March 2020 A Special Supplement to
The Pioneer
MASTER the OPEN ROAD
Useful tips for RV beginners
Keeping the Keys
When buying a leased vehicle makes sense
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April 2020 • A Supplement to the Pioneer
Dave Tassoni
MUFFLER SHOP
Hours: M-F 8:00-5:00 Closed Sat. & Sun.
14380 Northland Dr • Big Rapids, MI 49307
(231) 796-6335
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Navigating automobile incentives and rebates
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Did you know? - Auto Loans
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When buying a leased vehicle makes sense
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Learn how depreciation affects car value
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Useful tips for RV beginners
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Did you know? - RVing
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How to lower the cost of auto insurance
A Supplement to the Pioneer • April 2020
Navigating automobile incentives and rebates
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Low APR financing vehicles financed through their preferred lenders. Rates may range from 0 to 5 percent. Keep in mind that buyers’ credit scores need to be fairly high to qualify, and the low APR may only be on certain models.
Lease specials
P
urchasing a new car can be an exciting endeavor. Cars and trucks are among the most expensive items a person will buy over the course of his or her lifetime, and no one wants to spend more than necessary. Getting a good deal on a car or truck may come down to researching rebates and incentives.
The online automotive resource Edmunds.com says incentives and rebates are used by automakers to spur sales of particularly slow-selling models. Incentives and rebates also are used to entice previous customers to stay loyal to a brand. Potential buyers who are aware of incentives and rebates are being offered can use that knowledge to negotiate lower prices on desired vehicles. Here is a close look at some of the incentives that may be available.
Customers who lease may find manufacturers often offer special lease programs through captive financing companies. These are subsidized leases based on a residual value that’s much higher than the actual worth of the vehicle at term’s end. Dealers are playing with the numbers to bring down the monthly payment and thereby make their vehicles seem more appealing. RealCarTips says that sometimes dealerships will apply cash-back rebates or financing incentives towards a lease instead of a financed vehicle.
Dealer incentives Dealer incentives are factory-to-dealer offers that reduce the true cost to buy a vehicle from the factory, according to Cars.com. Dealers are under no obligation to pass on these cost-cutting measure to customers, but many do just to move stock.
Cash-back rebate This well-known incentive is based on manufacturers offering cash rebates directly to customers when they make a purchase before a given date. Cash-back rebates are generally offered on models that may not be selling as well as manufacturers had hoped. Some rebates are rolled over from month to month until desired quotas have been met. Think of a rebate as a coupon of sorts applied to the cost of the vehicle. With this incentive, dealerships offer low interest rates on
Bonus cash incentive
This type of incentive generally targets a specific demographic, such as recent college graduates or military personnel. These incentives are not widely advertised, so it may be necessary to inquire about what is being offered.
Government rebates Some savings are realized not through the manufacturer or dealer, but from government rebate programs. For example, tax credits may be available to buyers who purchase cars that run on alternative fuels or hybrids. There are many ways for savvy consumers to save money when buying new vehicles.
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April 2020 • A Supplement to the Pioneer
When buying a leased C vehicle makes sense
onsumers in the market for new vehicles must make a number of decisions before getting behind the wheel of a new car. Some may debate whether or not to buy a new or preowned vehicle, while others may wonder if buying or leasing is best for them. People who decide to lease will likely have another decision to make when their leases reach maturity: should I return my car or buy it? Drivers who have never leased a vehicle may not even know that lessees have the option to buy their cars at the end of their lease agreements. The idea of leasing suggests drivers would always be better off turning their vehicles in, but there are situations in which keeping the car can benefit buyers.
• The buyout figure is less than the market value of the vehicle: Lessees who don’t drive much might find that their vehicles are worth more at the end of the lease than the buyout figure indicated on the agreement. That means lessees can buy the vehicle for less than its market value. They can then flip the vehicle and
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Did you know? When shopping for auto loans, prospective car buyers should limit their loan shopping to a two-week period. Many auto buyers now shop for auto loans separately from shopping for cars, first arranging financing via a bank, credit union or other lender, and then beginning their search for their next car or truck. While that can help buyers secure low interest rates and borrower-friendly loan terms, buyers should know that each time they apply for loans their credit scores dip. The lower a prospective borrower’s credit score, the harder it becomes for that person to secure the best loan rate. However, according to the online
reap a profit or simply keep driving the vehicle.
• The excess mileage penalties are steep: Drivers also may be better off buying if they significantly exceeded their mileage restrictions. Lease agreements typically include per-mile penalty fees for every mile drivers go past the mileage limits indicated in their agreements. These fees can quickly add up, but drivers won’t have to pay them if they choose to buy their vehicles at the end of their leases rather than returning them.
