Tips to Get the Best Gas Mileage With Your SUV

If you want to increase the gas mileage by burning less fuel from your SUV vehicle and also play a role in decreasing environmental pollution, here are a few tips for you –

  • Inflated Tires – Check the pressure in your tires. Less inflated tire can burn up a lot of fuel as its rolling resistance is high and it consumes a lot of engine power. Keep checking your tire pressure (once in a month) and do not inflate the tires more than what is shown on the tire sidewall as it is dangerous.
  • Wheel alignment – This can also help you save fuel. The more the resistance, the more fuel will be used up by the engine. Having your wheels directed straight will reduce the resistance while rolling. Having your vehicle positioned in an uneven way because your rear wheels are not aligned, will also create a lot of aerodynamic drag in side of the body and hence using up a lot of fuel.yosemite-2706155_1920
  • Remove additional equipment – Anything that creates a vehicle drag, will also create more resistance moving forward. Removing equipment such as windshield visor, running boards, etc, will help you save fuel. But, if you are to drive in mud or in gravel, it could be useful to have your running boards attached.
  • Turn off the engine when vehicle is at rest – Looking for improved fuel economy in your vehicle, turning off your engine when the vehicle is at rest will help you save some gas. Stuck in a traffic for around a minute? It will cost less fuel to turn the engine off and then to restart it, than to keep your machine on. In addition to this, don’t race against the traffic signal, speeding up and then coming to a sudden halt also consumes more fuel.
  • Check the spark plugs – High resistance in the plug wires can lead to misfiring spark plugs. It’s good to spend some bucks on the tune-up, if you have been driving quite for some time now! Occasional misfiring spark plugs can bring down the fuel economy of your vehicle, even though you won’t be able notice it. So, get it checked to keep save some money on the fuel consumption.
  • Check the heater performance–In order to get your engine warmed up quickly, you need to get a new thermostat (if your thermostat opens up quick, your engine will take a long time to get to the operating temperature). Bad heater performance reduces the rating of your fuel economy.

As fuel prices are soaring up high, not pulling out some tricks will force you to spend a lot on the fuel. So, stick on to these few tips and consider it to be a guide that will help you save a lot of MPG, so you can use the money elsewhere, so that your vehicle can give you the best performance while rolling, also giving you much comfort.

Find a Fuel Efficient SUV for Sale in Olympia

If you still aren’t satisfied with your SUV’s fuel economy there are plenty of SUVs for sale in Olympia that get good gas mileage at Washington Auto Credit! Check out our selection of new or used vehicles for sale near Tumwater online or call us to speak with a sales representative now at (360) 529-0002

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Can I still buy a car if I have negative equity on my trade?

Negative equity is one of the toughest challenges to overcome when buying a new car. However, if you know what you are doing, there are a few different ways to overcome negative equity on your trade-in.

Your Credit Score Matters

The higher your credit rating, the more negative equity you will be able to roll over onto your new auto loan. If you do not have a good credit rating, there is a good chance that you will not be able to roll over much/any negative equity onto your new car loan.

Cash Down Payment is KING

If you owe $20,000 on a car that has a REAL trade-in value of $15,000, that $5,000 negative equity will need to be dealt with, one way or another. If you put $5,000 cash down, your NET down payment is $0. If you put $10,000 down, your net down payment is $5,000.  In short, the more money you put down, the easier it is to trade out of your negative equity.

Rebates Help

Money that the new car factory is willing to give you in the form of rebates can count towards your down payment. The one catch here is that new cars are usually more money, so:

Your Car Payment Will Probably Increase

There are 2 factors at play here. If you buy brand new, you will probably be spending more money than if you bought used. Also, to trade out of negative equity (without putting a lot of cash down) you have to buy an expensive vehicle so that your Loan-to-Value ratio is inline.

How Loan-to-Value Ratios Work with Car Loans

One other option: Don’t Trade Your Car In

Everyone knows that you can get more money selling your car on CraigsList than you can trading it in to a dealer. If your credit will allow you to buy a car without trading in, perhaps it is in your best interest to buy your new car, then sell your old car yourself to get the most money for it. Selling your car for what you owe on it is a much better option than rolling over $3,000 negative equity. There is, of course, a downside. If you do not sell your other car, you will have two car payments.

Should I Trade My Car? Or Sell it?

Many financial experts suggest that one not use an old car as a trade in when purchasing a new car. In fact, trading in your old car may ultimately cost you more or hurt your chances to get approved for an auto loan.

Most auto dealers have a certain amount of price flexibility.  The more one lessens profit margin, the less money the salesperson makes on commission. Few auto salespeople actually work for a salary that is not at least partly based on commission from sales.

If one uses an old car as a trade in, and insists on high blue book value (the highest possible value for the car) this means the price flexibility in the new car will change. The person is likely to pay more for the new car, thus rendering the trade in less valuable, even if the blue book value price is met.

