The Worst of the Worst

Each year thousands of American buy cars noted for their lack of reliability and their failure to provide trouble-free service. Why do they do it? And, more to the point, how can you avoid being one of them?

Avoiding a lemon isn't as easy as it sounds. Each year top brands with stellar reputations for quality and reliability buy back from their disgruntled owners individual vehicles that for some unknown reason are beset with gremlins that make them unfixable. And each year thousands of consumers buy vehicles from bottom-of-the-barrel manufacturers and somehow have a hearts-and-flowers experience with car models that are giving other owners fits. So what are you to do beside sticking a four-leaf clover in your pocket and crossing your fingers and toes when you go to buy a car?

One thing you can do is the same thing that professional gamblers do: you can play the odds. Now, as you well know, professional gamblers don't win all the time. When luck is running against them they can take the proverbial bath just like the rest of us chumps, but by knowing the game and positioning the odds in their favor, they can come out ahead more often than not.

In the business of buying a car, knowing the game comes from doing research. And when it comes to gauging overall reliability, a great place to start is a perusal of the J.D. Power and Associates Vehicle Dependability Index Study, which comes out every year. The 2003 Vehicle Dependability Study, which was recently released, was based on responses from more than 55,000 original owners of 2000 model-year cars and light trucks. It covers 147 specific problem symptoms grouped into nine major vehicle systems for models that are three years old. Is it be a perfect reflection of what is available in the market right now? No, it isn't. But it will give you a good indication of which brands offer strong dependability and which brands, on average, don't.

Before we start naming names, a bit of perspective is in order. These days, the dependability and reliability of all vehicles is, in layman's terms, "pretty good." Unlike in years past when some models were absolutely notorious for stranding their owners on the dirty gravel of a roadside, even the relative dregs of today's industry are decently reliable. But that being said, in this age of incredible choice in automotive offerings, why settle for okay when other choices can be so much better?

According to J.D. Power and Associates, the brands that are at the bottom are (from the bottom up) Kia with a VDI problem incidence of 509 problems per 100 vehicles, Land Rover at 441 problems per 100 vehicles (PP/100), the now-vanished Daewoo at 421 PP/100, Suzuki at 403 PP/100 and Volkswagen at 391 PP/100. No doubt the inclusion of some of these brands on this not-so-enviable list surprised some of you. Maybe you would have guessed that the two Korean brands would be toward the bottom, but would you have guessed that expensive European import Land Rover would be right there wedged between them? And would you have guessed that a Japanese brand (Suzuki) and a European brand with deep American roots (VW) would be down in the depths as well?

There are other non-intuitive results on the list. Would you guess, for example, that Volvo would trail the now-defunct Plymouth brand in reliability? Or that highly vaunted Mercedes-Benz would fall behind brands like Dodge, Ford, and Pontiac in dependability? But those are results reported in the latest survey.

The lesson here is that doing research is better than going with your gut. Often a brand's reputation differs from its current reality. So if you are going car shopping this fall, choose wisely and well. The information is out there. It is up to you to act on it.

Cleveland-based auto writer Luigi Fraschini prefers that you not become a sadder-but-wiser car buyer.

Getting Mr. Goodcar

A car can be like a spouse -- a loyal, faithful soul-mate or a double-dealing untrustworthy scoundrel. Making the right choice can make all the difference. As many of us have experienced to our grief, there are few things more frustrating than a vehicle that has problems. Not only can such a demon vehicle keep you up at night, it can also leave you abandoned by the side of the road. Neither is something most of us want to deal with.

Which, of course, begs the question, how do you choose Mr. Goodcar? And how do you shun all those pretty, shiny machines out there that want to entice you with their first-glance beauty only to leave you broken and despondent a year or two later?

While there are no perfect answers to these twin questions, very good answers can be gleaned from an analysis of the J.D. Power and Associates 2003 Vehicle Dependability Study (VDS). The 2003 VDS examines the reliability and dependability of three-year-old vehicles based on responses from more than 55,000 original owners of 2000 model-year cars and light trucks. It covers 147 specific problem symptoms grouped into nine major vehicle systems, which gives us a very objective look at how one vehicle stacks up versus another.

So why would looking at three-year old vehicles help us buy vehicles today? Well, as Mary Barnett Gilson so aptly pointed out, "What's past is prologue." While not an exact blueprint of the future, past successes and failures in the area of dependability give us strong hints about what brands of vehicles will be dependable tomorrow and the tomorrow after that.

