Check for a recall before purchasing that car!

An auto recall means that a specific vehicle may not meet safety, operating or emissions standards. Recalls can be issued by the either the manufacturer or the Environmental Protection Agency (EPA), according to the Recalls website, which is provided for consumers by the government. Recalls are covered by the manufacturer at a same-make dealership free of charge.

Purchasing a car, even a used model, is the second largest investment we usually make so it is important to do some research before you purchase a vehicle. If you plan a vehicle purchase go to the National Highway Safety Administration website, (NHTSA)  and do some investigation.  Try and visit the site every few months as recalls happen frequently and could happen during your vehicle ownership.

Before making that purchase contact a DMCC Certified Credit Counselor and consider a budget review. Knowing how much you can afford before you buy will help you make an affordable choice.

DMCC is a 501 (c)3 nonprofit organization committed to educating consumers on financial issues and providing personal assistance to consumers who have become overextended with debt.  Education is provided free of charge to consumers, as well as personal counseling to identify the best options for the repayment of their debt. To speak to a certified credit counselor, call toll-free 866-618-3328 or email

Automobiles: Buying vs. Leasing

There are many things to consider when deciding whether to buy or lease your next new automobile. To help you decide, we are reprinting an excerpt from, with their permission. This website will give you the answers and information necessary for you to make an educated and informed decision.

Leases and loans are simply two different methods of automobile financing. One finances the use of a vehicle and the other finances the purchase of a vehicle. Each has its own benefits and drawbacks. It’s not possible to simply say that one is always better than the other because it depends on your own particular situation and preferences.

You must not only look at the financial comparisons but also at your own personal priorities. Is having a new vehicle every two or three years with no major repair risks more important to you than long-term cost? Are long-term cost savings more important to you than lower monthly payments? Is ownership more important to you than low upfront costs and no down payment?

Buying and leasing are different.

When you buy, you pay for the entire cost of a vehicle regardless of how many miles you drive it. You typically make a down payment, pay sales taxes in cash or roll them into your loan, and pay an interest rate determined by your loan company. You make your first payment after you sign your contract.

When you lease, you pay for only a portion of the vehicle’s cost, which is the part that you “use up” during the time you are driving it. You have the option of not making a down payment, you pay sales tax only on your monthly payments (in most states), and pay a money factor that is similar to the interest rate on a loan. With leases you may also pay extra fees and possibly a security deposit that you do not pay when you buy. You make your first payment at the time you sign your contract.

If you lease a car that costs $20,000 but is worth only $13,000 after 24 months, you pay for the $7000 difference (this is called depreciation), the finance charges, and additional fees. When you buy, you pay the entire $20,000 plus finance charges. This is fundamentally why leasing offers significantly lower monthly payments than buying.

Lease payments are made up of two parts: a depreciation charge and a finance charge. The depreciation part of each monthly payment compensates the leasing company for the portion of the vehicle’s value that is lost during your lease. The finance part is interest on the money the lease company has tied up in the car while you are driving it. The principal pays off the vehicle purchase price, while the finance charge is loan interest. However, since vehicles depreciate in value by the same amount regardless of whether they are leased or purchased, part of the principal charge of each loan payment can be considered as a depreciation charge, just like with leasing. It is money you never get back, even if you sell the vehicle in the future.

The remainder of each loan principal payment goes toward equity. It is what remains of your car’s original value at the end of the loan after depreciation has taken its toll. Equity is resale value – what you get back if you sell the vehicle. The longer you own and drive a vehicle, the less equity you have.

So, buying a car with a loan is essentially like putting money into a declining-value savings account. You never get out as much as you put in. A portion of every payment you make is lost to depreciation, a terrible investment by any measure.

Leasing is similar to buying but without the “savings account.” You only pay for what you use. It is true that you’ll own nothing at the end of a lease, but what you do not own is the same part of the car – the depreciated part – that a buyer also does not own at the end of his loan.

There are hidden cost differentials to consider. Automobile insurance options may differ when you lease rather than own a vehicle. When you purchase a new vehicle and sell it or trade it in you will receive a dollar amount that has been determined by means of a book value. When you return a lease vehicle, although the dollar value has been determined at the time you signed the lease agreement, you may be assessed other costs (i.e. excessive wear and tear, mileage beyond the agreed terms, etc.). You will be liable for these cost at the termination of the contract. Therefore, it is imperative you review all documents before you sign the agreement.


DMCC is a 501 (c)3 nonprofit organization committed to educating consumers on financial issues and providing personal assistance to consumers who have become overextended with debt.  Education is provided free of charge to consumers, as well as personal counseling to identify the best options for the repayment of their debt. To speak to a certified credit counselor, call toll-free 866-618-3328 or email

Are You Buying A Lemon?

Buying a vehicle can be both a stressful and rewarding experience, especially if you plan on purchasing a used vehicle. Even if you get great financing and find the exact car you want with all the extras, there is still a chance that the car may not be as reliable as you hoped.  To avoid any future headaches, and empty bank accounts, be sure to do all of your homework first.

