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Take a look at a classic Camaro picture. The Chevy Camaro, the classic street machine.

LS and LS models described in this Cavalier review bring excitement to our everyday world.

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This guide is designed to help you save money on the purchase of a new car. If you follow the advice in this guide, you will save hundreds if not thousands of dollars on a single purchase. But before you rush out and get a great deal on a car, please give serious consideration to which car you buy. We can't emphasize enough the importance of choosing a car wisely. Pay special attention to two areas:

How well it suits your needs and the car's resale value.

Many of the disappointed or frustrated customers that we've seen in our day would have been much better off if they had paid more attention to these two areas. Buying a car that doesn't suit your needs very well (i.e. uses more gas than you expected; has payments that are too high) may cause you to sell or trade-in too early and set you up for big losses. Buying a car with poor resale value could mean paying for a car for years only to sell or trade-in and find that you have little or no equity; or worse yet, still owe more than it's worth.

Think about the car you have now and how well it suited you. Give some thought to what you might want or need that is different. What changes have occurred or will soon occur in your life that may affect your needs in a car? Then make sure the car you buy has a higher than average resale value. We know that selling the car that you haven't even bought yet is the furthest thing from your mind; but believe us, that day will come and when it does you'll be in much better shape.

Before You Shop

Before you shop for a new car you'll probably want to take a look at your finances. We're assuming here that you will be financing at least part of your purchase. (If not, see the paying cash section later.)

Let your budget help guide your decision on which car you buy. It makes more sense than picking a car and then forcing it into your budget. After you figure out what you can spend each month you need to think about how much you can use as a down payment.

A quick note. These days it's common not to make a down payment. People are used to no money down or just trading-in. Unless you own your trade-in outright or have significant equity in it, you'll want to use at least some cash as a down payment. Any amount is better than nothing. As we will see later, borrowing money is very expensive. Down payments will lower your monthly payments, save you money on interest and can sometimes earn you better rates on the money that you do borrow.

You should end up with a good idea of what you can afford for monthly payments and down payment. Use the Calculator and the Amortization Schedule to help you out (and keep dealers honest).

Your Trade In

The value of your trade-in and whatever amount you may still owe on it is one of the most important factors involved with buying a new car. Any equity that you have in your trade-in should add to your purchasing leverage.

But it is also possible however to have negative equity in a trade-in as we will see later. It's easy for car dealers to confuse you when it comes to how your trade-in equity affects the deal, so we need to spend some time here and sort a few things out.

Let's expose a little game most dealers play when it comes to your trade. It's called the 'trade-in allowance' game, and it's important that you know how it works. Take a look at page two, The "Trade-in Illusion" to see how two different dealers might present the same deal: As you'll see, the bottom line is the same. Why do car dealers do this? Two reasons.

First it can disguise the fact that the dealer is buying your car wholesale, which is always the case.

Second, it allows the dealer to tell you what you want to hear. If they sense that you are most interested in a big discount, they'll play it that way. If you seem more interested in what your trade-in is worth, they'll play it that way as well! They can present it to you any way they like, a one thousand dollar discount and a nine thousand dollar trade allowance still leaves you with a ten thousand dollar trade difference. It's easy to become confused and frustrated here. Our advice is not to involve your trade in until after you get prices. In any event two things you'll want to do are understand the value of your trade and compare apples to apples. Understanding the Value of Your Trade (wholesale value - not retail) when you trade your car in to a dealer, you're selling it wholesale whether you realize it or not. The wholesale value of your car is approximately what it would bring at a dealer auction, and is hundreds or even thousands less than the going retail price. Now I know what you're thinking, If I sell my car myself, then I'll keep the extra money. You're right, you will and if you can, you should. But you should also keep a few things in mind. You will need to advertise your car field phone calls, make appointments (some of which may not show and some of which you'll wish didn't) as well as let strangers take your car for test drives and accommodate scheduling appointments with their mechanics, only to have them haggle down the price you wanted for your car. Consider also potential hassles with financing and timing. You may find someone to buy your car, but you may still owe money on it.

Obviously they'll need to pay you first and then wait while your bank processes paperwork before getting title to their new car. Not everyone will be willing to do that. And after going through all the hassles already mentioned, you may need to wait for them to either sell their old car or get approved for financing themselves. Let's assume you finally sell your car. Can you time things such that you can sell your car and buy a new one without an inconvenient gap where you have no car?