Since we believe in Gilson's epigram, we suggest you would be well advised to start your search for dependability with the Lexus Division of Toyota Motor Sales. Lexus led the 2003 VDS with a score of just 163 problems per 100 vehicles (163 PP/100,) 110 problems better than the industry average and 346 problems better than the car industry's back marker, Kia. Nissan's luxury brand -- Infiniti -- is second on the list, while Honda's luxury brand -- Acura -- is fifth.

To those who have followed the industry for any period of time, this is to be expected, but the other members of the elite top five in dependability aren't necessarily intuitive. Number three on the list is a division of much-maligned General Motors Corporation -- Buick. The venerable Buick brand trails Infiniti by a mere five problems per 100 vehicles, a stellar performance. The final member of the top five is Porsche, a brand that in previous decades had a reputation as high-maintenance.

That information can be helpful, but unless you're in a bucks-up buying category, knowing that Lexus and Porsche offer great dependability is about as helpful as having Cameron Diaz's telephone number. It's interesting information, but it doesn't mean you can do anything with it.

Luckily, there is dependability out there for the rest of us. Not surprisingly, Toyota leads the popularly priced vehicles in VDS, coming in at sixth place on the list with a score 201 PP/100. After domestic luxury brands Cadillac and Lincoln in the seven and eight slots is another no-surprise, Honda. Mercury, Subaru, Nissan, GMC Trucks, Chevrolet, and Saturn are the other relatively lower-priced brands that turn in above-industry-average performances.

The 2003 VDS also indicates that some skunks can change their stripes. Jaguar and Saab, which have long borne the weight of reputations as unreliable and cantankerous automobiles, placed well on the study in the 11th and 12th positions, respectively. Right behind them was BMW, which completes our look at the up-industry-average nameplates.

So if you want to find Mr. Goodcar, shopping these brands is a worthy place to start. Without too much trouble, you should be able to find a vehicle that suits your needs wearing one of these nameplates. Next week, we will look at the list from the bottom up, warning you away from the vehicles judged least reliable by their owners after three years time.

Driving Today Managing Editor Jack R. Nerad has the most dependable spouse in the world -- and his cars aren't bad either.

Giving Cash Away

If you're like most of us, you don't take $20 bills and throw them off a tall bridge into the river. Yet when many Americans step up to the car rental counter, they do the equivalent of just that. Confronted with the arcane concept of rental car "waivers," they act like the proverbial moose in the headlamps, first freezing and then bolting the wrong way. While many of us possess the financial sophistication to plan for our retirement, pick the occasional hot stock, and actually get our bills paid on time, when it comes to rental waivers, we seem to have all the savvy of a blubbering five-month-old. It doesn't have to be that way.

First let's help you get a grip on what the waivers actually are. First, they are a big profit opportunity for rental car companies, but beyond that they can offer you worthwhile protection from financial loss... if you need them. Rental car companies sell waivers that cover liability (damage you cause to other people or property), collision (damage you cause to the vehicle you rented), and comprehensive claims (stolen vehicles, weather-related damage like that caused by hail and flooding and collisions with animals like the aforementioned moose in the headlamps).

How does this protect you? When you buy waivers, the rental car company gives up its right to collect damages from you. That's a good thing, kind of like insurance against a big claim if your rental minivan falls off that big cliff in Hawaii while you and your kids are admiring the view. But, since buying waivers can add substantially to the cost of a rental (waivers can cost between $7 and $25 per day, depending upon the company, vehicle, and type purchased), it's important to know whether you need them.

And the fact is that it seems most people don't know if they need them. In a recent survey conducted by the Progressive group of insurance companies, of those drivers who have rented a vehicle in the past three years, 18 percent said they always buy the waivers at the rental car counter, while 12 percent said they sometimes buy them and 68 percent said they never buy the waivers offered at the rental car counter.

When asked why they buy waivers at the rental car counter, 54 percent of drivers said they do so because they want extra coverage beyond their own policy limits (a good reason if true), 32 percent don't believe or know if their current auto insurance policy covers them (not such a good reason), and nine percent said they feel pressured into buying the waivers by the rental car company representative (not a good reason either.)

So, should you buy waivers at the rental car counter this summer? We'd like to give you a one-size-fits-all answer but, unfortunately, we can't. But here's good advice from an expert:

"It's important that consumers understand what they're already paying for and how it applies to a rental car," said Tom Hollyer, director of product development, Progressive. "That way, they can make a more informed decision about what they may or may not need to buy at the rental counter. If you have 'full coverage' on your personal automobile (comprehensive, collision, and liability coverages) you should check with your agent or your company to see if that coverage extends to a rental vehicle. Chances are it does, and if you're involved in a crash with a rental car, in most cases you would be liable only for your deductible on comprehensive or collision coverages, just as you would be in your personal vehicle."

