Vehicles That Offer the Best Retained Value

Blue Jeep Wrangler on scenic overlook with lake in backgroundThe following vehicles manage to best combat the effects of depreciation
One of the major drawbacks of purchasing a new vehicle is the steep depreciation that takes effect right after the purchase is completed. Once a vehicle is driven off the lot, its value usually begins to plummet significantly. Still, there are outliers in the automotive industry that retain quite a bit of their initial value. If drivers look to sell their vehicles down the line, these outliers will generate the best return on investment.

Spanning across several different segments and brands, here are just a handful of vehicles that offer the best retained value, according to experts at Kelley Blue Book.

Compact Car: 2017 Subaru Impreza
Subaru vehicles are some of the only in the industry to offer all-wheel drive standard, making them an increasingly popular choice, especially in areas with harsh winters. Because of this, many drivers hold on to their Subaru vehicles for far longer than usual, thus increasing their residual value. In the first three years, the 2017 Subaru Impreza manages to maintain 54.9% of its initial value. At five years, that amount only decreases to 36.1%, making it a standout in the sedan segment.

Compact SUV/Crossover: 2017 Jeep Wrangler
There really isn’t any other vehicle in the automotive world quite like the legendary Jeep Wrangler. Due to both its unique design and its cult following among automotive enthusiasts, the Jeep Wrangler has been able to maintain a high retained value for years. The latest iteration of the Jeep Wrangler manages to keep 60.6% of its initial value after three years have passed. Even after five years, the Wrangler manages to retain nearly half of its initial value at 47.4%.

Sports Car: 2017 Porsche 718 Cayman
Porsche is regarded as one of the world’s most recognizable and refined brands. Motorists who purchase vehicles from Porsche, like the 2017 Porsche 718 Cayman, don’t tend to turn around and sell those vehicles soon after, greatly increasing their resale value. In the first 36 months, the 718 Cayman’s value only decreases to 54.5% of its initial worth. At 60 months, the value is estimated at 39.5%.

Hybrid Car: 2017 Honda Accord Hybrid
Vehicles that utilize alternative energy and hybrid technology are quickly gaining popularity. Since such vehicles are still a minority in the industry, their rarity only makes their value grow. The basic version of the 2017 Honda Accord already retains a sizable amount of its initial value over time. Still, when the Accord is upgraded to its hybrid variant, the resale value in the first three years stays set at 42.7%.

Pickup Truck: 2017 Toyota Tacoma
Out of any segment in the automotive industry, pickup trucks managed to possess the highest retained value. The leader in this segment is the 2017 Toyota Tacoma. The Tacoma manages to achieve the highest-rated resale value of any truck, with 71.8% of its initial value retained after three years and 58.4% of its value retained after five years. According to Kelley Blue Book, those ratings make it the vehicle with the best retained value across all segments and brands of the automotive industry.

Originating from iconic brands and offering distinct collections of attributes, these vehicles manage to maintain a value that other automobiles tend to quickly lose.

Used with Permission. Published by IMN Bank Adviser Includes copyrighted material of IMakeNews, Inc. and its suppliers.

Advertisements

Common Auto Financing Terms

Defining the essential vehicle finance jargon you should know
Calculator with car keys on top of keypadPurchasing a vehicle from a dealership, be it a brand new or moderately used model, is rarely as simple as you would hope. What should be a basic transaction can quickly become a complicated discussion rife with uncommon phrases you wouldn’t hear elsewhere.

In preparation for the next time you intend to shake hands and sign on the dotted line to purchase a car, familiarize yourself with the following information.

Understanding pricing
Even before you step foot on a car lot and introduce yourself to a sales representative, it is crucial that you understand how each vehicle is given a price. If you’re researching vehicle prices, you will likely come across these terms.

The manufacturer’s suggested retail price of a vehicle (MSRP), also known as list price, is the manufacturer’s recommended price at which to sell a brand new vehicle. It’s not required that a dealer adhere to this amount, but according to the experts at Bankrate.com, it is required by law to be posted on the vehicle window’s Monroney sticker, along with the destination (freight/shipping) charge.

