I was glancing through the the paper this weekend and noticed the excellent deals on cars and trucks. With spending down, consumers hurt by gas and housing, and inflation, auto manufactures are becoming desperate. Great rebates, low APR, and extended terms. If you have been holding off to buy a new car, this may be the time.

Some of the deals I saw:

Chevy – 0% for 72 months on most models
Dodge – Large rebates (Up to 8K on trucks)
BMW – 3.9% for 60-months on select models
Ford – 0% for 72-months.
and many more.

There are lots of great deals, but beware of the many deals mixed in that are horrible. When you see an add for a $15K car at $250 a month, you might think it is a good deal until you read that it is a 60-month closed end lease. Not a good deal.

If you are going car shopping and looking at the ads remember these key things:

– Don’t buy based on monthly payment. The teaser rates are not always the best deals. Creative financing can give the appearance of a good deal, but in the end you will pay more. Know what your payment should be based on the price of the car. There are several posts to tell you how to figure this out.

– Do not lease now! Why, because car values are horrible right now. In prior posts, I explain how lease payments are calculated in detail, but in short, your payment is largely dependent on how well the car holds its value. If the car is anticipated to lose value fast, your monthly payment will be higher. Since leasing is basically like renting, anything that gives you a higher payment makes a bad deal. To add to the problem, in the next few years you will see a host of manufactures coming out with more efficient models, the banks know this and as a result have assigned lower residual values to the cars. If you do have to lease, make sure you understand every point (residual, term, down payment, lease factor, mileage penalty, and rebates) so that you can compare a buy Vs. lease.

– Don’t trade in your car. I am always amazed on this one. People will spend hours negotiating a $500 option, but then have no problems losing several thousand on a trade. Dealers have always been bad, but in today’s market you car is almost worth nothing as a trade in. Be patient and sell it. If you get something in between the market price and what the dealer would offer you win.

– Take your time. The market is in your favor. If you have to leave, don’t think you will not ever get the deal you have been offered. More often than not, the sales person will call back with a better offer.