Cars : Keep It Til It Dies!

My motto with cars has pretty much always been “if it gets me from point A to point B, then I still love my car”. Especially if it’s paid off! And that’s what my current car is, still running and paid off for several months now. I own a 2005 Honda CRV, which is a small SUV type of vehicle that is fuel efficient because it is still a 4 cylinder vehicle and I think it’s even built on a Civic frame, it’s just that it has the body of a small SUV instead. Yes, many people have dubbed the CRV as a “chick car” but hey I could care less what it’s called, as long as it runs and it is paid off.

It’s been wonderful not having a car payment for well over six months now. I accelerated the payments on purpose for the life of the loan, just so that I could have it paid off before it hit 100 thousand miles, since I have a pretty long commute to work every day, and we tend to use my vehicle to go on long trips since mine is the more dependable vehicle between me and my husband.

But we don’t mind. We’re not people who have to have the latest fancy cars, we’re pretty practical, and if you read any of the “get rich” books, then you know that the people who accumulate true wealth are the ones that do things like keep cars that are paid off for several years instead of trading up to the latest and greatest models whenever they get tired of their car or it goes out of fashion.

If you read books or study how truly wealthy people behave, they really don’t blow their money on things like new cars and vacations all the time, but rather, they save as much of their money as they can, and they live off a small percentage of their income, stashing away the rest in investments and savings that yield returns. A lot of people are learning that with this recession, wealth is very easily lost, and they are paying dearly for lifestyles that have been largely funded by accumulating debt and easy credit rather than accumulating wealth.

In other words, they were paying everyone else before they paid themselves, as the author of Rich Dad Poor Dad says, or something like that. It’s truly sage advice, and keeping your car til it doesn’t run any more is one of the best pieces of advice I’ve ever taken.

Auto Industry Just More Bad News

Although some are saying that the closing of around 800 car dealerships in the wake of the impending GM bankruptcy is what the company has needed now for years after being oversaturated in the dealerships, of course this is not good news for the economy, since more jobs will be lost of course through these voluminous closings. I just read an article that made a good point about the future of autoworkers now.

They said that it used to be that once you signed on to become an autoworker on the production lines, that you were pretty much automatically guaranteed to be what we call part of the working middle class. Which is a great thing ,it’s certainly better and more desirable than being in the poor, lower class who struggles from paycheck to paycheck and often earns meager wages for hard work. Being an autoworker used to mean you had a great paying job, good benefits, and a pretty much guaranteed future of comfortable retirement.

Well, not any more. As so many other paradigms have changed through the course of this recession, so has the one about autoworkers being comfortable and well paid, and secure above all. Now, being an autoworker strikes fear into people’s hearts as the auto industry faces it’s largest crisis ever and is forced to close down multiple plants and dealerships, putting thousands out of work, and reducing benefits and pay for those that are left holding the bag. Not a great deal, as you’re well aware.

Ford, GM to Offer Special Car Financing or Price Deals Now?

It looks like Ford and GM, although they said they wouldn’t, may be offering special financial incentives to purchase a vehicle from them, after Daimler Chrysler announced their special pricing incentives on cars to move inventory.

Apparently, earlier in the week, GM or General Motors, announced 0% financing for up to six years on most of its cars and trucks. And that’s not all, I guess that another popular domestic car manufactere Ford already had 0% financing for up to 5 years on most of its models of trucks and cars.

The offers aren’t going to last forever though. GM’s offer is to expire first, which will be on this Wednesday after the Fourth of July holiday. And then Ford’s special financing offer is to run through July 31, just like Chrysler’s special employee vehicle pricing incentive does.

So why are all these domestic auto makers putting special incentives on the minds of consumers?

There is an industry fact in sales that is looming over their heads, where financial analysts are predicting new car sales will drop 8% from 12% in June. Bad for them, good for us!

Chrysler to Offer Special Car Discounts

In effort to ousell and outperform rivals Ford and GM, both domestic car manufacturers, Chrysler is said to be offering special discounts and incentives to car buyers soon. So, if you’re in the market for a car now, check out Chrysler cars (although I’m a Honda girl myself).

Set for July, Daimler Chrysler is planning to roll out a new set of discounted car prices to attract new customers, and also to roll out a new employee discount program that will be offered to any employee purchasing a Chrysler vehicle.

The exact discounts have not been disclosed yet, but they may take the form of a car rebate, where you get money back AFTER purchasing the car, and you usually get varying rebates back depending on the model vehicle you choose.

This could potentially save a car shopping customer hundreds or thousands of dollars depending on the deals offered, and will definitely cause a price war once the competitors get a load of the new offers. What good for the consumer is good for the economy, right?

Toyota Cars and Honda Cars Sales Increase in May

With the demand for more fuel efficient and compact cars with the steadily increasing gas prices, two of the biggest foreign car manufacturers, and American favorites, Toyota and Honda, have experienced tremendous sales jumps in the month of May.