This differs from the invoice price, which is the amount the manufacturer initially charges the dealership to obtain and, in turn, sell the car to a buyer. The invoice price can be lowered by rebates, incentives, holdbacks and other ways to ensure the dealer makes a profit.

According to the DMV.org’s guide to understanding car financing, incentives and rebates can also be offered to retail customers looking to purchase the vehicle. The dealer may launch a short-term program to offer financial enticement to buyers in order to sell certain models. Manufacturers can also temporarily reduce the price of a model in a rebate program to make the cost accessible to more buyers.

Understanding financing
Once you negotiate and agree upon a fair price for the vehicle, the process moves to financing the purchase. Since most people don’t pay the entire bill up front, the transaction will be financed, distributing the cost across multiple years to be paid back with interest in monthly installments.

The Federal Trade Commission’s Consumer Information guide explains that the annual percentage rate (APR) measures how much the loan will cost the buyer and expresses it as a negotiable percentage. The APR includes not only the basic interest rate but also other fees involved with making a loan. The APR can be affected by many factors, from your credit history to local competition among dealerships. If you have poor credit history, based on an inconsistency of bill payment and financial dependability, you may be deemed a non-prime lender and receive a higher rate.

Interest rates can either be fixed, remaining the same throughout the entire repayment term, or are variable and fluctuate based on the current index.

Once you pay the initial down payment on the vehicle, the remaining balance will be financed and will consist of the principal, the amount of the vehicle cost still owed, the interest charges and any other fees.

Understanding your future
Ideally, you will continue to make monthly payments until you repay your auto loan on time. If you happen to pay it off early, Bankrate.com experts warn that you might be charged a prepayment penalty by the dealer, so inquire beforehand.

If, down the road, you believe you could get a better deal on the loan than you currently have, you can refinance the loan, either with the current lender at a new rate or with a different lender. Refinancing allows your loan to be reevaluated and potentially adjusted to a better rate.

According to DMV.org, there are two things you don’t want to have happen to your new car: be upside-down or have it repossessed. If you are upside down or underwater on a loan, the vehicle has negative equity and you owe more on it than it is worth. If you fail to make your payments on the vehicle, your lender might repossess your car, taking the vehicle from you without warning or court involvement.

Hopefully by understanding how the auto financing process works and what these common phrases mean, you can avoid any penalties or pitfalls and purchase your next car without issue.

Used with Permission. Published by IMN Bank Adviser Includes copyrighted material of IMakeNews, Inc. and its suppliers.

Vehicle Details: Best Cars for Summer

Get ready to hit the road in style
With the warmer months finally here, it’s time to start planning that summer vacation you’ve been dreaming of. Here are a few vehicles that are ideal travel companions whether you’re heading out alone or with the family.

Kia Soul
For the money, you can’t get much better than the newest Kia Soul. Currently residing as the No. 1 ranked Compact by U.S. News & World Report, the Soul was also named to the Best Cars for the Money and Best Cars for Families list. The Soul (MSRP $16,100) is available in Base, + and ! trim levels, and is now also available with a turbocharged 1.6-liter four-cylinder engine that makes over 200 hp. You can haul over 60 cubic feet of stuff, and the Soul can also be equipped with leather upholstery, ventilated front seats and a Harman/Kardon® audio system, making it a great choice for road trips.

Ford Mustang
There are few vehicles as iconic as the Ford Mustang, and whether you choose the Coupe (also referred to as Fastback) or Convertible, summer is always better with a sports car. Starting with the 2017 Mustang Fastback (MSRP $25,185), you get a 300 hp V6 with the Shelby GT350 cranking out a tremendous 526 hp. There are four engine choices. For those who want the open-air feeling of a convertible, the Mustang gives you the best of both worlds. “For the money, in the segment, nothing can touch it. Not even excuses,” says Autoblog about the Mustang. Available features include the SYNC infotainment system, Shaker Pro audio system and a navigation system.