Read independent reviews from people who own the car you want. Web sties like and have a Consumer Review section for every car by make, year and model. Here, owners have the opportunity to share their views and experiences. These reviews are a great source of first hand information and can tell you exactly what to expect, from problems to compliments. Just make sure you read a few of them so as not to get a biased perspective. Once you found the car you like and know the good and the bad about it, all you need next is to find someone selling the car.

More specifically, you should find a car with a clean history. Worse then buying a car that with seats that seem to get more uncomfortable the longer you drive is buying a car with water damage. This usually means that the electrical system, the interior and the cars engine have been sitting in water for a period of at least two days. Traditionally these vehicles are taken to junkyards and are stripped for usable parts. However, this is not always the case.

The practice of selling damaged vehicles is kept alive by curbstoners. Curbstoners purchase damaged cars in volume, fix and resell them to dealerships and consumers who are interested in buying a less expensive automobile. Frequently, these cars are only minimally repaired and taken out of state to be re-titled as undamaged vehicles and are more commonly found after severe weather, such as after a flood or hurricane. Water damage to a car is tough to identify because the vehicle will continue to run, but its days are numbered. To ensure the safety of the future driver and the cars reliability, you will need to pull out a magnifying glass and start investigating.

What to do when looking at a used car:

– Have the car looked at by a trusted mechanic for a thorough inspection

– Check the reputation of the dealership

– If purchasing a vehicle through the classifieds, check for multiple listings by the same owner (compare the advertised phone number to call)

– Review the vehicles history., is a good website for this purpose (you will need the vehicles VIN number) Inspect the car for water lines and signs of rust (check the glove compartment and underneath the seats)

If you do not feel 100% comfortable with a seller (or the vehicle), then perhaps it is a sign you should walk away from the deal. Visit for free educational information and warning signs to look out for when purchasing a used vehicle. If you believe you have purchased a lemon, contact the Department of Consumer Affairs in your state to find out what you can do.

DMCC is a 501 (c)3 nonprofit organization committed to educating consumers on financial issues and providing personal assistance to consumers who have become overextended with debt.  Education is provided free of charge to consumers, as well as personal counseling to identify the best options for the repayment of their debt. To speak to a certified credit counselor, call toll-free 866-618-3328 or email

Car Insurance

courtesy of

Congratulations, you have just purchased the car of your dreams; you worked a great deal, now it is time to insure it. Car insurance is mandatory in all states, and must be maintained throughout ownership. Insurance quotes can vary from company to company, and there are a few factors that you can control, and other factors you cannot. A full understanding of how insurance quotes are arrived at, will give you the best rate, and maximum coverage.

Factors that cannot be controlled include the age of the driver. Common sense tells us that a new driver would be more of a risk to an insurance company, than an established driver. Therefore a driver in their early 20’s would pay a higher premium than a driver in their 40’s. Further, elderly drivers have poor reaction time, and similarly would pay more of a premium. The ideal driving age would be between 35 to 55 years; anyone younger, or older would pay more.

Gender is another uncontrolled factor that insurance quotes are based on. Statistically, insurance companies see females as safer drivers than males. As a result, female drivers pay less than their male counterparts.

There are factors, which we can control, namely the amount of traffic tickets and accidents. A ticket is a violation of law that could potentially result in an accident. Insurance companies frown on this, and will penalize the driver with higher rates. Similarly, accidents could indicate a pattern of behavior; as such the driver is penalized with higher rates.

Where you live is another controlling factor that effects insurance quotes. Living in a rural area, puts the driver at much less risk of accident or theft as compared to living in a city. As a result, city drivers will pay a larger premium than rural drivers with very few exceptions.

Want to drive a Porsche 911 Carrera? It will cost you. The more your car is worth, the higher your insurance quote will be. The logic should be obvious.

Car insurance companies are now looking at your credit worthiness. Do you have excessive, outstanding credit, or no credit at all? If so, you are a risk in the eyes of the insurance companies, and will get socked with higher insurance quotes. Keeping your credit in check will show the insurance companies you are responsible, both financially, and on the road. As a result, you will pay lower premiums.

Your occupation can put you at a higher risk. Jobs that require many hours of driving, or driving in hazardous conditions, or places will put your quote at a higher rate. Less driving, and exposure to high-risk opportunities, will result in lower premiums. Additionally you want to keep your annual mileage down to a minimum. The more miles you drive, the greater the risk of accident.

Vehicle theft is a risk factor that can easily be minimized. Most companies will give you a discount for having better security for your vehicle. An alarm, or another approved anti-theft device will usually result in some discount. Some companies may insist on having such devices installed on more expensive and desirable cars before they even consider offering you a price.

Some companies look favorably on drivers who have taken a defensive driver’s course. They see this as a commitment to safer driving, thereby lowering the risk of accident, resulting in lower premiums.

