A buyer's guide to car shopping

San Jose Mercury News (MCT) - Are you in the market for a car, or think you might be sometime soon? If so, there's a lot to sort out before you drive away in your new vehicle.

In today's car market, new-car manufacturers are offering an ever-changing array of incentives _ but used cars have their attractions, too. Financing may be harder to get from auto dealers than it once was, but savings banks and credit unions can be good sources for loans.

Experts offer the following tips for would-be car buyers searching for a set of wheels.

BUY NOW, OR WAIT?

"Do you really need a new car right now, or is there a way to eke a few more months out of your old car?" said Eric Evarts, associate auto editor for Consumer Reports. If you've got an older car that lacks modern safety features, you're more likely to be in the market to buy a car. But repairing your old car may make more sense than replacing it, Evarts said.

When zero-down financing and easy credit terms ruled, a lot of people got used to buying a new vehicle when repairs on their current car got to be pesky. Still, Evarts said, "brake jobs aren't that expensive" compared with new-car expenses. Even shelling out for a "catastrophic" repair like a $5,000 new engine might be wiser than buying another car, said Jack Gillis of the Consumer Federation of America, and author of "The Car Book." If you add up a 10 percent down payment on a new vehicle, plus higher insurance and monthly loan payments, he said, "It's very easy to eat up that $5,000 and you'll see how much more that new car will really cost you."

NEW OR USED?

If you really do need to buy a car, good deals abound on new models.

"There are some truly extraordinary values, compared to the manufacturer's suggested retail price," said Gillis of the Consumer Federation. With a new car, buyers can get more options in fuel economy (hybrids, for example), the latest safety and technology features, updated styles and no mystery stains on the floor mats.

Gillis said buyers looking for used cars in the $7,000 to $12,000 range _ average for used cars, he said _ might want to consider some new cars now selling at discount in that price range.

But there are plenty of good-quality used cars for sale these days, said Consumer Reports' Evarts. That's partly because leasing has been popular in recent years, and those cars _ usually with low mileage _ are being returned to dealers now, and offered for sale.

"I think now is a great time to be looking at a used car, and I don't think that will continue for more than a couple years," Evarts said. That's because the supply will dwindle as more people opt to save money by buying used cars. "You can find a good quality, low-mileage used car for not a lot of money right now."

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Philip Reed of Edmunds.com, a car research and buying site, agreed that used cars are growing in popularity. "We're in an economizing frame of mind, as a country," said Reed, who wrote "Strategies for Smart Car Buyers."

"I highly recommend people buy used cars. At the end of one year, the new car has depreciated by 30 percent. The depreciation is your savings, it's that simple."

Data from Edmunds.com shows that 27 percent of car shoppers who went to showrooms intending to buy a new car in February ended up purchasing a used one instead. That was a sharp increase from the previous three months when 16 percent of shoppers switched from new to used.

But not everyone relishes the unknowns that can come with purchasing a used car (Did the owner really change the oil often? Will the sunroof leak in the rain?).

Also remember: Buying a used car usually means you'll need to pay with cash.

HOW DO I WORK WITH DEALERS?

Know that dealers' incentives for new-car buyers are changing constantly, so do your research close to the time you plan to buy, said Reed of Edmunds.com. "Employee discounts" offered to the public on one model this month might not apply next month, for example.

Also, comparison shopping is more important than ever. Dealers in one part of a metropolitan area might offer lower prices than in another, Reed said.

After you've researched the car you want, the best way to get the best price is to "pit two or three dealers against one another," said Gillis of the Consumer Federation. If you show dealers you're a bona fide buyer and they know they're bidding against each other, they'll give you their best price. And remember, Gillis said: "You have the most important tool in the negotiation, and that's the 180-degree turn."

WHERE DO I LOOK FOR USED CARS?

You can find used cars on dealers' lots, at independent used-car lots, through private-party advertisements in the newspaper, and through friends and family.

Gillis said buying through friends and family is best, because you're likely to get an honest evaluation of the car's history, and your friends aren't likely to sell you a problem car.

Another option is to look for used cars that have been "certified" by car dealers. Those programs don't mean the car is flawless, but indicate the dealer has given "some attention to the critical components on the car," Gillis said.

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Private-party sales are his least favorite option, because he said they include everything from "fabulous deals" to "rebuilt wrecks," and it's not always easy to tell the difference.

On the other hand, Reed of Edmunds.com. said he loves buying from private parties, because "prices are good and highly negotiable ... to me, it's like a treasure hunt."

HOW DO I AVOID GETTING A CLUNKER?

Experts suggest that prospective buyers take the used car they're considering buying to an independent mechanic to get it inspected. That's especially crucial if they are buying from a private party, as opposed to "certified pre-owned" programs offered by some car manufacturers and dealers. The inspection could cost $100 or so, but it's worth the investment, said Gillis of the Consumer Federation.

Another good tool is the online Web site Carfax.com, Reed said. Buyers enter a car's vehicle identification number to review the car's history, including the number of previous owners, prior service records, and accident/damage reports, among other information.

WHAT ABOUT FINANCING?

Leasing deals have largely dried up, said experts, and the best dealer-financed rates are only available to buyers with excellent credit. Experts said buyers should expect to put 10 to 20 percent down to get a car loan.

Edmunds.com's Reed and others recommend getting preapproved financing before heading out to buy. But if the dealer's financing turns out to be better than what the buyer had already lined up with another financing source, he or she can opt to apply for it.

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© 2009, San Jose Mercury News (San Jose, Calif.).