Honda Ridgeline
A pickup may normally be associated with winter driving, but the 2017 Ridgeline (MSRP $29,475) isn’t your typical compact pickup. Currently sitting atop the U.S. News & World Report’s list of the best Compact Pickups, the Ridgeline has many features that set it apart from the competition and make it a great summer vehicle. A lockable in-bed trunk with drain plug can be used as a 7.3 cubic foot cooler, while the truck bed audio system and available 150-watt/400-watt trunk-bed outlets allow you to plug in a TV or other electronics, making it the ultimate party vehicle. “No matter how it’s outfitted, the Ridgeline is a no-brainer of a truck: unmatched in smoothness and comfort, and full of innovation well beyond its unibody construction,” Car and Driver writes. “It deserved far more sales than it netted in its inaugural generation. Here’s hoping this one realizes its full potential.”

Chrysler Pacifica
A minivan is a great vehicle for any family road trip and the new Pacifica ensures everyone will be comfortable and happy. It was recently named the Best New Family Car for 2017 by Cars.com. Some of the family-friendly features you’ll find are the available Uconnect Theater with 10.1-inch touchscreens and integrated games, and a 20-speaker Harman Kardon premium audio system. The Pacifica benefits from the convenience of Stow ’n Go and a class-exclusive Easy Tilt Seating that gives third-row passengers easier access to their seats. The Stow ’n Vac integrated vacuum helps clean up any messes that may happen along the way too. All Pacifica models are efficient, but you can also get a hybrid model—the only one in the segment—with a remarkable 84 MPGe rating.

Used with Permission. Published by IMN Bank Adviser Includes copyrighted material of IMakeNews, Inc. and its suppliers.

Do You Need a Co-signer for Your Auto Loan?

If you don’t have enough income or good enough credit, you may need a co-signer

As with any type of loan, your income and credit history will be major determinants of whether you are approved for an auto loan application. If you’ve been denied for an auto loan, you may want to consider using a co-signer.

Understanding how a lender determines loan approval
According to a January 2016 article in The Balance by author of “The Everything Improve Your Credit Book” Justin Pritchard, the lending company or financial institution must have reason to believe you will pay back the loan in order for you to be deemed worthy to receive the auto loan. A financial institution looks at two factors to determine whether you are credible: your credit score and your income.

Your credit history is a true indicator of how well you repay your loans; if you’ve borrowed money through loans previously and have successfully paid them off, or are making on-time payments, the lender will be more likely to believe you are a safe bet and will approve your loan application. On the other hand, if you have a poor credit score from defaulting on loan repayments, or don’t have any borrowing history, the financial institution may not want to approve you for a loan, explains Pritchard. To the financial institution, such a person is a bad investment, as the likelihood of the financial institution being repaid decreases.

Lenders also consider the income of the individual in deciding on a loan application, says Pritchard. In fact, the financial institution often calculates a debt to income ratio to determine if you make enough income to cover the expense of the loan payment each month.

Larger vehicles are generally more expensive than smaller ones, but smaller cars can also be more costly depending on the make and the engine build. The price of the vehicle and its calculated monthly payments under a loan in comparison to your monthly income will determine whether you have a low enough debt to income ratio to afford the monthly payments.

When to bring in a co-signer on your auto loan
If you have poor or no credit history, or your debt to income ratio is deemed too high by the lender, you will likely not be approved for a loan. In essence, the financial institution has determined you are too risky and will likely struggle to repay the loan, so it is unwilling to work with you.

A co-signer can help you meet the income and credit score requirements of the financial institution, as the financial institution considers the added income and credit history of the co-signer to the loan terms, explains Pritchard.

“Co-signing happens when somebody promises to pay a loan for somebody else. This happens when a [financial institution] won’t approve a loan (or it won’t approve the original application, but it’s willing to lend if a co-signer is involved),” says Pritchard in an October 2016 article in The Balance.

To the financial institution, the co-signer acts as a backup plan to collect payment if you default on the loan repayment. And if the co-signer has good credit history, the financial institution knows that at least one person on the loan has experience borrowing and repaying loans on time, adds Pritchard.

“The co-signer (who presumably has strong credit and income) promises to ensure that the loan gets repaid by signing the loan agreement with you. In other words, the cosigner takes full responsibility for the debt — if you don’t pay off the loan, your co-signer will have to do it.

“As a borrower,” Pritchard explains, “you need to have sufficient income and good credit to qualify for a loan. Using a co-signer therefore boosts your appeal as a borrower to the financial institution if you can’t meet the loan application requirements on your own.”

