Buying a new car, '90 style: a plethora of models, financing deals--and pitfalls


SILVER SPRING -- It doesn't take long to get a salesman's attention in an auto showroom these days -- just seconds in the case of a solitary, pre-lunchtime shopper at Covington Buick, one of 20 franchises owned by six dealers in Auto Sales Park of Montgomery County, which in good times is a hotbed of automotive retailing.

"The economy finally caught up with us," said Barry Covington, the owner, lamenting the yearlong dearth of customers.

The 1990 model year, which ends Wednesday, has been the weakest since the recession of the early 1980s.

But the difficulty facing new-car buyers isn't just a question of the economy.

There are a daunting number of choices -- technological, ideological and financial.

Sedans, coupes and station wagons have been joined by minivans, utility vehicles and extended-cab pickups.

Automakers offer and rescind cash rebates at a dizzying pace.

The safety-conscious must decide whether air bags are superior to automatic seat belts.

And what of ideology in an age when the line between imported and domestic models has been blurred by foreign companies that assemble cars in the United States?

The recent experiences of three typical suburban Maryland shoppers show some of the intricacies encountered in today's market.

Dr. Clifford Crawford, 37, of Silver Spring, is the kind of customer the General Motors Corp. looks for.

Young, well-educated and affluent, he sees cars not just as a means of transportation but as a means of expressing himself.

According to GM's marketing strategy, Dr. Crawford should have switched directly from the 1986 Pontiac Fiero GT he was leasing for $345 a month to a more expensive model.

Having grown up in Flint, Mich., the birthplace of GM, Dr. Crawfordhad resisted the idea of switching to an imported car.

But in January, he leased a 1990 Nissan 300 ZX. It was $500 a month and cost more because it used premium fuel, but it "turned heads, especially where I work at the Quantico Marine Base in Virginia."

He was not altogether confident of the safety of the 300 ZX, however, and in May, he started shopping for a new car.

Dr. Crawford visited about 10 dealerships, test driving a variety of foreign and domestic sport models, including the Lexus M30, Acura Integra, Pontiac Grand Prix, Toyota Celica and Toyota Supra.

"I wanted something with style and power, but I also wanted an air bag and antilock brakes for safety," he said. "Electronic goodies were important, too."

Finally, he bought a $19,000, four-door Buick Regal at Covington Buick.

Crawford ended up with a GM car, but just barely. He says that if his experience with the Buick is less than positive he won't hesitate to buy an import.

When Don and Rose Money of Silver Spring came to Crystal Ford in the Auto Sales Park, they were looking for a vehicle that had the cargo capacity for the newspapers that Mr. Money, 38, distributes for the Washington Times. He was considering a Ford Econoline van.

The Moneys wanted to trade their tiny 1988 Hyundai Excel for the Econoline, but they had a big problem: They still owed $6,900 to the Chrysler Credit Corp., which had financed the Hyundai.

The Hyundai had cost about $5,900 new two years earlier and now was worth only about $2,000.

The Chrysler loan was larger than the purchase price because it covered not only the Hyundai but the unpaid balance on a previous auto loan. Thus, the Moneys had negative equity of almost $5,000.

They had only $5,000 in cash, enough to cover the old loan but not a down payment on a new vehicle.

One Ford dealer wouldn't consider selling to them. But Money met a Crystal salesman who was friendly "without being pushy."

At first, Ford Motor Credit turned down their application for a loan. Crystal Ford tried again.

Creative financing provided the solution. The Moneys paid off the loan on the Hyundai but agreed to the full retail price of almost $20,000 for an Econoline van that usually would have been discounted to less than $16,000.

Ford Motor Credit lent them more than $15,000 and the Moneys agreed to 60 payments of about $360 a month.

Ford's loan to the Moneys and hundreds of thousands of loans like it represent a potential time bomb even as recession looms.

With almost $300 billion in automotive debt outstanding, a substantial proportion -- no one knows exactly how much -- represents negative equity.

A need for basic transportation wasn't the only motivation for Jonathan Sams, 23, to shop for a new car, but it was his No. 1 consideration.

"I wanted something that would hold up well, since I have to move around quite a bit, and it had to be able to transport my bicycle," said Mr. Sams, a sailor stationed near Washington with the Navy.

The second-most-important consideration was price.

Mr. Sams' 1982 Pontiac Trans Am had a case of "the 50,000-mile blues," he said, and needed constant repairs.

He spent two months of comparing a variety of foreign and domestic models. Then, while visiting home in Cincinnati, Mr. Sams found a 1990 Oldsmobile Cutlass Supreme sedan deeply discounted from the retail price of $18,900 to $14,600.

Mr. Sams' father took his used Trans Am and in return promised to pay his son's car insurance for two years.

Without insurance costs, and after a down payment of $2,700, Mr. Sams will owe about $280 a month for his Cutlass Supreme.

"I never thought this nice a car could be in my price range," he said. Moreover, the back seat folded down, allowing him to carry his bicycle.

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