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These strategies can help steer you toward a vehicle and financing that will fit you -- and away from possible trouble.


If you plan to buy a new or used vehicle, there are some things you should do before you make that major purchase.

Here are eight strategies that can help you save money and make the process easier:

Consider buying a used vehicle
The inescapable truth is that any new vehicle loses at least 30% or more of its value the minute you drive it off the lot. Though that loss has less impact if you keep a new vehicle for at least five years, it still should enter your calculations.

A vehicle that's 2 or 3 years old and with low mileage might be a better deal for you. (See "Are certified used cars worth the cost?")

Weigh fuel costs
Although there's no crystal ball to predict where gas prices are going, there's little doubt that prices aren't going to return to $2 a gallon. So look at vehicles with higher fuel ratings and give some consideration to hybrids, even though some hybrids cost considerably more than comparable gas-only vehicles.

Which cars cost less to insure?

Also, be aware that for 2008, the government economy ratings have been revised downward to better reflect the actual mileage you'll receive. (See "Finally, the truth about gas mileage.")

Beware of low-cost lease deals
As manufacturers become more desperate to sell cars -- 2008 looks to be another down year overall, with sales of fewer than 17 million new cars and trucks -- you'll see a lot of offers involving cut-rate lease payments.

Though these appear attractive, they can trap you if you drive more than the allotted mileage. Many of these leases allow only 10,000 miles a year and charge as much as 25 cents a mile for every mile over the allotment. Be honest with yourself about how many miles you drive -- it's likely more than most leases allow.

Get your financial house in order
The last thing most people do is check their creditworthiness before going car shopping. Do you know your credit scores? These are the numbers that can determine whether you qualify for the lowest interest rate on a car loan. (Estimate your score here.)

Also, check your credit reports for erroneous information, and look for ways to raise your credit scores, such as by paying off credit cards. (See "Build a killer credit score in 2008.") Remember, though, that closing credit card accounts after paying them off can actually lower your scores.

Shop for the best loan deal before buying
One way to avoid getting burned on your next car purchase is to have your financing in place before you set foot on a dealer's lot.

A good resource should be your credit union, which typically has the lowest rates. Another place to shop is the Internet, where lenders offer essentially preapproved loan checks that you can take directly to the dealer. (Find the best auto loan rates here.)

Build up your down payment
Too many people these days buy cars with little or no money down and then are surprised that for the first three or four years of ownership they owe more than their cars are worth.

A good rule of thumb is to put at least 20% down on any vehicle, in cash or trade.

Clean up your trade-in
Look at the vehicle you own as if you were a shopper. Is it clean? Does the paint shine? Are there dings that could be cheaply fixed? The difference between a car that looks well cared for and one that looks a little shabby can be thousands of dollars.

Also, if you still owe money on your trade-in, make sure you can get enough to pay off the loan. Don't roll the balance into the loan on your new car.

Widen your shopping list
It's quite understandable that many car shoppers go directly to Toyota or Honda, given the impressive record of reliability that both of those brands have.

But the truth of the marketplace is that the domestic manufacturers have closed the quality gap and have vehicles that favorably compare. Given the push by Detroit manufacturers to regain market share, some of the best deals of 2008 can be found there.

This article was reported and written by Terry Jackson for