Used with Permission. Published by IMN Bank Adviser Includes copyrighted material of IMakeNews, Inc. and its suppliers.

What to Know About Trading in Your Existing Car

The steps you should be taking as you head to the dealership
Are you thinking about trading in your current car for a new one? Before rushing to the dealership and signing any papers, there are a few things you should consider.

What is your current car’s appraisal value?
“To determine [whether] you’re being offered a reasonable price on your trade-in, you first must know what your car is worth,” says Edmunds senior consumer advice editor Ronald Montoya.

You can do this via any appraisal resource, like Edmunds’ True Market Value tool or Kelley Blue Book (KBB). Be honest with yourself when assessing options and condition, or you may find yourself with a vastly inaccurate assessment.

What does the dealership say?
Next, you will want to take your current vehicle to a dealership to have the experts there appraise it and give you a trade-in amount offer. This number will not be the same at all dealerships, as it depends on various factors, including current inventory levels, probability of sale and current trade-in promotions.

How much do you still owe on your vehicle?
Find out how much you owe on your current car by requesting the payoff amount from your lender.

“This is the amount it will take to pay off your existing loan, and it may be different from any outstanding balance listed on your statement or [in your] coupon book. This difference may be because of a prepayment penalty or the way interest is calculated,” the Consumer Financial Protection Bureau website explains.

Compare that amount to the appraisal quote and the trade-in value given to you by the dealership. If you still have equity in your vehicle (that is, you are not “upside down” — owe more than your car is currently worth), you can use that to your advantage.

Can you negotiate?
As previously mentioned, don’t settle for the first number spit out at you. The first offer always starts low, as dealerships expect buyers to negotiate. Use your original appraisal from Edmunds or KBB as a basis for what is fair and see if they’ll match that number. If you are upside-down on your current car, see if they will give you a bit more for your trade-in if you plan to get your new car there that day. However, be sure to keep negotiations for your trade-in and your new car separate. In most cases, your trade-in can be used as a form of down payment and will be written into your new car contract as a credit against the price of the car.

Following these steps will set you on the right path to having a positive vehicle trade-in experience.

Used with Permission. Published by IMN Bank Adviser Includes copyrighted material of IMakeNews, Inc. and its suppliers.

Vehicle Details: Top Vehicles That Are Affordable and Cool

A cool ride doesn’t need to break the bank

There are so many choices if you’re looking for a new vehicle that it can be difficult to know where to start. But if your priorities are on coolness and affordability, here are some great options.

Kia Soul – The Soul is frequently awarded for its value and coolness, and the new 2017 model starts at an MSRP of $15,990 while delivering the same charm that has won over many buyers. The Soul continues to find ways to improve, with the newest model adding a turbocharged 1.6-liter four-cylinder engine that produces 201 hp and 195 lb/ft of torque through a seven-speed dual clutch transmission, and estimated fuel ratings up to 26 mpg city and 31 mpg highway. The Soul is easily spotted in a crowd thanks to its unique design, and some of its impressive features include the UVO infotainment system with eight-inch touchscreen display, navigation, and Apple CarPlay or Android Auto connectivity. You can also add a Harman Kardon audio system, ventilated front seats, heated rear seats, a heated steering wheel, and plenty of advanced safety features like the Blind Spot Detection System, Lane Departure Warning System, Forward Collision Warning System and Rear-Cross Traffic Alert.

Consumer Guide summarizes it nicely: “The competitively priced Soul is a very compelling mix of personality and practicality.”

Honda Fit – Named to Kelley2017_fit_yellow Blue Book’s KBB.com’s “10 Coolest Cars Under $18,000,” and currently ranked as the No. 1 subcompact and hatchback by U.S. News & World Report, the Fit has plenty to love. All Fit models have a 130 hp 1.5-liter four-cylinder engine that gets up to 37 mpg highway, but the versatility of the Fit is arguably its biggest strength. A maximum cargo capacity of 52.7 cubic feet is more expected from a small SUV, and clever features like the second row Magic Seat allow buyers to haul larger items. There are also plenty of standard features including Bluetooth wireless connectivity, a multi-angle rearview camera and a five-inch color LCD touchscreen.

