The study was overseen by the Governors Highway Safety Association, a nonprofit organization that represents highway safety offices in every state and territory, as well as the District of Columbia and Puerto Rico. Here are a few highlights from the study:

1)      There are four basic types of distractions: visual (e.g. looking away from the road), auditory (e.g. listening to something that’s unrelated to driving), manual (e.g. fiddling with something other than the steering wheel or gear shift, like the radio or a mobile phone), and cognitive (e.g. thinking about something other than driving).

2)      Most major distractions involve at least two of the above factors.

3)      Shockingly, the majority of drivers admit to being distracted between 25% and 50% of the time they are behind the wheel.

4)      Roughly 1/3 of all drivers regularly use a mobile phone while driving.

5)      Roughly 1 in 8 drivers have said that they text and drive.

6)      Between 15% and 30% of drivers involved in auto accidents have admitted to being distracted (and the figure may actually be higher due to reporting inconsistencies).

7)      While texting is almost certainly more dangerous than talking on a cell phone, the GHSA study insists that “there is no conclusive evidence on whether hands-free cell phone use is less risky than hand held use.”

8)      Laws prohibiting talking and texting on mobile phones result in reductions of those activities immediately after the law goes into effect, but there’s no sign that they have any long-term impact or that they reduce the total number of crashes.

Despite point #8, the GHSA recommends that states continue to implement anti-talk/text laws, but stress that unless those laws are regularly enforced, they’ll do no good.

As technologies in telematics and collision-avoidance become more common place, hopefully we’ll see distracted driving become a more manageable problem. For now the problem lies with us, the drivers. We have to take responsibility for our actions and put away the phones while driving and encourage our kids, co-workers, and spouses to do the same.

*Portions of this taken from GHSA study

There are various types of extended warranties, each differing by the type of coverage provided as listed below:

• Full Coverage (Bumper-to-Bumper)
• Modified Full Coverage
• Basic Coverage (Power Train)

The cost can vary based on the coverage type and the length of time covered (i.e.: 12, 24, 36, 48 or 60 Months). This is where customizing an extended warranty for your pre-owned vehicle is important. When choosing an extended warranty you may want to consider your driving and maintenance habits (number of miles you drive annually, unexpected repairs you are willing to cover should they occur, and the frequency of normal vehicle maintenance).  These factors are all important in coming up with a cost-effective extended warranty product for your pre-owned vehicle.

For example, you purchase a 2009 Dodge Charger with 60,000 miles on September 1, 2011. All original manufactures warranty has expired (both original Bumper-to-bumper and Power train) on the related vehicle and your past driving habits indicate that you normally drive 20,000 miles per year.  As such, look to see which of the following terms would be most cost effective and meet your driving needs:

A)

A bumper-to-bumper extended warranty that expires after 40,000 miles or 48 months (4 years) after the date of purchase,

whichever comes first (miles or time)
B)

A bumper-to-bumper extended warranty that expires after 40,000 miles or 36 months (3 years) after the date of purchase,

whichever comes first (miles or time)
C)

A bumper to bumper extended warranty that expires after 40,000 miles or 24 months (2 years) after the date of purchase,

whichever comes first (miles or time)

Have you determined your answer? If you thought option C would be the best extended warranty product for the related customers driving needs, then you are right because of the 20,000 mile annual driving habits. Both options A & B would cause the customer to pay more for the longer coverage periods (36 and 48 months), however, due to the customers driving habits (20,000 miles per year) the extended warranty would expire after 2 years because, based on their driving habits, the customer would have reached the addition 40,000 miles first.

Choosing the right extended warranty product should take some careful thought and planning in order to get the best results and protection at the most effective price.  For more guidance on this issue, contact your local MAC car buying consultants.

(1) Make a lane change into a lane not adjacent to the authorized emergency vehicle if possible in the existing safety and traffic conditions; or
(2) If a lane change under paragraph (1) of this subsection would be impossible, prohibited by law, or unsafe, reduce the speed of the motor vehicle to a reasonable and proper speed for the existing road and traffic conditions, which speed shall be less than the posted speed limit, and be prepared to stop.

