When families decide that a new car is warranted, they need to consider Luke 14:28: "For which one of you, when he wants to build a tower, does not first sit down and calculate the cost to see if he has enough to complete it?"

If families really need a new car, their first option should be to consider a good used car—preferably no more than five to seven years old and less than 100,000 miles—for which they would pay cash. However, if a good used car is unavailable or impractical, a new car can be considered as a secondary option. But even with a new car, families who can should pay cash for the car rather than finance it. In other words, the best way to finance an automobile is not to finance it but to save the money and pay cash for it.

However, if families have to finance an automobile, there are some basic guidelines that should be considered. (1) It is generally better to sell an old car rather than trading it in on a higher-priced newer one. This may take a little longer, but you will get more for it to put toward the newer vehicle. (2) Consider using alternate collateral for the loan if possible. If you use other collateral (stocks, bonds), often you can negotiate a lower interest rate. However, a word of caution: Do not use the equity in your home as collateral. Many couples who do this end up creating a 10- to 15-year note for an automobile, and the car will be worn out long before the note is paid. (3) Consider financing through a bank or a credit union rather than a dealership or the manufacturer's finance company.

Dealership financing
If all other alternative options are closed and you still feel that financing is the only way you can buy a new car and you want to trade in a car rather than sell it yourself, be very cautious of dealers' advertised "super deals" and shop around.

Many new car dealers advertise unusually low interest rates and other special promotions, such as high trade-in allowances and free or low-cost options. Although these advertised options might help consumers decide where to start shopping, finding the best deal requires careful comparison.

There are many factors that determine whether a special offer provides genuine savings—interest rate, size of down payment, and dealer's financing package "add-ons." So, when considering an advertised special, read the ad carefully and call or visit the dealer to find out about all the terms and conditions of the offer. Then compare the specials advertised by other dealers.

Questions that consumers should consider asking dealers with regard to financing:

1. To qualify for low-rate-interest financing, will the car be priced higher? Will the price be lower if you pay cash or supply your own financing?
   
2. Does the financing require a larger than usual—more than 20 percent—down payment to qualify for low-rate interest financing?
   
3. Are there unusually short limits—12 to 24 months—on the length of the loan?
   
4. Is it a requirement to buy special or extra merchandise or services, such as rustproofing, extended warranty, or a special contract to qualify for a low-interest loan?
   
5. Is financing available for a limited time only? (Some dealers limit special deals to a few days or require delivery by a specified date.)
   
6. Does the low-rate interest apply to all cars in stock or only certain models?
   
7. If manufacturers' rebates are offered, do dealers require the rebate to be given to the dealer?

Dealership special offers
Other special promotions include high trade-in allowances, free or low cost options, or promises from dealers to sell cars for a stated amount over dealer's invoice. The following questions will help to determine the actual value of special offers.

1. Does the advertised trade-in allowance apply to all cars, regardless of their condition? Are there any deductibles for high mileage, dents, or rust?
   
2. Does a larger trade-in allowance make the cost of the new car higher than it would be without the trade-in?
   
3. Is the dealer who offers high trade-in allowance and free or low-cost options actually giving a better price on the car than another dealer who does not offer such promotions?
   
4. Does "dealer's invoice" reflect the actual amount that the dealer pays the manufacturer? Consult consumer or automotive publications for information about what dealers pay for certain models.
   
5. Does "dealer's invoice" include the cost of options, such as rustproofing or waterproofing, that already have been added to the car? Is the dealer charging more for these options than other dealers are?
   
6. Does the dealer have cars in stock without expensive added options? If not, will the dealer order one for you?
   
7. Are the special offers available if you order a car instead of buying one off the lot?
   
8. Can all offers be taken advantage of simultaneously?

Once you decide which dealer offers the car and financing you want, read the invoice and installment contract carefully. Check to see that all the terms of the contract reflect the agreement you made with the dealer. If they differ, get a written explanation before signing.

Conclusion
Careful shopping will help consumers decide what financing, car, and options are best for their family needs.

If you have to borrow for a car this time, we encourage you to start preparing yourself to buy the next car with cash. God knows your needs and, if you trust Him, He will provide the car you need.