A lot of news sites are doing a lot to report about the current economic cycle and the poor quality of the economic environment around the world. In addition to housing loans and credit markets, cars loans are obviously the next large monetary groups and though we all know it’s going to be tougher to get credit to purchase a new car when our current model becomes inadequate due to life changing events (births, new jobs, death, etc.), you have an accident or you need a new ride because you just got a raise and want to upgrade. Below is an analysis of the number of ways you might be able to get a great deal on a car or at the very least, improve your chances on getting everything you want. Without further adieu…

Look at Last Year’s Models

Unless you’re getting a completely redesigned model, the only difference between a 2007 and a 2008 Ford F-150 is a different color option or two and maybe different features in the cold weather package, but it’s the same car built in the same factory by the same people. The engine and electronics are just as reliable and major recalls should already be fixed if the cars haven’t been purchased yet. Dealers have to move current inventory before they can add more cars. As such, they’ll want to cut their margin on these cars to get them moving and move in new, “more desirable” cars for those looking at the newest and best. Don’t be too picky and you might just get yourself a super deal.

Look for Incentives

Cash back and similar incentives are mostly gimicks to get you to purchase a new car. However, they are worth a look. Different dealers can offer different incentives for the same car. So, if you have a steady income to buy a new car but don’t have a large savings for a down payment, you might want to look for 0 money down incentives where as those who have been planning the purchase for a while might get money back off the total of the car. Some dealers like Chrysler and Suzuki had incentives dealing with gas locked in at a low price for the first year of car ownership, but with gas prices in rapid decline, these sorts of incentives are less impressive today.

Look at Used Cars

Just because you’ve always had new cars doesn’t mean you always have to have a new car. A car that’s 3-4 years old with low mileage will carry 90% of the reliability of a new car with with a majority of depreciation already worked into the price. Whereas some cars, like the Mini Cooper, see very little depreciation after a few years time, high volume models like the Civic, Corolla and

Look at Certified Pre-Owned Cars

Whereas a used car will take a deep discount due to the lack of warranty after a few years, the Certified Pre-Owned car (or CPO) is a middle ground that carries a slightly higher cost due to dealer going over the car upon trade in and ensuring everything is in factory condition (mechanically), even if the leather might have one or two wear marks or the paint isn’t factory fresh. These cars often offer a warranty

Shop Around

With the number of dealers shutting down (and will shut down in the coming months), you may have to look to dealers not in your immediate area for deals. It may be harder to leverage dealers against each other because of the distance you’ll have to travel. However, because of the prevalence of shipping cars to your local dealer, don’t be afraid to look around the country for great deals on cars. Maybe a particularly slow market has an over stock of mini-vans. Leverage this in your buying decisions and keep your eyes peeled in markets other than your own. It pays to be a smart shopper and go outside your local dealers.

Don’t Settle For Less Than You Want

This is a buyers market. Between dealers who are overstocked and independent owners who are strapped for cash, if you have cash, you’re in the cat-bird seat. You worked hard and now have the money to buy the car you want. Don’t let someone get away with trying to rip you off because they are in a hurry to sell the car. You owe it to yourself to get the best deal possible. That doesn’t mean you can be a “tire kicker,” but it does mean you have the luxury of time. Spend that time well!

Don’t Be Pressured to Buy

Dealers need you more than you need them. Dealers are starting to wise up to the average buyer and high pressure situations don’t work as they once might have. You are the one who is gracing them with your presence. There are plenty of dealers out there (for now) and you can just as easily drive to another one (or another make all together). They should treat you with the utmost respect for you are one of the few people out there still looking to buy a new car!

Don’t Buy More Than You Can Afford

Options on cars these days can be an endless wish list of all the things you’ve ever wanted or could possibly seem useful. Look at Mini Coopers, for example. The base price may start out at a mere $21,000. However, adding convenience package, technology packages, cold-weather packages and the rest of the seemingly endless supply of dealer add-ons can put your car well over $40,000 (I have a friend who virtually built one of these cars back when the Mini first came out). Determine your needs ahead of time, use the online car builder and read reviews about various features. Maybe you save a few dollars by not putting that DVD navigation system in and just buy a nice portable unit to use in multiple cars. A few items like that can set you back $2500 or more, depending upon your manufacturer.