Edmunds adds, “If there’s one thing this Honda is known for, after all, it’s the incredible amount of stuff you can fit inside its pint-sized hatchback body. Today’s Fit also has more rear legroom than ever, and it’s got a respectable roster of standard and optional technology too.”

Chevrolet Sonic – Also named tofebruaryfeatured_coolcars Kelley Blue Book’s KBB.com’s “10 Coolest Cars Under $18,000,” the 2017 Sonic is an affordable compact that offers excellent value (a starting MSRP of $15,145), two engines (a 1.8-liter four-cylinder and a turbocharged 1.4-liter four-cylinder) and plenty of technology, including a new Chevrolet MyLink infotainment system bundled with Apple CarPlay and Android Auto compatibility as well as OnStar 4G LTE with Wi-Fi hotspot. Safety is provided by 10 standard airbags and you can also add Lane Departure Warning, Forward Collision Warning and the new Rear Park Assist.

Autotrader says, “If you’re in the market for an affordable pint-sized champ that won’t make you feel second class for driving it, the Chevrolet Sonic may have your number.”

Other vehicles to consider include the Toyota Yaris iA, Honda Civic, MAZDA3 sedan and hatchback, Nissan Versa Note, Hyundai Elantra and Kia Rio.

Used with Permission. Published by IMN Bank Adviser Includes copyrighted material of IMakeNews, Inc. and its suppliers.

Questions You Should Ask the Dealer When Car Shopping

Five answers to know before you sign on the dotted line

No matter whetherfebruaryfeatured_dealerquesitons you are shopping for a new or used vehicle, there are certain questions you will always want to know the answers to. The answers the dealer provides will tell you whether you are getting the most car for your money.

What are the additional fees?
Legitimate costs include sales tax, registry costs and a documentation fee. However, the amount dealers charge for filling out the contract (the doc fee) is not universal. According to the trusted automotive resource Edmunds.com, some states regulate these fees and cap them below $100, so before you seal any deals, check the paperwork and negotiate down an outrageous doc fee. Another questionable fee you may encounter, in an effort for the dealer to build a potential profit back into the deal, is a “vehicle preparation fee.” This means, for example, they are charging you for making sure there is oil in the vehicle and for performing other menial tasks that one would expect to be done inevitably before a car is rolled off the lot.

Are there any aftermarket parts on the vehicle?
Inclusion of “add-ons”-from things as simple as tinted windows to things as complicated as car alarms-is another way dealers attempt to boost profits by raising prices.

“Mud flaps, rust-proofing and paint sealants make the dealer a lot of money, but you can get them for less-often much less-elsewhere,” writes David Muhlbaum, online editor of Kiplinger.com

Before saying yes to a vehicle purchase, you will want to double-check with the dealer and in the contract, and negotiate accordingly.

What special promotions are you running right now?
Manufacturers are always running sales events, and sometimes dealerships even tack on their own discounts and deals. Investigate up front what promos are going on so you can take a closer look at the vehicles with the best incentives.

“If you’re diligent-and a little bit lucky-you can use one of these events to knock a few thousand dollars off of your total cost or secure 0 percent APR financing for the first year or so of your loan,” says Business Insider personal finance writer Ben DeMeter in an article on Investopedia.

What is the lowest price you can give me?
Instead of telling the auto dealer the highest price you can afford to pay each month, take the reins by figuring out the lowest possible price you would pay on the vehicle in question. While it is smart to go into negotiations with financing options already lined up, the dealer may be able to offer you lower financing, so don’t show your cards too soon.

Can I see an accident history report and title history?
Most dealers these days automatically provide a CARFAX report for all vehicles, as well as an AutoCheck report to be thorough. These documents also report title history, which will disclose any previous problems with the vehicle such as odometer issues, a rebuilt engine or whether it was ever reported stolen. If you choose to proceed without checking one or both of these reports, or something like them, you are putting yourself at risk for a large devaluation of the vehicle.

Once you ask these questions and are satisfied with the responses provided, you can feel comfortable signing on the dotted line as an informed consumer.

Used with Permission. Published by IMN Bank Adviser Includes copyrighted material of IMakeNews, Inc. and its suppliers.