• The condition of the vehicle: Drivers who took care of their leased vehicles and even those who did not may benefit from keeping their cars when their leases reach maturity. Keeping a leased vehicle that’s been well-maintained can save drivers money over the cost of buying new vehicles, as the buyout value on their lease is likely a lot less expensive than the cost of a new car or truck. But keeping vehicles that have enduring considerable wear and tear also may be wise, as leasing companies may charge hefty wear-and-tear penalties.
Buying a vehicle at the end of a lease may seem unusual. But there are various instances when buying makes more sense than turning the vehicle in.
financial resource Bankrate. com, applicants who can file all of their loan applications within a two-week period will only have those applications count as one credit inquiry. That means applicants’ credit scores will only fall once as opposed to several times for prospective buyers who apply for loans sporadically over the
course of several weeks or months. Potential borrowers also should know that once they have prequalified for loans and found a car or truck they want to buy, they can then present their loans terms to the dealership and ask if the dealer can beat the terms, potentially saving them more money over the life of the loan.
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A Supplement to the Pioneer • April 2020
Learn how depreciation affects car value
B
uying a new car can be an exciting prospect. Having something that no one has previously owned or used can elicit pride. But new car buyers are no doubt familiar with the conventional wisdom that, the moment a new car leaves the dealership, it loses a considerable amount of its value. Drivers may be surprised at just how much and how quickly that value drops. According to Capital One®, car value can depreciate as much as 20 to 30 percent in the first year. The rate at which cars lose value after the first year is not as steep, and can be influenced by factors like age, mileage and how well the car has been maintained. However, Kelley Blue Book® says cars generally shed about 60 percent of their original purchase price within the first five years. A snapshot of how average depreciation works for a sedan can paint a clearer picture. Here is the value of a sedan over five years, according to Edmunds.
Full price: $30,000 1 year: $24,300 2 years: $20,700 3 years: $17,400 4 years: $14,700 5 years: $12,000 If a person is planning to keep a vehicle for the long haul, depreciation may not be much of a concern. However, for those who may not plan on holding on to a car for long, it is important to know about depreciation and how it affects car resale value and the total cost of owning the car. For example, if a person borrowed money to buy a vehicle and decides to sell it shortly thereafter, he or she might end up upside down on the loan or owe more money than the car is worth. Car depreciation also can affect trade-in value when moving on to a new car. One of the ways to avoid the perils of depreciation is to purchase a used car, since depreciation will have largely been absorbed by the previous owner. Another
way to mitigate depreciation is to purchase a vehicle that has a slower rate of depreciation. CarFax® says that when SUVs and trucks are in higher demand than sedans and compacts, they will retain their value longer. When fuel prices rise and cars that are more fuel-efficient are in demand, the reverse is true.
Ways to reduce depreciation include:
• driving the vehicle around 10,000 miles a year; • keeping up with maintenance, such as oil changes and replacing worn out parts; • buying new cars with high levels of safety technology, which can help a car retain more value over the first five years; and • researching Kelley Blue Book’s Best Resale Value Awards to see which vehicles hold their value the most. Vehicle depreciation is something all new car buyers should be aware of when they are shopping for their new automobiles.
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April 2020 • A Supplement to the Pioneer
Useful tips for RV beginners Roughly 40 million Americans go RV camping each year.
Did you know? Few things embody the spirit of the open road as well as recreational vehicles, or RVs. The mere sight of an RV traveling alongside them has inspired many motorists to plan their own road trips, and such road trips have only been made better by RVs. While they might seem like a relatively recent phenomenon, RVs actually trace their origins to 1910. According to Go RVing®, an online resource for RV enthusiasts, the first modernized campers were built in 1910. While those campers were downright primitive compared to modern RVs, the latter would not be possible if not for the development and success of the former. Go RVing® notes that the 1913 Earl Travel Trailer is an ancestor to the contemporary travel trailer, though people who see one today may mistake it for a modern horse trailer due to its appearance. Modern RVs come in all shapes and sizes, and travelers’ options in terms of amenities are endless. Basic RVs can be an ideal, no-frills choice for budget-conscious road trippers. For those who want all the amenities of home but the open road, too, luxury RVs, complete with high-tech indoor/outdoor entertainment systems and stacking washer/dryer units that can put an end to vacation time spent at the laundromat, can make for the perfect vehicle.
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oad trips are a unique way to travel that afford travelers the freedom to stop and take in sights and scenery on their own time. Traveling the highways and back roads gives people a chance to slow down and really enjoy an adventure. Such trips can be made even more special by traveling in recreational vehicles, often referred to as “RVs.”