(b) The operator of a motor vehicle approaching a stationary towing or recovery vehicle or a stationary highway maintenance vehicle that is displaying flashing yellow, amber, or red lights shall approach the vehicle with due caution and shall, absent any other direction by a peace officer, proceed as follows:

(1) Make a lane change into a lane not adjacent to the towing, recovery, or highway maintenance vehicle if possible in the existing safety and traffic conditions; or
(2) If a lane change under paragraph (1) of this subsection would be impossible, prohibited by law, or unsafe, reduce the speed of the motor vehicle to a reasonable and proper speed for the existing road and traffic conditions, which speed shall be less than the posted speed limit, and be prepared to stop.

(c) Violation of subsection (a) or (b) of this Code section shall be punished by a fine of $500.00.

This new law in Georgia says drivers must move over for emergency vehicles stopped on the side of the highway. This law is meant to keep officers and traffic violators safe from crashes with passing cars. We have seen these incidents on the local news many times.

This law passed after a growing number of police, emergency technicians, and DOT workers were being killed during routine traffic stops, crash responses, and highway construction projects around the nation. Right now more than thirty states have move-over laws on the books, with fines that range as high as one thousand dollars or more in some jurisdictions. The move-over fine in Georgia is an “attention getting” five hundred dollars.

Failure to obey this law can lead to consequences far more serious than fines. According to FBI statistics, traffic crashes claim the lives of more police personnel than any other cause of death in the line of duty, including shootings. According to the FBI last year, forty nine officers died in crashes across the country. Thirteen of those were struck and killed by passing vehicles while they worked outside their patrol cars.

This law was meant to reduce the number of injuries and fatalities to police officers, paramedics, and firefighters, tow truck drivers and highway maintenance workers according to the office of highway safety. Reports show emergency vehicles of all kinds have been struck while parked on Georgia highways—even with emergency lights flashing.

The Georgia MOVE-OVER law requires drivers to move over one lane when possible. Don’t worry about those people who are flying past you, think about yourself. SLOW DOWN below the posted speed. Think SAFETY FIRST.

At first glance, a pre-owned vehicle of this caliber may appear to have excessive usage for its age, due to the number of miles accumulated over such a short period of time. But one thing to consider is that these vehicles are initially owned by large publically traded companies who maintain rigorous maintenance routines on their vehicles. So, these vehicles are typically serviced every 3,000 to 4,000 miles according to the vehicles manufacturers recommendations, which may suggested that the vehicles mechanical systems are functioning without any problems. Keep in mind that with most vehicles original manufactures’ warranty now extending out as far as 60,000 miles that these pre-owned vehicles still have a good portion of its original warranty remaining. Additionally, with the emergence of extended warranty products, someone can now purchase extended warranty coverage that can extend a pre-owned vehicles total warranty coverage beyond 100,000 miles.

Nonetheless, to get the right pre-owned vehicle at the best price you need to do your research by obtaining the vehicles history report (Auto Check or Car Fax) as well as other due diligence procedures. For further guidance on collecting information on a vehicles history and analyzing the related results consult with one of our Members Auto Choice (MAC) sales consultants.

Generally speaking, you want to negotiate the price of the vehicle you are looking to buy prior to allowing a dealer to even know anything about your trade-in. Sales people at dealerships are trained to get the keys to your trade prior to taking you on a test drive so that their used car manager can be appraising your trade while you are falling in love with their vehicle. They like to make it seem as though they are getting two things done at once to cut down on the amount of time it takes you to complete the purchase, but that is not the real reason for this process.

The real reason is that while you are test driving their vehicle then the salesperson is getting details and asking you questions about your trade in. He asks things like how much you owe on the trade, how much you think your car is worth, and what amount will it take to get this deal done today.

When you answer the salespersons questions you are arming him with valuable information.

When you arrive back to the dealer’s lot after the test drive, the salesperson goes to get your keys from the used car manager and it is at that point he fills the used car manager in on exactly what it will take to complete the deal.

