It is a Great Time to Buy a Car

The Federal Reserve board decided to cut rates after all today. That means the prime rate is now a low 2%. Auto rates should be falling soon with the new, they're already below 7% for a new car.

So you can get a good rate on an auto loan, why else is it a good time to buy a car?

• Auto dealers are facing slumping sales. Analysts predict a million fewer new car sales this year.
• Gas is expensive. You can reduce your commute costs by switching to a more fuel efficient vehicle.
• The internet makes it easy. Compare cars online to find the best deal.
• Cash strapped consumers may be extremely motivated sellers.
• There are some great used car options. A lot of cool low-MPG cars have been on the market for a few years. The Toyota Prius and BMW Mini have both been sold in the US since 2001.
• Your tax refund and economic stimulus rebate are coming in the mail soon and would make for a good downpayment.

If you are shopping for a car, here are some tips for saving money:

• Research first. Spend some time reading online and comparing prices to narrow down your list of options. Do some test drives to see if you really like the choices.
• Wheel and deal online. Most auto dealers have specialized internet sales departments that you can play against each other from the comfort of your computer. Keep negotiating until you get a great deal.
• Buy used.  Unless you plan to keep the car for a long time, you can save a bundle by buying a car that has been gently used instead.
• Wait until the last weekend of the month or the quarter if buying from a dealership. This is when car sales teams are racing to make their numbers.
• Finance your purchase online. Online auto loans offer very low rates and fees. And the best part is that a dealership will often try to undercut the rates and give you a better deal.
• Use a downpayment to lower your auto loan rate and save money on interest.

We've got more tips to help you save $3,000 on your car purchase online. 

Emily Davidson – A former TransUnion insider and a member of Credit.com's expert team. Emily writes about credit reports, credit cards, loans and personal finance as the CreditBloggers.com editor.