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Automobile in USA
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New cars
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Car rental
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Drivers license
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Car insurance
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Driving in America
The automobile is almost a
necessity in the United States. It is an essential part of of
the American lifestyle. Except for a few cities, there is very
little public transportation. Since most American commute long
distances for work, they invariably drive to
work.
The following are the
main choices for using an automobile
:
1. Renting a
car This is a limited option which will work for short periods
of time. More details regarding this option are available at
....
2. Buying a
car Here the buyer has 2 options both of which are very widely
use
(a) Buying a
new car
(b) Buying a used car
This section also includes
relevant information about automobiles in the USA such as car
insurance, driving license and driving conditions in the
usa.
Used cars
A stabilized rate of depreciation
(7% - 12% per year) makes used cars a better value than new ones. New vehicles
lose an average of 20% of their value the instant they are driven away from the
dealership. When coupled to the average yearly depreciation of 7% to 12%, your
first year's loss is anywhere from 25% to 35%. That translates to a first year
$6,000 to $8,000 loss on a $22,500 new vehicle, or a $10,000 to $15,000 loss on
a $40,000 one. And that's for a vehicle only driven the average 13,500 miles.
If you drive more than that, your depreciation will be greater (35% to 50% for
the first year). Don't forget to factor in your financing, which will add
another $1000 to $3000. From the investment point of view, this is a lot of
loss.
Another drawback occurs if a
new car is totaled in an accident. Often the insurance is not adequate to
replace the car. When buying a car, the interest on the loan is paid off faster
than the principal (the vehicle itself). Less money has gone to the reduction
of the purchase price, and insurance only covers the vehicle value, not the
interest, so there can be a cash shortfall.
Luckily the rate of
depreciation is not uniform. Some popular cars (Honda Accords, for instance)
hold their value much better than others (Ford Taurus - Jeep Grand Cherokee).
When a car model is totally revamped, especially if the name is changed, the
older version usually drops in value more quickly. Those used cars are
generally good buys. Because late-model (2-4 year old) used cars have not
declined significantly in either mechanical reliability or appearance, they
remain the best bargains.
Off-Lease Bargains
Because
leasing demands regular upkeep, off-lease vehicles are a good
place to start a used-car search. Car insrance As leases
have become popular, large numbers of well-maintained, 2- to
3-year-old cars are coming off lease in increasing
numbers. Because of the stringent lease mileage
restrictions and maintenance requirements, these vehicles
practically qualify as new, even in appearance; and usually
are still covered by the remainder of their original
warranties. Currently there's a glut of Jeep Grand
Cherokees and Ford Explorers & Tauruses flooding dealer
lots at bargain basement prices. To keep that metal
moving, many manufacturers offer special packages designed to
enhance the appeal of those vehicles. This began with
luxury brands, but now every major automaker has used-vehicle
lease and certification programs.
Leasing Crisis
Millions of car leases financed by banks are expiring just as domestic new car
prices are falling. In 1998 only 38% of lease customers turned in their vehicles
at the end of the lease. Due to aggressive pricing and rebates offered by
domestic automakers that percentage has risen to over 56% this year and banks
and finance companies are panicking. The result is a gap between what banks
expected the vehicles to be worth and what they're actually fetching at
wholesale dealer to dealer auctions. In 2000 that gap cost banks about $2,000
per vehicle. This year (2001) losses are expected to rise to between $2,500
& $3,000 per vehicle. Major financing companies like GE Capital and First
Union have eliminated their leasing programs altogether while Chase, Bank of
America, and Bank One are significantly scaling back their operations. The
manufacturer's financing companies (Ford Credit - GMAC - DC Credit) aren't
suffering nearly as much because their leasing losses are offset by the profits
made when the vehicle is sold initially. Losing money on lease turn-ins is seen
as a normal part of doing business for the Big Three.
Program Cars
"Program" vehicles can be a mixed
blessing. A program car may be a dealer demonstrator, a
company executive's car, or an off-lease or fleet
vehicle. Former rental cars sometimes enjoy that
moniker. Rental cars and former fleet vehicles are the
least desirable types of "Program Car." Some are
overworked and under-maintained, while others have had regular
oil changes, tire rotations, and other preventive
maintenance. Some rental companies such as Enterprise
and Hertz have been accused of infrequent or non-existent oil
changes. It can be hard to tell whether the company
followed the manufacturer's new car break-in and maintenance
schedule.
At the wholesale level, rental
cars are usually worth 10% to 15% less than a comparable new car trade-in, for
many reasons: people who rent vehicles often mistreat them, maintenance records
may not be kept, and salesmen may have driven them. I know quite a few
salesmen, and most of them treat their own cars very poorly, so I wouldn't
expect them to treat a rental car any better. If you are looking at a former
rental or program car, ask to see its maintenance records, and don't be
surprised if there aren't any. Insist on an independent mechanical inspection,
and try to find out which rental company owned it initially. Finally, consider
your options. Is this car priced significantly lower (10% to 15% less) than a
factory certified model at another dealer?
High-Mileage Vehicles
Are you willing to take a chance
to save yourself many thousands of dollars?
Safety-conscious people on a budget might want to consider
late-model cars with high miles. I have sold and driven
1- and 2-year-old cars with high (50,000 - 75,000) mileage
almost exclusively for the past four years and haven't
experienced any more maintenance expenses than with a typical
average (15,000 - 30,000) mileage 1- or 2-year-old-car.
