Smart Moves by Ellen James Martin

DRIVE A HARD BARGAIN WHEN BUYING A CAR AND A HOME

Do you find yourself in the position of having to buy a house and a car at the same time, due to a major life change?

If so, to avoid overspending, you'll want to make the most prudent and cost-saving choices on your car purchase. That way you'll maximize your chances of obtaining the best possible home, according Sid Davis, a real estate broker and author of "A Survival Guide for Buying a Home."

"Nowadays, those who make a strategic home purchase in a strong neighborhood can, at the minimum, expect that the property won't go down in value. And over time, it could appreciate. However, a car isn't an investment because it's bound to depreciate," Davis says.

Should homebuyers who are also buying a car choose a new vehicle or a used one? If possible, should they try to pay cash for the car or finance it? How can they determine the best choice in terms of safety, reliability and fuel economy?

"Remember, if you buy a very expensive car with a big car loan, that could negatively impact your chances to buy the home you want or to get a mortgage. Lenders hate seeing a huge car loan popping up on a borrower's credit report," Davis says.

Ideally, homebuyers who also need a car should buy an inexpensive one and pay cash -- assuming they have sufficient savings to do so, he says.

Here are a few tips for wannabe homebuyers who also need a vehicle:

-- Look for a great deal on a late model used car.

The very idea of buying a used car makes many people nervous. After all, it can be risky to purchase one without the assurances that come with a new vehicle. But if you do your research, over time the savings from buying used can be significant, says Jeff Bartlett, deputy editor for autos at Consumer Reports magazine.

"The greatest depreciation for a brand-new car comes in the first three years -- when new cars typically lose 35 to 50 percent of their value," Bartlett says.

-- Research the reliability ratings for the vehicles you're considering.

Drawing on reader surveys, Consumer Reports publishes annual data on the reliability of numerous used car models. The Used Car Buying Guide is available in either the print edition or online at www.consumerreports.org.

"We believe in making reliability a major factor when you buy a car," Bartlett says.

For those in the throes of buying a home and a car simultaneously, it can be tempting to consider only immediate needs. But Bartlett urges you to think longer-term and consider upkeep and repair costs, as well as fuel economy.

For information on fuel economy ratings, go to the website of the U.S. Environmental Protection Agency: www.fueleconomy.gov.

-- Get a clear sense for used car prices before you shop.

Bartlett says all used car purchasers should thoroughly research values before heading out to look at cars. That way you stand a better chance of avoiding an above-market price.

One widely recommended source on car values is AutoTrader.com, a website for consumers seeking to buy or sell vehicles (www.autotrader.com). Another source to consider is Edmunds, which provides extensive car pricing data, along with vehicle reviews (www.edmunds.com).

-- Shop for cars with a businesslike attitude.

Eric Cluskey, a former car dealer and author of the "Step-by-Step Guide to Buying a Used Car," says those shopping for a used vehicle are in a stronger bargaining position if they maintain emotional neutrality.

"Once the dealers know you're in love with a given car, you lose your edge in negotiations. Dealers hate it when you hide your emotions, but that's what you've got to do to get the best price," Cluskey says.

-- Have any used car you're considering checked out by a mechanic.

"Your best secret weapon is hiring an independent mechanic," Bartlett says.

Many dealers will allow you to take a used vehicle off the lot to a service station to have it assessed. But you might also choose to pay a mechanic to check out the car on the dealer's lot.

Consumers are increasingly turning to independent car inspection services that will go to any location, including a dealer's lot, says Andrew Dabbs, the founder of one such service called Lemon Squad (www.lemonsquad.com).

"The advantage of our type of service is we don't care whether you buy the car. Unlike your neighborhood service station, we don't have any repairs to sell you," Dabbs says.

Besides the Lemon Squad, two other companies in the car inspection field include: Aim Mobile Inspections (www.aimmobileinspections.com), and Car Chex (www.carchex.com).

Before hiring any car inspection service, consumer advocates advise you to search for possible complaints about the company through your local government consumer protection office or the Better Business Bureau (www.bbb.org).

-- Shop for safety as well as price and reliability.

Obviously, all used car buyers should make safety a top consideration. Bartlett recommends you pick a vehicle new enough to have state-of-the-art safety gear, including front and side air bags, as well as electronic stability control. ESC is an especially important feature on sport utility vehicles.

You should also look at comparative crash test ratings available through the National Highway Traffic Safety Administration (www.safercar.gov) and the Insurance Institute for Highway Safety (www.iihs.org).

-- Give more thought to home buying than car buying.

Clearly, no one should buy a car -- new or used --without a substantial amount of research. But Davis, the real estate broker, says those buying both a car and a home simultaneously should realize they'll need to pay more attention to the real estate.

"Remember, a car is a commodity. At any one time, for example, there are probably a few thousand 2010 Ford Explorers for sale in your region. But every home is unique in terms of features, condition and location within a neighborhood. So in the long run you'll find that every additional hour you spend will likely prove more rewarding," he says.

(To contact Ellen James Martin, email her at ellenjamesmartin@gmail.com.)