Wait

There is the possibliity things will get worse before they get better. Millionairs became millionaires by saving their cash and waiting for the right time to invest. The same goes for car buying. Keep your cash in reserves until YOU are ready. Emotion can play a huge part in car purchasing as well as ownership. Don’t let greed or impulse drive your decision for that shiny new car that’ll make all your friends jeolous. Bide your time, look for your deals and wait. The car will come to you and when it does, you’ll be glad!

With the recent $700M treasury backing of a number of financial institutions here in the USA, there’s obvious pretense now for politicians to spend our money elsewhere in the economy (because the first $700M worked so well). With the obvious worry and underlying lack of confidence of the average American consumer, the two Presidential candidates are looking for last minute “quick fixes” to gain support for their candidacy. In addition, Auto executives praise both Obama and McCain for their call for a faster distribution of the loan. Both McCain and Obama realize that there will be both economic and emotional consequences to a failure or bankruptcy to the likes of GM or Ford. Both companies are currently in a fight for their lives, struggling to find ways to survive the poor sales and terrible credit situation many Americans have put themselves into. On the bright side, Ford still has well over $26B in cash equivalents and GM has over $21B (due to the last 7-10 years of spectacular growth and solid profit surpluses). These reserves, even with the most grim estimates by financial analysts, should be enough to last Ford and GM through the end of 2009. Should there be a more dire situation (and it’s prudent to always assume the worst), both auto makers have access to numerous lines of credit and have been aggressively restructuring and laying off workers to minimize their overhead as much as possible in the tough times. In addition, 2010 will see drastic cost reductions due to the fact that many of their healthcare and pension liabilities to retirees and union workers will be reduced under a new labor deal. GM has made it clear that, ”…bankruptcy is not an option GM is considering.” according to Renee Rashid-Merem, a GM spokeswoman.

Consider the fact that bankruptcy will not only harm the GM brand, but the filing would have adverse effects on the residual value of new and used cars, current GM warranties and selling inventory still on GM lots. This would make consumers gravitate to other, more stable carmakers. Whereas companies like Delta or K-Mart could use bankruptcy as a means for escape of an unmaintainable financial situation, GM and other brands that plan to continue in the foreseeable future need to present a degree of stability to their potential clients.

The LA Times recently reported that just two weeks ago President Bush signed off on a plan to guarantee $25 billion worth of low-cost loans to U.S. automakers and suppliers, a crucial lifeline at a time when borrowing at any price is almost impossible for large companies. Representatives on both sides of the aisle have supported these loans, loans that would otherwise be impossible to secure from any other means. If no one else (no other bank, the best financial minds in the world perhaps) is willing to lend this money Ford and GM, how does the US Federal Government think it can help (considering their complete lack of regard for their own financial book balancing)?

So, that leaves the unimaginable, Ford or GM going bankrupt. GM representatives cannot will themselves out of bankruptcy. If the marketplace for credit for the average American does not change by the time GM and Ford’s credit and current cash runs out, bankruptcy will be the only option. However, as a recent article on Jalopnik pointed out, it’s not a crisis of brand. It’s a countrywide issue affecting all car companies:

“For the first time in the history of the company, the crisis isn’t product. It’s clear GM’s figured out the need to design and build high quality, fuel efficient and attractively-designed vehicles. Not only have they realized the need to do it, they’re actually doing it. Even the most jaded auto enthusiasts, journalists and industry analysts with even the slightest clue have to admit they’ve stepped up their game in the past few years.”

Here is where the bright side comes in. GM has a competitive product. Ford isn’t quite there yet, but they are making strides to bring many vehicles from their European markets that fit right in with cars like Yaris, Aveo, Camry and other standard names that fall into the inexpensive, fuel efficient and reliable category. Just look at the new Focus and Fiesta.

GM and Ford have a long way to go. They have survived terrible times in the past and the government is going to try to do all they can to make things work. The fact is though, GM is making good cars. They are trying like they never have before. Last year when Toyota surpassed them as the #1 automaker in the world, they realized that they had to stop trying to market cars for the sake of marketing and start making real cars that people wanted to buy over the (foreign) competition. Because of that, if GM does make it through this current climate unscathed, they’ll be in a much stronger position than they ever have been before. So where does this leave Senator McCain and Obama? Well, their hearts are in the right place, but time will tell whether their heads are. The free market will decide if GM and Ford are destined for the big junkyard in the sky. I have a feeling though, it’s not the Federal government or the next president that will keep GM from the pain of bankruptcy. It will be a combination of smart managers, an growing product line with solid products and the will of the American people to keep The General’s door open.