The more miles a vehicle has on it the shorter its functional
life will be no matter how well cared for it was, but since an
average car lasts for 145,000 miles, a vehicle with 60,000
miles can still give you six or seven years of useful
transportation, if you drive 12,000 to 15,000 miles a
year. The big advantage is driving new
technology while paying for old. For example, a
2-year-old 1998 Ford Taurus GL with 65,000 miles in excellent
condition would cost about $7500. A 5-year-old
1995 Taurus GL in the same shape with only 30,000 miles on it
would cost you about the same. While the '95 Taurus was
a safe car in its day, the '98 version is a very safe, totally
modern car with dual airbags, antilock brakes, remote locks,
and the best cup holders in the business. If you are on
a limited budget and willing to take a chance, a 1 or
2-year-old high mileage full or mid-sized domestic sedan is
one of the best used car values.
Other Bargains
American cars tend to be among
the best used-car values because they provide more car for the
money. While many people think American cars are not as
good those from Japanese automakers, it's just not true.
That assumption, however, helps American cars depreciate more
quickly and makes them better used-car values -- a lower price
for more features. Structurally and mechanically,
American cars are some of the most durable cars in the
world. In addition, they are often less expensive to
repair, with lower-priced parts, and repair facilities more
common than those for foreign makes.
Information Resources
There is a
lot of information available on both new and used cars. Automotive-Links.com, Edmunds, Consumer
Reports, and Autoweek
are four of the best sources of
auto information; in print form they're available at your
public library. Specialized internet data resources like
Intellichoice can show the costs associated with certain makes
and models. Don't buy a car without consulting with all
of these information goldmines.
Orphan Cars
Avoid orphan cars like the
plague. An orphan is a vehicle whose parent company no longer
sells or supports their vehicles in this country. Parts and
service are nonexistent for many of these orphans. It's
unfortunate, but some of my favorite cars have become
orphaned. The German-made Merkur Scorpio of 1988 and
1989 is my favorite car of all time. Ford still makes
the car in Europe, but has totally abandoned the loyal
stateside owners of this fine vehicle. Alfa Romeo,
Peugeot, and Sterling are some of the popular abandoned
marques that can still be found for sale. Forget about Yugos,
Fiats, Citroens, Renaults, Lancias, Maseratis, and Bertones
too. I notice that almost all of the orphans are from
France or Italy, but I can't explain why.
Manufacturer-certified
Manufacturer-certified used cars have been refurbished to
like-new standards and have passed a checklist of requirements, however be sure
to find out whether a used vehicle is dealer-certified or
manufacturer-certified, since their standards may differ. The manufacturer
standards try to bring cars to like-new condition, because corporate reputation
is tied to the sale. Avoid dealer-certified vehicles as some dealers may be
more interested in a quick, cost-effective turnaround and few perform the 100+
checks required under the manufacturer programs. When visiting different
dealers always ask for a copy of the manufacturer's warranty standards and
compare them. Certified pre-owned buyers
don’t just enjoy the satisfaction of driving a like-new automobile at a bargain
price, they also experience the unparalleled limited manufacturer's warranty
that comes with it. Keep in mind you won't find a manufacturer-certified used
vehicle at a non-franchised used car dealer.
Typical Certifying Procedures
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General Motors (Buick,
Chevrolet, GMC, Oldsmobile, Pontiac) - General Motors trade-ins, less than
four years old with less than 60,000 miles, go through a 110-point inspection to
become GM Certified Used Cars. All worn or broken parts are repaired or
replaced, and all fluids are changed. These GM Certified used vehicles are
backed by an extended GM factory warranty and a 3 day 150 mile money-back
guarantee.
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Ford (Ford, Lincoln, Mercury) - Ford’s Certified pre-owned vehicles
are trade-ins five years old or newer that have no more than
50,000 miles on their odometer. First the vehicle
identification number (VIN) is double-checked to make sure
all paperwork matches and that all scheduled maintenance has
been performed. Then the Ford dealer put the car through a
rigorous 115 Point inspection process designed to uncover
even the slightest mechanical or cosmetic flaw. Included are
the power train, the chassis, all accessories, and finally a
thorough cosmetic review—technicians check everything from
the body panels to the weather stripping and the carpeting. All worn or
broken parts are repaired or replaced, and all fluids are changed. Only then is the vehicle deemed worthy of carrying
the Ford Quality Checked Certified Pre-Owned window sticker.
Recommendations
Similar factory-certified warranties
are now available from almost every manufacturer.
Certified vehicles will cost more than seemingly identical
non-certified examples. The idea is that you recoup the added
expense through lower repair bills. My personal and
professional experience with these certified vehicles has been
excellent. Make sure you're getting a manufacturer's
warranty that's comparable to available third party extended
warranties (some aren't, we recommend Warranty Direct for
third party extended warranties).
Providing you can afford them, factory-certified used vehicles are your best bet
for years of reliable trouble-free motoring. Certified Pre-Owned buyers don’t just enjoy the satisfaction of driving a
like-new automobile at a bargain price, they also experience an unparalleled
limited warranty. Please don't make a
$10,000 mistake! We highly recommend that you order an Experian AutoCheck Report for any manufacturer-certified used vehicle under
consideration. It's your best protection against buying a used car with costly,
hidden problems.
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