The Salina Journal from Salina, Kansas on June 6, 1998 · Page 8
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The Salina Journal from Salina, Kansas · Page 8

Salina, Kansas
Issue Date:
Saturday, June 6, 1998
Page 8
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;A8 SATURDAY, JUNE 6, 1998 CONSUMER THE SALINA JOURNAL V AUTO BUYING Got the new car itch? Be sure you do it right DOUGLAS ARMSTRONG Milwaukee loiinml Sentinel Doing your homework can save you money when it's time to deal The symptoms of this bug are easy to spot: The urge to go out and kick a few tires; the itch to take a demonstrator for a spin. Hut be warned. Catching a nasty case of new car fever this time of year can result in financial trauma later. But if you're going to do it anyway, you might as well do it right. Doing it right means paying attention to your pocketbook as closely as you do ihe details of the deal. It means ;;ot confusing the loan you qualify lor with the loan you can afford. It means considering all the hidden costs of new car ownership, including insurance. "I don't think people realize what it costs to drive a car," says Mike Arnow, a certified financial planner and accountant in Milwaukee. "The IRS reimbursement rate is 32.5 cents per mile. Does the IRS iiive you more than it's worth? I think not." If you drive 12,000 miles in a year, that's $3,900, or $325 a month. Y CONSUMER CORNER Arnow advises clients to limit the shopping list to vehicles that represent no more than one-third of a year's salary. "It fits well in the budget," he says, as long as you aren't putting on a ton of miles each year (buy a cheaper car if you do) and you are not trading in every year or two. "My recommendation is based on holding a car four or five years," Arnow says. "If you plan to hold on to a car for 10 years, you can go for a more expensive car." Besides shopping sensibly, doing it right also means knowing how to negotiate a purchase by arming yourself with well-researched, accurate facts rather than cagey arguments. "As anyone who's bought an in- demand import over the last several years knows, a fair profit in the opinion of the dealer and the salesperson is whatever you will tolerate paying," says Kathleen Wondolkowski, a consultant for Runzheimer International, a consulting firm. Wondolkowski recommends doing your homework before you shop. "The better prepared you are when you walk through the dealer's door," she says, "the more likely it is that your best offer on a car will be accepted. The dealer will be investing much less time and effort with you than with a shopper who needs to be cajoled into making a decision." According to Edmund Publications, which publishes car-pricing data, your goal should be to pay between 2 percent to 5 percent over dealer cost, "not the 8 percent to 10 percent the dealer wants you to pay." Information on dealer costs is available from a number of sources, including new ones cropping up on the Internet all the time. "Note that actual dealer cost is usually less than the quoted invoice price," Wondolkowski says. "The dealer often receives special incentives to sell certain models, and most dealers receive a rebate of 3 percent from the manufacturer on the cars they sell." Tips for buying Wondolkowski has assembled a list of tips over the years on how to buy a new car. Among them: • Deal separately on options. "Optional equipment represents a substantial profit to the dealer," she says. "The discount you receive off the base price can easily be recovered by the dealer through various add-ons." Ask about option packages. They may combine some features you want at a discounted price. • Decide when it's to your advantage to order from the factory rather than from dealer stock. You can generally get a better deal on a factory- ordered car, Wondolkowski says. However, when inventories are high or the dealer is eager to reduce overhead, she says, "buying a car off the showroom floor may be more price advantageous." Also, the end of the month is a better time to shop because dealers may be more eager to meet their monthly quotas. • Leave the trade-in for last. "Salespeople love to combine the value of your trade-in with the cost of a new car, thus confusing an already complicated transaction," Wondolkowski says. It is true you can often do better selling your old car yourself rather than trading it in. However, when you trade in, you only pay sales tax on the net difference between the new car and the old. • Watch out for unwanted add- ons. "Auto dealers can be especially creative when it comes to tacking additional charges onto the price of a car," Wondolkowski says. Be sure the dealer's price quote will be your final cost, advises Edmund. How you pay One last component of a smart car purchase is how you pay. Cash is always the cheapest alternative. The only time it isn't, according to the Federal Trade Commission's Bureau of Consumer Protection, is when you can invest your cash at an interest rate higher than the loan rate. So, you don't have that much cash in your money market account? Should you jump on one of those 2.9 percent financing deals? "The going rate on car loans is about 9.5 percent, even when you do one of those 2.9 percent deals," says Arnow. By electing to take a low-interest loan, you relinquish the cash-back option, "which works out to 9.5 percent" over the life of the loan if you compute the math, says Arnow. You should shop your credit needs the same way you do your transportation needs. There is competition in car loans. Credit unions may offer a lower rate. Arnow suggests using a home equity loan to buy a car, since the interest is tax deductible and a car loan is not. Arnow points out: "9.5 percent is 6 percent after taxes" with a home equity loan. My own feeling is that there is a risk in using your home as an aluminum-sided credit card. Especially if you have trouble handling credit sensibly. Windbreakers by GapKids recalled . By The Associated Press SAN FRANCISCO — GapKids voluntarily has recalled thousands of pullover nylon windbreakers because paint on the zippers has too much lead. There is no immediate health danger but exposure to high levels of lead could be hazardous to children if ingested, the company said. The hooded anoraks have a "Made in Russia" label. GapKids said it will give a refund to customers who return them. Be We Will NO! Undersold on Lane Recliners! Furniture C- Bedding 110 N. W. 3rd •'Milne »™ 735-263-3361 [785] 263 33G1 FREE DELIVERY Membership resales certainly carry a risk Dear Attorney General Stovall: Many years ago I purchased a campground membership from a nationwide company for about $5,000. My family & used the membership for several years. Unfortunately, the company has filed for bankruptcy and some, if not all, of the campgrounds are closed. Recently, I was contacted by a company in Florida that promised to resell or transfer my membership to another company for $7,000. In order for it to do this, I have to pay $460 up front. The broker says that this CARLA STOVALL Kansas Attorney General is a one-time-only fee. It seems like a small price to pay compared to the money I will make when the membership is sold. However, I am wary of giving the company my money in advance. What do you think of this offer? Dear Kansas Consumer: You were smart to question the up- front fee requested by the "resale" company. Consumers often hear of great offers in reference to timeshares, campground memberships and resort properties. Usually consumers who invest are disappointed by the reality of what they have acquired with their substantial investment. Often, the campgrounds are neglected or undeveloped, making camping there an unpleasant experience. In some cases, illness or other factors may prevent consumers from utilizing their campground membership. In other cases, the company that owned the campgrounds goes out of business. Whatever the reason, consumers who have invested and cannot use the property are prime targets for resale companies that promise to sell the property at a profit. Once it receives the up-front fee, the resale company usually disappears, and no attempt is made to sell the membership or memberships may be sold for its current appraised value, which may be only a few hundred dollars or less. The result is further losses for the consumer. In your particular case, since the company holding your membership is in bankruptcy, the value of your membership is not certain at this time. Any resale of your membership would require full disclosure to the prospective buyer of the bankruptcy situation and probably would discourage them from purchasing. If you no longer intend to use the membership for camping purposes, it may be ill-advised to invest more money in transferring to another resort or park system. If you wish to continue to camp, you may want to investigate other resort or park systems that would allow you to transfer into their system for a minimal fee or alternately just for the cost of membership dues. Please do your homework by checking with the Better Business Bureau, state attorney general where the company is located and any other organizations within the industry to determine the history and viability of a prospective company. NATIONAL NURSING ASSISTANTS WEEK June 4 through June 11 S moky Hill Rehabilitation Center would like to congratulate and applaud our CNAs. Their dedication to our residents shows in the loving care delivered each and every day. 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