NEW YORK (MainStreet) — There is a perfect storm of sorts at work in the automotive market.
Interest rates are at record lows (down 18% for buyers with good credit in the past year), oil and gas prices are still cheap and the average U.S.-owned vehicle is more than 11 years old, according to WalletHub's 2015 Auto Financing Report. In its survey of 150 auto financers nationwide, WalletHub reports that the "good places to start" are carmakers (where rates are 49% below average) and credit unions (23% below average).
Not so with big banks (where loan rates are 10% above average) and regional banks (where rates are 43% above average). Survey researchers deem them "secondary options" for auto buyers this summer, which seems an understatement.
Manufacturers Toyota, Volkswagen, Kia, Ford, Dodge, Nissan and Cadillac offer the lowest financing rates. If it's a lease you're mulling, Volvo, Audi, Ford and Toyota have the best offers, WalletHub says.
For consumers looking to shift into higher gear on a new car or truck purchase, buyers who've been there and done that have advice.
Andrea Woroch, a consumer savings advocate in Santa Barbara, Calif., was forced to buy a car when the engine in her 2005 Jeep seized recently.
"I had set a budget first," Woroch says. "The key for car buyers there is to review your currently monthly bills versus income to figure out a comfortable monthly payment that you can afford. Then begin researching car options that fit within that budget. Doing it the other way around will often lead you to overbuy and get stuck feeling financially strained."
Woroch also advises using Kelly Blue Book or TrueCar.com to find the estimated average price paid and fair market price for cars you're considering. Check Costco too, she says.
"Costco members are privy to an exclusive auto pricing program for participating retailers which is usually below the manufacturer price. Make sure you have your member card ready if you're asking about this price, or consider joining for the year. The one-time fee will be paid for by the savings you get from the warehouse deal," she says.
If trading in your old car is part of the deal, your best move may be to take the deal private. "If you need to sell your current car, you can expect to get 15% to 25% more from a private party versus what you'd get trading it in to a dealer, depending on the vehicle's condition," says Kelly MacRae, vice president of strategic and financial planning for Beacon Pointe Advisors in Newport Beach, Calif. "Also, if you decide to purchase your car from a dealer, timing is everything. Consider waiting until the end of the day when salespeople and managers are anxious to close the deal and get home."
If you opt for a used vehicle, make sure to buy on sites that require a Vehicle Identification Number. "The VIN is a vehicle's fingerprint and is vital for tracking a vehicle's life — its use, misuse and demise," says Kristen Andersson, head of communications and strategic marketing at San Francisco-based Instamotor, an online vehicle sales marketplace.
Make sure to get a mechanical inspection too. "We always recommend a mechanical inspection by a certified mechanic," Andersson says. "Putting a vehicle up on a lift is the only way to uncover hidden issues."
— Written by Brian O'Connell for MainStreet