So let’s say you have told the salesperson that you need $10,000 for your trade-in and the black book used car guide states your trade in is worth $8,000, which in no way means that a deal can’t be put together for you. All that means is that they have $2,000 less negotiating room on the price of the vehicle that you are looking to purchase. The salesperson will come back to you and give you the trade in allowance (the amount that you have already told him you wanted to hear) and you will never know the true ACV (Actual Cash Value) of your trade-in.

The more efficient way to handle this is to not even discuss a trade-in until after you have negotiated the price down on the dealer’s vehicle. This will give the dealer less of an opportunity to make additional profit on your purchase.

A lot of people refer to this process as flipping the numbers. Most consumers know that it happens but do not really know how to prevent it from happening.

Consumers these days turn to the internet to obtain values on their trade-ins but the reality is that the dealer is the one who has access to the true value of your trade-in. No dealer will pay you more for a car than he would pay if he went down to the auction to buy a similar vehicle.

So if you are out car shopping and one dealer tells you a trade-in figure several thousand dollars different than other dealers, rest assured he is flipping the numbers. In the end you will need to look at the bottom line (the amount financed) to determine if your purchase is a good deal. It doesn’t hurt to get the information that the internet offers you regarding the value of your trade in but the true test is when a dealer offers you a fair trade in amount after you have already agreed on a price for the car you are trying to buy.

Contact MAC today to learn more about the car buying process.

A Negative Equity position simply means that the trade-in value of your car (what your car is worth today) is less than what you owe on the car (your loan payoff balance). For example, let’s say that you currently own a 2005 GMC Truck that has 90,000 miles and the trade-in value quoted to you is $6,000; however, the loan payoff is $7,500, which results in the negative equity ($1,500).

Essentially, there are three ways to overcome negative equity on your trade-in. The simplest alternative is to drive your car until it is completely paid off. In other words drive your car until “the wheels fall off.” The second alternative would be to find a car to purchase that has enough equity spread to cover your existing negative equity. The third alternative is to put cash down to cover the negative equity.

Equity spread as mentioned above is the difference between the purchase price of the new vehicle being acquired and its related bank retail loan value (or the NADA Retail Loan Value). For example, let’s say that you are purchasing 2006 Infinity M35X with 56,000 miles on it for $25,000 and the Bank retail Loan Value is $28,225. As such, the equity spread would be $3,225. The bank retail loan value is the maximum amount of money the Credit Union will loan on any vehicle.

Equity spread will give you the leverage needed to roll any negative equity into the new vehicle being financed. In the two examples mentioned above you would be able to roll the negative equity from the 2005 GMC Truck ($1,500) into the financing of the 2006 Infinity M35X.  For further assistance with finding vehicles that have equity spread benefits contact MAC today.

Most lenders look for credit scores above 700 to lend to. In today’s economy maintaining a 700 plus credit or beacon score takes a lot of work and discipline. You must pay all of your bills on time and live within your means in order to maintain a positive credit rating.

Since interest rates are based on risk it is fair to say that the lower the beacon score, then the higher the interest rate. When consumers do not repay debts within the terms that they agree to with a lender their credit rating is affected. Once your credit is affected it can take years to repair it and get it back to a 700 plus score.

There are several factors that go into a credit/beacon score.
Some examples are:
a. The amount of debt you owe relative to the high credit a particular bank has loaned you (in other words your maximum credit line).
b. Slow payment history or in other words not paying a certain creditor on time.
c. Allowing too many creditors to pull your credit report. This happens when you are shopping for financing through a dealership or other potential creditor. When you sign a credit application you are allowing them to look at your credit and also authorizing them to send your credit to as many banks as they see fit.

When a conventional lender is not willing to take a risk on your credit as a result of a lowered beacon score then you are automatically moved over to what is referred to as the subprime market. The subprime market is primarily for higher credit risks. Remember the higher the credit risk the higher the interest rate—when you are placed in the subprime category you will pay more interest for items that you cannot afford to pay cash for. That means a higher interest rate on credit cards, cars, home loans, boat loans, etc.

