thinking I am doing the right thing by not taking the car in my husband’s name?

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Dear Dr. Don,
We have an auto loan with CitiFinancial at 16.99 percent. The loan is in both my husband’s and my name. I called CitiFinancial to see if there is something that can be done about this.
I was told that I have a simple interest loan and it has to stay like this until the end of the loan, unless I pay it off early.

We pay nearly $1,600 in interest every year and I just think this is ridiculous. Is there anywhere else I can get this auto loan refinanced at a better rate?

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Dear Terry,
I’m currently paying 16.9 percent on a loan for a used ‘07 car, but I’m sinking fast in payments. I bought the car in October 2007 and am financing for roughly seven years.

I’m not too keen on keeping the car, so if I can sell it, that would be my best option. But at this point, I’m almost prepared to voluntarily repossess it. I’m still young and don’t have many accounts open, but I don’t know what to do or who to turn to.
– Tara

Dear Tara,
You don’t say what your credit is like or whether you’re current on the car loan. If you’re current, you should try to refinance your loan. For a 2007 model car, you should be able to get a loan for about half what you’re being charged now. (more…)

For all the bad news that seems to come out daily about the automobile industry, it’s a boom time for some manufacturers and their dealers.

Honda dealers are reveling in the stampede of buyers looking for fuel-efficient cars. Sales of the subcompact Fit sedan are up 53 percent over a year ago, and the Civic was the best-selling car in the United States in May.

Toyota is doing equally well with its Corolla and, of course, its Prius.

Some dealers are reporting that they have almost no backlog of fuel-efficient cars and that it’s not unusual for cars to be snapped up on the same day they’re unloaded from the transporter.

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Dear Terry,
I have a 2007 Dodge Charger R/T. We are way upside down on the car and have a high payment. I want to know what options, if any, are available to get a cheaper payment.
The Blue Book value if it is in great condition is $23,000 and — get ready for this one — we owe $41,000 because we were also upside down on the previous two vehicles we purchased. All that has been added to this one and I would like to refinance it and try to get a cheaper payment. Is that even possible?
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Dear Terry,
Why does the Toyota dealership in Daytona Beach, Fla., deem it good practice to add $3,000 to $6,000 to their Prius manufacturer suggested retail price, while St. Augustine Toyota (45 miles away) quotes an MSRP with no markup? They are both in the Southeastern Toyota district.
You don’t suppose Daytona Beach is taking advantage of people who really want to help reduce gas consumption and planet pollution, do you?
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