The RV industry has been consistently growing for years. The Recreational Vehicle Industry Association says the RV industry creates $50 billion in economic impact in the United States, with roughly 23,000 businesses currently in operation. More than 504 RVs were shipped in 2017, and in Canada the industry is responsible for more than $7 billion in retail sales, states RVIA and Statista. Roughly 40 million Americans go RV camping each year, and millennials make up approximately 38 percent of campers, according to a report from CNBC. New RV enthusiasts are getting on the road every day, and such travelers can benefit from the wisdom and experience of those who have blazed trails before them.
• Budget for all RV expenses. It can be tempting
to overspend on the RV itself, but buyers should factor in other expenses like hoses, wheel chocks, levelers, navigation systems, campsite fees, and more.
• Consider the size of the RV. Buy the smallest
RV that is comfortable. Doing so opens up more options regarding places to stay. In addition, small RVs are morely easily maneuvered on the road than large ones, especially for novices.
• Add time to your ETAs.
The estimated time for trips that popular map and navigation software provide are customized to average car speeds. RVs generally move more slowly than cars, so allow for more time to arrive at your destination. This is an important consideration if you need to be at a campground by a certain time.
• Save condiment packages. When visiting
restaurants and carryout places, save any unused condiment packets, napkins and packages of disposable cutlery. These items take up much less room than full-sized packages, and space inside RVs is often at a premium.
• Invest in storage boxes. Store belongings neatly and cleanly in plastic storage containers. Choose uniformly shaped and sized bins, which are more easily stacked and stored than bins of varying sizes.
• Pack a paper map.
Navigation services that are powered by satellite or cell phone signals may not be available in inclement weather or when traveling through mountain ranges. Paper maps can fill the void and keep you on track.
• Check towing capacity.
Make sure you do not exceed the manufacturer-recommended towing capacity. This is usually found on a sticker in the driver’s door. Overloading the vehicle can cause transmission issues and/or burn out engines.
RVs can be a fun and relaxing way to travel, and novices can make such trips more enjoyable by following a few tips from seasoned road trippers.
How to lower the cost of auto insurance
A Supplement to the Pioneer • April 2020
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Auto insurance is a must-have for drivers. While it might seem hard to believe, as of 2019 there are still some places in the United States where auto insurance is not mandatory. Auto insurance is mandatory in Canada, though each province has its own requirements in terms of the minimum amount of coverage allowable by law. Many people, even those in places where auto insurance is not mandatory, recognize the importance of being insured before they get behind the wheel. However, that doesn’t mean those same drivers would not like to cut the cost of their auto insurance policies. A 2019 analysis from the online financial resource NerdWallet found that
the average cost of car insurance in the United States is $1,621 per year. Average insurance costs vary
significantly in Canada, where data from the General Insurance Statistical Agency found that, in 2019, the average annual insurance premium in British Columbia exceeded $1,800, while drivers in Quebec paid slightly more than $700 annually. No matter where drivers live, chances are they would love to lower their auto insurance costs. While there’s no one-size-fits-all solution to cut auto insurance premiums, drivers can try various strategies to save money on their policies.
• Raise your policy’s deductibles.
Higher deductibles may sound scary to drivers, but raising the deductibles is a great way to lower the cost of auto insurance. The auto insurance provider Progressive notes that deductibles typically range from $100 to $2,000. A driver whose policy has a $100 deductible will pay considerably more on his policy per month than a driver with a higher deductible. In fact, the Insurance Information Institute notes that drivers who increase their deductibles from $200 to $1,000 can save 40 percent or more on their coverage costs. Drivers who choose this option should always be sure they have enough money in the bank to cover the cost of their deductibles.
• Bundle your policies. Some drivers
save money on their auto insurance policies by buying two or more types of insurance
from the same provider. For example, homeowners may save money by buying homeowners insurance from their auto insurance providers or vice versa.
• Research potential discounts. The
III notes that many companies offer discounts to policyholders, even if those discounts are not necessarily promoted. Drivers can contact their insurance companies, or shop around with other providers, to ask about various discounts that can save them money on their policies. Anti-theft devices, defensive driving courses, low annual mileage, and a strong credit record are just a handful of the many potential discounts drivers may be eligible for. Drivers can reduce the cost of their auto insurance policies in various ways, potentially saving themselves hundreds of dollars each year as a result.
Did you know?
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hen shopping for auto insurance, drivers may be most concerned by the bottom lines on estimates they receive from potential providers. However, the Insurance Information Institute recommends that drivers also investigate a company’s reputation and stability before purchasing an auto insurance policy. Rating companies like AM Best (www. ambest.com) and Standard & Poor’s (www. standardandpoors.com/ratings) vet insurance companies in terms of their financial stability. In addition, government organizations may be able to provide potential policyholders with information regarding the history of consumer complaints filed against certain insurance providers. That history, coupled with information regarding a given firm’s financial stability, can give drivers an accurate picture of insurance providers and whether they’re trustworthy or simply the most affordable option on the market.
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April 2020 • A Supplement to the Pioneer