Your rates of bank

Dear Terry,
I have a new car that I just brought about three months ago. I am still paying on it but I really don’t like the car. Can I trade it in this early?
— Cynclaire

Dear Cynclaire,
You can always sell or trade in a car, but in your case — assuming you financed the purchase — you almost certainly owe more than the car is worth. That means you’ll likely have to pay thousands of dollars to cover the difference between what the car is worth and what you owe.

A dealer may offer to roll over that difference into the loan on the new car, but that path will eventually lead to disaster because you’ll be even deeper in the hole. My advice: Learn to live with the car until you can afford to trade it in without having to come up with cash to cover the loan balance.

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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,
I have a 2002 Chrysler Sebring convertible in very good condition with only 34,000 miles. The high Blue Book value is $8,000.
Would I look like an idiot if I went into a Toyota dealership with it as a trade and told them I wanted $12,000 for it and was only willing to pay $1,000 over sticker for a new two-wheel-drive, four-cylinder, Dodge PU Club Cab with all the bells and whistles?
— Laura

Dear Laura,
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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…)

Dear Terry,
I have just filed for bankruptcy (due to a subprime mortgage debacle) and I am in need of another car. How can I re-establish my credit to get a car loan without getting completely ripped off with an outrageously high interest rate?
— Daisy

Dear Daisy,
It’s likely that the only lenders who will offer you a loan will be those that specialize in high-risk borrowers — of which, by virtue of the bankruptcy, you’re now one. (more…)

Dear Terry,
Twenty-eight months ago, my wife went out to a Cadillac dealership, traded in her paid-off truck and leased a 2007 Cadillac Escalade. I was not present. They took her $40,000 truck and applied $20,000 toward the new lease.

Our financial situation has changed, and she was not able to pay the new truck note for the past 2

Dear Terry,
I purchased a Honda Element in May 2007, when I had a great-paying job. I have lost that job due to having to move because of domestic abuse. I am living in a small town with two boys and I am having a very hard time finding a job.
In short, I can no longer afford my car. My monthly payment is $495. My mother signed on the loan with me and I have ruined her credit now due to the fact that I have fallen behind on my payments.

How do I get out of my loan and still save my mother’s credit? I truly cannot afford a $500 car payment. I still owe $22,000, yet my Blue Book value is only $14,500. Please, can you give me any advice?

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Would you spend $55 to make your time on the road safer?

For little more than the cost of a fill-up at the gas station, you could increase your ability to deal with most road or safety hazards. Yet few cars carry such essential items, which could prove more valuable than a $2,000 satellite navigation system.

Here’s my list of essential safety items (and their cost) that should be in every car. They are available at most auto parts stores and some department stores.

Can of flat-repair sealant and compressed air ($5.99 or less)
This simple-to-use item — attach the can’s tubing to your tire’s valve stem and press the button on top of the can — seals most tread leaks and pumps up the tire so you can safety drive to a service station.

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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…)

Although the price of gasoline is heading downward to levels that are merely outrageous rather than insane, consumers are still rightly concerned about various issues.

Here are two questions raised by readers that cover important issues worth explaining in greater depth:

Does driving on ‘empty’ hurt the engine?

Dear Terry,
With gas as expensive as it is, I’ve been driving my car until the gas light comes on. But this goes against everything my dad taught me. (more…)

Dear Terry,
I am leasing an ‘08 Honda. I needed it when I leased it, and the finances weren’t tight like they have become now. How can I lower the payments from $500 a month to maybe $400 or $425?
— Pedro

Dear Pedro,
Your only option would be to buy out the lease and then finance the car with a conventional loan with a longer term that would result in lower payments.

But that’s not going to be easy.

First, you’ll pay a penalty in interest and other costs for early termination of the lease, which means you would probably have to pay more than the car is worth now.

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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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