Banks limit the amount financed on a vehicle based on the buyers’ credit.  The price flexibility that would be used up giving you a high price for your trade is often needed when the bank makes the dealer discount the price and pay high acquisition fees.  Paying a high price for your trade in can limit or even negate your available loan options.

Getting high blue book value for a trade in is often not realistic. Auto dealers want to take your old car in and profit from it. Therefore, they are likely to offer low blue book (fair or poor condition, trade-in value) value so they can sell the car at high blue book value.

If you sell your car on your own, instead of using it as a trade in, you are likely to receive more money up front.  Because you have not depended on the dealer to give you a high price on your trade in, you will have a better chance of being approved for a new or newer car. Essentially you have maintained greater price flexibility.

Also, a greater cash down payment often means better financing terms for your new car. Larger down payments can mean smaller payments, shorter-term loans, better interest rates, and a greater likelihood of getting approved.

When possible, if you can sell the car at a price equal to how much you owe, you will save money when you purchase a new car, you won’t need to roll over any negative equity absorbing your old debt.

Some cars have a high enough resale value that one can get enough for a trade in value to pay off the current loan and have money left over to act as down payment on a new car. Generally, this makes sense. This can help you get down payment from your trade without taking the time to sell it on your own.

GAP Coverage Explained – Don’t Get Caught Owing $$$$

What is GAP Insurance?

Gap insurance (often times simply called GAP) is an optional coverage that most buyers should purchase. It protects you from owing money to the bank after the unfortunate loss of a vehicle. GAP can be purchased from the dealer and included with in your loan.

How does GAP work?

In the event that your vehicle is demolished in a traffic accident, stolen, or otherwise determined to be a total loss, your auto insurance company will assess their value of the car. Unfortunately most of us are all too familiar with the scenario that follows:

  1. The insurance adjuster calls and tells you how little they are going to give you for your vehicle.
  2. You pick yourself up off the floor and plead with them that the bluebook is much higher than their figure.
  3. They inform you that they assess their own value of your vehicle completely independent of the bluebooks.
  4. They remind you that the rental car they had been paying for will need to be returned by tomorrow or you will need to pay for it yourself.
  5. You eventually accept less than what you think you should get.
  6. You realize that you owe more money on your car than the insurance company is going to pay out.
  7. The insurance company sends their funds to you bank and your bank sends you a letter requesting final payment of the remaining balance of the loan.
  8. You realize that you can not afford to pay them off and still get another car.
  9. they don’t get your money and they report the loan as an unpaid charge off which looks like a reposession on your credit.

Here’s where GAP comes in to save the day

Let’s pretend that you have a loan balance of $10,000. You have been making your payments perfectly and things are good. Somebody runs a red light and T-bones you causing enough damage that your car is totalled. Then the insurance company calls to tell you they are sending a check for $6500 to your bank to pay off you totalled vehicle and you find yourself at step 1 of the unfortunate process above. If you have GAP you can skip all of the remaining steps. The Insurance company will send their funds to your bank and the GAP insurance company will send your bank enough funds to bring your loan to a zero balance!
This results in a “paid as agreed” account on your credit instead of a “repo”.

Should I get GAP?

The nature of loans is such that your balance will fall less at the beginning of the loan than toward the end of the loan. Your car will depreciate continually from the very beginning. The longer term you select for your loan, the slower your balance will go down, but the car will depreciate at the same rate.

If you are buying a car chances are you are financing it. If you are financing a car chances are you put as little down payment as possible and took out a loan with as long of a term as possible. You SHOULD get GAP!

Unless you are putting a significant amount of money down, and going for a short term loan You SHOULD get GAP!

If you put enough cash down that you are borrowing less than what an insurance company would pay if the car was totalled you may not need GAP.

Trade in Your Car with Negative Equity

Most people who are in a car loan and did not put a lot of money down have what is called “negative equity”.

What is Negative Equity?

Negative Equity is a term car dealers use to explain that their customer (you) owes more money on their car (the loan payoff) than the car is worth for trade-in (Actual Cash Value or ACV). Often, the number is similar to what an insurance company would give you if the car is totaled or stolen.

There are really two different types of people with negative equity:

1. People who owe only a little more than their car is worth on trade-in. Under $3,000 for people with average credit.

2. People that are BURRIED in their trade.

Maybe you noticed the part on #1 where it says “people with average credit”. Most dealers probably consider average credit to be in the 600-640 Beacon score range and having at least 3 major trade-lines (car loans, home loans, large credit cards) that have/had been open for a couple of years. The better your credit score, the easier it is to get a lender to absorb your negative equity on your new auto loan AND you can roll more negative equity over to your next auto loan.