Perhaps it is because the summer time tends to be so heavily traveled as well, but Toyota and Honda are both enjoying a nice boost in new car sales, with Honda beating out Toyota by about 4 percentage points in sales increase, a 21% compared to Toyota’s 17% increase.

This is welcome news for the foreign vehicle companies, especially since domestic car makers such as Daimler Chrysler and Ford are suffering due to a reliance on larger, less fuel efficient vehicles as their staple offering.

The steadily rising fuel prices (with no immediate relief in sight unfortunately), hurt many of these domestic manufacturers, with General Motors reporting its sales were down 12% for the month, while Ford Motor said its sales were down 2% and DaimlerChrysler AG’s Chrysler Group said sales were down nearly 11 percent.

The other leg up that Toyota and Honda may have is the fact that they produce the most notable of hybrid cars right now, which are rising in popularity after fuel prices showed signs of instability. Hmm, maybe the good news out of this for us consumers will be some good, cheap deals on domestic cars, although the overall impact to the American economy most likely will not have a good outcome.

Current Prime Interest Rate for Loans?

Forecasts for the Prime Rate – which is the best going rate you can possibly get in a given time period, are usually given by financial forecasters and banks about once a month. Yep, the Prime Rate changes that often.

It just goes to show the true volatility and dynamics of the financial and lending industry. Below you will see the most recent forecasts – which means they are estimates.

Why Knowing the Prime Rate is Important

Knowing what you’re getting into, and what the rate is that you would be getting a great deal at is important because it allows you to go into the lending game as a knowledgable consumer who knows a good deal when they see one. Basically, it helps prevent you from getting a raw deal on your loan.

Prime Loan Interest Rate Forecast for the Next Few Months in 2006

May 2006 – 8.0
July 2006 – 8.0
August 2006 – 8.25
September 2006 – 8.50
October 2006 – 8.50

Building Good Credit

We all know that in order to get the best loan rates, mortgage rates and general loan rates including car loans, you need to have good credit and be deemed a good risk so that the lender will place a higher value on your business (they know you are more likely to pay them back, and in a timely manner if you’ve established a good credit history).

So, the next few posts are going to be on what you can do to establish and maintain good credit, so that you pay a lot less in the future for both long term and short term loans, mortgages and credit cards. I have to admit, I’m going to have to do a little investigating, as my knowledge in this area is just about the same as the average joe on the street.

There are some ways to building good credit that aren’t all common sense, or common knowledge for that matter. We’ll discuss those in the coming days.

Tax Break for Hybrids?

I’ve been thinking that my next car might really be a hybrid car. I’m not sure which one I want, whether it would be the Toyota Prius or one of the new hybrid SUV’s by Ford, or maybe even the Honda hybrid, but with all the benefits of the Hybrid cars, including their environmental consciousness, gas savings and now also the tax break that the federal governement is offering as an incentive to purchase one of these cars that are catching on like wildfire.

What’s the tax break deduction for hybrid cars?

Apparently there are exact credit amounts now determined for Fords and Toyotas, but some of the other makes and models are still awaiting a decision on what kind of tax breaks they will get by the feds.

They are actual dollar tax credits—which took effect for the new tax season of 2006 starting January 1st, 2006. It used to be just a reduction of taxable income, whereas now reportedly it is an actual credit – like you’d get for having a child almost, so obviously the federal government is trying to make the purchase and use of hybrid vehicles more appealing for the every day joe, so these cars make us less reliant on oil and gas? Maybe, I guess that’s just speculation on my part, but it seems logical.

The IRS will publish expected credits for other makers besides Ford and Toyota fairly soon as well.

Car Loans – Paying Off Early

I have a Honda CRV, a 2005 that I purchased back in June of 2005, and I love it.  Anyways, I bought the car brand new, and got the special rate of 2.9% financing.  I asked during the sale process whether I would be penalized for trying to pay off my car early, and part of what I loved about the deal is that the answer to that was “no” I wouldn’t be. 

What the finance officer at Honda told me was to make sure I write two checks, one for the amount of the payment, and then an extra one, for whatever amount I wanted to pay over the minimum due, and write the words “toward principle balance” on the check so that the processors of my payment at Honda would know that it goes toward the principle (call me silly, but I thought that’s what they’d do anyways, but oh well.)

I just got a bill.  I paid aobut $200 extra and this bill is reduced by that much – it’s just funny how they do that to you!  Assuming you want to pay the minimum always, so they can get more money over the long haul!  Of course, I’ll keep paying more than the minimum, but I can’t blame them for trying – that’s how they all stay in business!

American Honda Finance Offers

About eight months ago, I bought a Honda CRV. I bought a Honda vehicle because of their reputation for reliability and superior construction. I knew I’d pay a little more than I would for a domestic car, but I also knew that by buying a Honda car, my 45 minute drive into work wouldn’t be impeded by a failing or broken down vehicle!