Don't get us wrong - If you can sell your car privately, do it. But unless someone is beating down your door with cash in hand you may want to consider trading. So what is your car worth? You'll want to know both the wholesale (Actual Cash Value or ACV) and the retail value. Retail prices can be found in a current edition of the N.A.D.A. Used Car Guide or Kelley Blue Book for your area. (There are different regional issues) which can be found at the library, bookstore or on the Internet, although these are normally the "consumer " editions where prices between "wholesale" and "retail" vary widely (WheelsDirect2U can furnish the "wholesale" trade-in ACV to you, click here). It is important that it is a current issue since the values can vary by hundreds of dollars from one issue to the next. It is also important that you use this guide properly. (Add or subtract for mileage, etc.) And remember that the book is a guide, not law (although I have never known a dealer who did NOT use the book).

The automobile market is as volatile as any market on Wall Street, and a number of factors can affect the value of your car positively or negatively. Some cars are notoriously 'soft' which means they often bring less than book value while other cars are 'strong' and usually bring book value or more. If you want to fine tune your figure, try to compare the book value to what similar cars are selling for in your area. Also, the time of year is important, obviously a 4 wheel drive is worth more in the winter months than in the summer months. Once you have calculated the ACV, you need to deduct from it any balance that you may still owe on the car. Call your bank and get an accurate payoff amount (usually termed a "10 day" payoff, principal + interest). The amount left over is your equity in the car. For example:

Cash value of trade in = $13,000

Loan Balance/Payoff = $ 8,000

Your cash equity = $ 5,000

What if you have negative equity? If you find yourself owing more than your car is worth or 'upside-down', don't panic. This is more common than you might think! First consider selling your car private sale to try and get more for it than its wholesale value. Also use your down payment or any other cash available to you to make up as much of the difference as you can. If you still find yourself upside-down, you may consider keeping your current car a little longer and continue paying it off. If all else fails, you can roll the negative equity into the new car ( we strongly urge you not to do this unless it's your last resort). You are in essence financing your negative balance along with the cost of the new car. This is possible by paying full price (or perhaps more) for a car and using any discount you would have gotten to pay off the negative balance on your trade-in.

Even though this happens all the time (most people are just unaware that they are doing it,) it should be your last option since it sets you up for being really upside-down next time you trade. Many people continually roll more and more negative equity into new purchases. Eventually this catches up with them because banks limit the amount that they will lend on each car. We have seen people owe over seven thousand dollars more on their car than it is worth. Obviously this is trouble. One option that may help here is leasing. We explain leasing in detail in the buy vs lease section. Compare apples to apples ( a term dealers love using).

If you shopped two dealers, what might go through your mind? 'I want to get the high trade-in value of Dealer #1 and get the discounted price of Dealer #2. That would be a great deal.' Well, that will never happen. And this is the source of much consumer frustration. The important thing is that you focus on the trade difference figure, that's the important number. After you sell your car and buy the new one, how much did it cost? What's the bottom line? Dealers are going to present the deal to you the way they want to, what you want to do is to look for the best bottom line. We'll present the true facts and figures free of charge!

GLOSSARY

ACV -- Actual Cash Value or wholesale value.

Add-ons -- Products or services sold by dealerships that can be added on to the vehicle. Some examples include rust-proofing, upholstery treatments, alarm systems, and extended warranties. Remember that these add-ons will increase the price of the vehicle, and your monthly payment.

Amortization -- The reduction of debt by regular payments of principal and interest over a period of time. The loan is amortized so that, with each payment the amount of interest paid decreases, and the amount of principal paid increases.

APR -- Annual Percentage Rate. A way of expressing the cost of credit on a loan. Under federal law, all consumer loans must disclose the Annual Percentage Rate.

Backend -- Less obvious area of dealer profit including financing, insurance, extended warranties and other add-ons. Use our calculator and amortization schedule to determine if the dealer is "packing" the back end.

Backdoor money -- Hidden manufacturer rebate that dealers get for selling a car.

Balloon Loan -- A type of loan that features smaller monthly payments, with the balance of the loan due in one large "balloon" payment at the end of the loan term. See next item.

Balloon Payment -- A large payment due at the end of a loan. Using a balloon payment, the individual monthly payments can be smaller.

Business manager -- Salesperson in the F&I department.

F&I department -- Finance and insurance department

Factory invoice -- The "bill'" that the dealer gets for a car. Does not represent true cost. Click here for the invoice on your particular vehicle.

Holdback -- Rebate the dealer receives on each car they buy.

M.S.R.P. -- Manufacturers Suggested Retail Price.

Term -- The time period of a loan.

Trade difference -- Bottom line price difference of new car minus trade-in.

Trade-in allowance -- Inflated figure made up of what the dealer actually buys your trade for plus the discount off the new car.

Upside-down -- Owing more on a vehicle than it's worth.

Free Purchase / Lease Analysis | Buying Used | Buying New | Buy or Lease? | "The Trade-in Game" | More Tips