When to bite on automakers' zero-percent financing deals

Q: I've been toying with the idea of buying a new car. I'd like to have a few other expenses paid first, so I'm thinking of waiting until after the first of the year. But I'd like to take advantage of the zero-percent financing offers floating around now. Will these offers continue? If not, what sort of financing might I expect to encounter next year?
J.N., via e-mail

A: "The industry has been slowly phasing out zero-percent financing," says Edward Lapham, editor of Automotive News, a trade paper in Detroit. "It used to be that the offer was applied to [loans of] more than three years. Now it is offered only on contracts for 36 months." Mr. Lapham doesn't expect no-interest financing to be around beyond the first few months of 2003. "But many incentives will continue to be offered," he says, including lease incentives, rebates, price reductions on selected accessories, and so on. Currently, the average Ford product has about $1,900 worth of incentives, he says, a typical GM product about $2,200, and a DaimlerChrysler product around $2,500.

Q: What credit rating, or other qualifications, does one need for zero-percent financing?
B.F., via e-mail

A: "Car dealers are tightening credit requirements for zero-percent financing," Mr. Lapham says. "Typically, only the most credit- worthy buyers will get it," he says, although it may help to have a very large amount of cash available for a big down payment. Top credit-worthiness, he says, means little or no debt, a favorable past payment history, and a steady income that is appropriate for the cost of the car.

Q: My husband and I have talked about donating our older car to a charity. Is there a list available of organizations that accept this type of donation? Please explain the tax benefits.
J.N., via e-mail

A: One list of qualified charities can be found at www.donateacar.com. Generally, you can deduct the true fair market value of the car. The procedure is spelled out in IRS Publication 526 (www.irs.gov). If the value is more than $500, you must complete tax form 8283. If more than $5,000, you will have to get a written appraisal by a qualified appraiser. Make sure the charity is a 501(c)(3) charity, registered with the IRS.

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