Even though someone with negative equity and good credit can find it easier to roll the negative equity over, they will notice that the more negative equity they roll over, the higher the auto loan interest rate will be. It is a simple relationship between risk and interest rate with the lender. The higher the loan-to-value (LTV) ratio is, the more risky the loan is for the lender

If you have poor credit, and you need an auto loan that allows you to trade out of a large amount of negative equity, there are a few points you need to consider. First, your payments are almost always going to go up. Because of loan to value restrictions lenders place on auto loans, it is easier to trade out of negative equity into a more expensive vehicle. Once you add the negative equity to the loan, you end up with a higher payment. Second, you will probably need to have a down payment. Think about it, if you are $5000 upside down in your car, you have to have $6000 down just to have a NET $1000 down payment. Usually a dealer will be able to help you out and absorb some of their negative equity, but it is tough for a dealer to absorb all of it. When a dealer absorbs your negative equity, they are basically taking money that would be profit with a normal customer, and giving it up to you so that they can sell another car that day.

Auto loans with negative equity are difficult to put together, unless you have stellar credit. To make it easier on you, know what you are working against from the start. Check and see what your 10-day payoff is on your current loan. Then check to see what your trade in value is. There are many sites that you can get an idea of what your car is worth, obviously no dealers go off these sites, but they do help give you an idea. These sites only work well if your car is less than 5-years old, and has less than 75,000 miles on it. Most old, high mile cars have very little trade-in value no matter what kbb.com says it is worth for trade-in.

Once you have established the estimated trade-in value, and your payoff. You know about how much negative equity you have. There is however one more thing you can do to lower your negative equity. If you bought GAP coverage or an extended warranty on your car, you can cancel any remainder on them. The warranty company or GAP company will give you a refund on any unused portion and credit that directly against your payoff.

So now you know: Your trade-in value, your payoff, and your cancelable products that can lower your payoff. What is next? Obviously you need to know your credit rating. There are many places online that you can get your credit score. The free sites do not always give you all you want to know about your credit report. Also, you need to evaluate your budget and figure out exactly how much you can put for an auto loan down payment and how much per month you can afford for your car payment. Be realistic, and remember that the more you can put down, the more it will help your situation.

Negative Equity in Your Trade-in?

Also called being “upside down”, having negative equity in your trade in is not a position most people want to be in. There has been an influx of customers with poor credit trying to buy vehicles lately. That is great for us because we help people with bad credit buy cars. The problem is how many people with bad credit want to trade in their current car (that they owe way too much money on), and lower their payment. Granted, most of these people are in SUVs and they want to also get a vehicle that will have better gas mileage, but I want to try to explain a little bit about how loans work, not just car loans, secured loans in general.

Rule Number 1 – If you are past due on your bills now, do not expect a decent interest rate.

The worst possible time to ask for a loan is when you cannot pay the credit cards and loans you already have. Think about it. If you are trying to lower your payment, and you have negative equity, make sure you have been current on all of the bills you already have for several months.

Rule Number 2 – If you have negative equity, and bad credit, your payment will probably not go down.

In fact, if you are not putting a lot of money down, your payment is probably going to go up. The reason is loan to value restrictions the lenders will make.

Rule Number 3 – Keep the loan to value in line.

I am going to give you a couple of examples of how people try to trade in a car with negative equity to try to help you understand how vehicle loans work. In both examples, the customer is trying to trade in a vehicle that is worth $10,000 and the customer owes $16,000. Total Negative Equity: $6,000.

A.

Car to be purchased has a value of $10,000 to the bank. The auto lender is willing to lend up to 120% of that value on this vehicle for a total of $12,000. The only way to do that would be to put $4000 down.

B.

The car to be purchased has a value of $25,000 to the bank. The auto lender is willing to lend up to 120% of that value on this vehicle for a total of $30,000. Since the customers are still $6000 upside down in their trade, they only need to put $1000 down in this situation.

However, the payment on a $30,000 loan in Option B. is going to be a lot more than the payment of the $12,000 loan in Option A. Bottom Line: It might take some cash down to help you trade out of your auto loan. If you look at brand new vehicles, sometimes you can use factory rebates as down payment. The down side is most new cars that offer big rebates are expensive.

Rule Number 4 – The more negative equity you have, the higher your interest rate will be.

This makes sense if you think about it. If 2 people are buying the same $20,000 car, and one of them has a loan for $30000, and one has a loan for $10000, which one will have a lower auto loan interest rate? The one borrowing way less money, right? I hope you can recognize that it is less risk for the finance company to lend less money on a given car. Even if the loan turned into a repossession, they are probably going to get their money back when the car sells at auction.

Rule Number 5- When possible, don’t trade in with negative equity.

We find that people, on average, trade in their car every 2.5 years. Most people do not want to put any money down, and even more want the lowest possible payment. That is a recipe for disaster. Keep your car longer, put more money down, and you will not have the negative equity repeating cycle. It seems to get worse with every trade-in until dealers cannot help you trade in anymore.

Rule Number 6 – The lowest payment IS NOT the best deal.

Some auto loan lenders are willing to go up to 84-120 months for an auto loan. Doing this will guarantee being upside down in your loan unless you put a lot of money down. Be smart. If you cannot afford the 48 or 60 month payment, do you really need the car?