Keep in mind these are just general guidelines, and the difference in price between various companies can be significant. What one company may consider a high-risk factor another company may not view as so important. The bottom line, keep your credit in check, be careful on the road and choose a car that fits your budgets.


DMCC is a 501 (c)3 nonprofit organization committed to educating consumers on financial issues and providing personal assistance to consumers who have become overextended with debt.  Education is provided free of charge to consumers, as well as personal counseling to identify the best options for the repayment of their debt. To speak to a certified credit counselor, call toll-free 866-618-3328 or email

Hybrid Cars: Cheap Transportation?

Maybe you want to do your part for the environment. Perhaps, you want a more economical way to travel since gasoline prices are on the rise. Or, you may want to purchase a vehicle that rewards you with federal tax incentives. Regardless of your reason for purchasing a hybrid vehicle, you need to do research and make sure you get the most out of this financial investment.

There are many web sites that help consumers with the process of purchasing a hybrid vehicle.  However, the research itself can still be overwhelming. Therefore, below are some important aspects you should consider.

Review Review Review

The cost to replace hybrid parts can be extremely expensive.  Reviewing your options when considering these costs can help you quickly eliminate some hybrids off your list. Check the Technical Service Bulletins (TSBs) and recalls. Go to and search for the vehicle you have in mind for more information.


If you are purchasing a used hybrid or plan on owning the vehicle longer than the standard warranty, really think about spending the extra bucks on an extended warranty.  Because hybrid vehicles are loaded with new technology, the cost to repair them is going to be extremely high.  Not to mention the cost of the knowledgeable mechanic working on these vehicles. So, between repair and labor, it may be a wise decision to purchase the extended warranty and have a little peace of mind.  Be sure to look into what the manufacturer offers.  If you cannot afford to buy the extended warranty at the time of purchase, consider buying it before the standard warranty expires.

Compare a Hybrid to a Conventional Car

Buy That New Car and Control Your Budget

Do you still think you need that new car?  The chart above is a good illustration of how much one would spend on either a conventional car versus a hybrid, plus the difference in gas mileage.  It also shows how a budget will be affected by the purchase of a hybrid. The extra money you could save every month for purchasing a conventional car would look great in your savings account.

Have a Teen Driver? Learn How to Save Money on Insurance

Did you know that adding a teen to a car insurance policy could increase premiums from 100 percent to 355 percent, even if the teen is just driving the family minivan?

There are several different ways to get lower premiums for your teenagers. Many insurance companies offer online tutorials that they can take and, if passed, companies will provide substantial discounts. For example, State Farm has an online tutorial called Steer Clear and if the new driver passes it, State Farm will give up to a 15 percent discount to first time drivers. Many other insurance companies have similar online programs that offer discounts for teens. Esurance, an online car insurance company, gives discounts every six months for clean driving records.

According to, here are a few insurance tips for teen divers and their parents.

– Call around to different companies and compare prices with discounts that best suit your needs.

– Be aware that your insurance rates typically increase when a new driver is added to the policy. If you are not adding a new vehicle to the plan, it is best to have the teen as a primary driver of one of the family cars.

– Take advantage of student discounts. In most states, students at accredited high schools, colleges and universities can get discounts if they have a grade point average of a B or higher.

– Talk to your teen about safe driving habits and how traffic violations can increase their rates.If you are planning to buy a brand new car for your teen, you may want to check which vehicles get the best rates.

Most Insurance Companies use three different ways to rate cars in terms of damage, safety and liability.

1. The Damage and Theft Index (DTI), rates vehicles on the cost of payment for damage and theft.

2. The Vehicle Safety Discount (VSD), awards discounts up to 40 percent for car models that generate lower payment for injury to occupants in the vehicle.

3. The Liability Rating Index (LRI), rates vehicles on the amount of damage and injury it causes to the other vehicle and its occupants.

-Consider getting a Personal Liability Umbrella Policy (PLUP). If you or your teenage driver accidentally injures someone or damages their property, you could be sued. Even though your underlying policies may provide substantial liability limits, it is not uncommon today for juries to award damages that exceed those limits.

There are many different areas insurance companies look into while quoting you a premium for you and your teen. Companies will look at what kind of deductible you want, the kind of car you drive, the areas you drive in, the amount of time you are on the road, your age and gender, your driving record and even your credit history. So if you live in a major metropolitan area with high auto theft rates, chances are good that your rates will be much higher than those who live in the suburbs with low auto theft rates.

Here are other ways to save yourself and your teen some money when buying car insurance.

– Most companies give an Anti-Theft Device Discount for cars that have car alarms and other forms of security.

– If you have ever been convicted of a moving violation or have been an in accident, take Driver Improvement Courses to improve your chances of having a lower rate. Many of these courses can be taken on the Internet now.

– Teens can get discounts if they complete a Drivers Education course through their school or accredited agencies.

– Vehicles that have airbags, anti-lock brakes, head restraints and day-time head lights can also get you a discount on car insurance.

Everyone knows that car insurance can be really costly, but there are ways to slash the price if you ask about them.