So keeping on the topic of cars and the subprime market, let’s explore two different types of subprime lenders.

The first is the larger subprime lender: these lenders cater to the beacon scores that range from 600 to 690. They offer rates that are usually 6 to 8 percent higher than conventional rates so usually anywhere between 12.50 to 19.00%. Often, these lenders require a significant down payment to minimize their risk. The lender dictates the type of car you are able to buy as well as the loan terms. The lender charges the dealer a loan acquisition fee. This fee is basically profit in their pockets to offset their losses on the back end as their repo rates will be higher than conventional lenders. These lenders will generally require an automated debit from your checking account for monthly payments.

The next type of lender in the subprime market is the Buy Here Pay Here lenders/dealers (BHPH). When you are buying a vehicle from a BHPH dealer you are considered the highest credit risk. The average credit score for a BHPH client is 500 to 600. Most BHPH customers have usually been rejected by traditional dealers and the first category of subprime lender. These customers have most certainly not paid his/her bills on time or not at all.

BHPH car dealers know that their clients are high risk and therefore set an average interest rate of 29%. After doing research on the BHPH market most dealers charge the maximum the state allows. All BHPH dealers maintain detailed records of who your friends and family are and keep up to date information on where you live, work, worship and/or go to school. Generally they mail out free oil change coupons or some other type of gimmick or giveaway to get you to come in so they can update your records.

They all verify every piece of information on the loan application before they let you leave in the car and the average cost of the cars that they sell is $3,000 to $14,000. If you are forced to buy a low end cost car at about $3,000 they will require at least half of the cost of the car for a down payment. If you get to a higher value car then the BHPH dealer requires a more significant down payment and the higher value vehicles usually go to the established client or the repeat client.

Usually, the BHPH dealer requires a large down payment. The typical down payment is equal to about 60 to 70 percent of what the dealer paid for the car.

The average BHPH dealer does not spend a lot of money up front on the maintenance or repair of the vehicles they sell. This includes cosmetic items as well as mechanical items. They generally wait until the client pays them for 6 months or so. This tells them the trend of how that particular client will pay them for the life of the loan.

Most BHPH dealers do not report to the major credit bureaus in an attempt to control the client. So while you may be making on time payments, a criteria for improving your credit score, this information is not reported and therefore not affecting your score. This keeps the clients credit score low so they do not have the ability to move from a BHPH dealer to a subprime or conventional lender.

The average gross profit for a BHPH dealer is $4,500 to $6,000. This sounds extreme, but they are lending to clients that have a proven track record of not paying their creditors in a timely manner. Also it takes the full loan term for the dealer to collect his full profit.

The average loan term is 30 to 42 months. BHPH dealers collect their payments weekly to ensure they are the first to get their payments before their clients pay anyone else.

The automotive industry had a very difficult year in 2008. A credit crisis, volatile gas prices, both inflation and deflation, and other economic factors combined to create some unprecedented economic challenges for both new and used car dealers. While franchise sales and profits declined, BHPH dealers did not suffer the same fate.

The car industry lost approximately 5000 franchise and independent operators in 2008. Prudent operators will provide financing to better credit quality customers only after increasing their down payments and repayments from historic levels. Such increases will enhance their profits and cash flow and reduce their losses and mitigate risk. These changes are necessary because capital availability when America emerges from this recession will be more limited.

If you have had credit problems and you do not want to limit your choices please go see a representative at your credit union. These credit union employees are trained to help you understand your credit as well as guide you to make wiser financial decisions.

Please do not let your low credit score hinder you from going to your credit union and working to reestablish your credit score. Credit union representative can help get you into a car that is reliable with an interest rate that is based on your total picture.

Do not allow yourself to think that you have no options when it comes to buying a car. You are in control of your own credit and also what interest rate you will get when you do come in to apply for a loan.

Learn more about the car business with a free consultation with a MAC representative nearest you.