The key advice here is check with your insurance agent or insurance company. While it probably won't be the most exciting phone call you ever make, it could end up saving you $350 over the course of just one two-week vacation. Wouldn't you rather spend that $350 on a couple rounds of golf, a big steak dinner, or theme park admissions for the kids rather than on waivers of liability?

Additionally, you should check with your credit card company(ies) to learn their policies, because some companies will provide you with coverage at no charge if you use their card to rent the vehicle. You might also want to go to the extreme of taking a copy of your insurance policy along on vacation with you. It's not that the policy needs a break from its dreary existence in the file cabinet, but it might be useful to consult with the policy at the rental car counter if you're unsure.

In this case, as in many, knowledge is power. If you take that five minutes to talk with your insurance and credit card companies it could save you serious cash, and that's a reason to smile whenever you go on vacation.

Driving Today Managing Editor Jack R. Nerad is the veteran of many family vacations that have involved rental cars.

Re-Fi Your Car?

If you own a house, you may have refinanced your mortgage lately. Some folks have actually re-financed their home loans three or more times in the last two years as interest rates have continued to fall to unheard-of levels. But should you consider refinancing your auto loan? Next to a home mortgage, a car loan seems trivial in both length of term and monthly payment, so does going to the effort to arrange refinancing make any sense? Well, hundreds of thousands of consumers apparently feel it does make sense.

Industry data shows that the number of auto loans that have been refinanced has increased by 75 percent in two years. Nationwide, about 450,000 auto loans were refinanced in 2002, up from more than 297,000 in 2001, according to Bandon, Oregon-based CNW Market Research. That number is expected to grow to 525,000 refinanced loans by the end of 2003.

"Refinancing presents a solid opportunity to save money, particularly if you've owned your car for a year or more," said Mike Johnson, Auto Club vice president of marketing and product management. "Lowering the interest rate on your auto loan by even a percentage point or two can make a big difference. It will lower your monthly payments and save hundreds of dollars in interest over the life of the loan."

One of the reasons consumers might shy away from refinancing their vehicles is the fear of being fee'ed to death, because those who have been through a home mortgage re-fi know the thrills of application fees, registration fees, closing costs and the like. But if you find the right lender, refinancing your vehicle can often be accomplished with very minimal fees and out-of-pocket costs. For example, in many states refinance applicants pay only a $15-$25 fee to transfer the lien.

There is one key factor to make certain of, however. Car owners contemplating a re-fi need to make certain that their existing loan has no prepayment penalties. Vehicle refinancing gives consumers the greatest benefit when a simple-interest loan with no prepayment penalties is refinanced into a simple-interest loan with a lower rate. Prepayment penalties can quickly eat up the savings that might otherwise be gained by getting a new, lower-interest loan.

Are you afraid the savings won't be worth the effort? You have to decide for yourself if $1,500 is worth a 10-minute phone conversation or visit to a Web site. Here are examples of how vehicle refinancing works:

Let's say you are consumer who bought a new SUV last year and financed $30,000 for five years at eight percent. You currently have a monthly payment of $608. If, after one year, that loan were refinanced at five percent, the payment would drop to $574 a month -- a savings of more than $1,600 over the life of the loan.

Obviously, the larger the loan being refinanced, the bigger the savings. But even if you have a significantly smaller loan, you can still realize some pretty handsome, in-your-pocket cash. If you refinanced a 60-month $16,000 loan after one year -- dropping from an eight percent APR to five percent APR - it will save you $882 over the life of the loan. The bottom line is, if interest rates are lower (the rule of thumb is by one percentage point or more), then car owners can save money by refinancing.

Will everyone benefit from refinancing? While many will gain some benefit from securing a lower-interest rate loan, it works best for someone who is in the first couple of years of a loan rather than near the end of the loan term. You are also a strong candidate for a re-fi if previously you had a poor credit history but now your credit history has improved.

Just as when buying a car, if you want the most significant savings, don't look only at the monthly payment. One way lenders can lower the payment is to extend the term of the loan, but that can end up costing you money rather than saving you because the total of your payments could well be more than the original balance.

How do you go about refinancing your car loan? Most major banks and financial institutions will refinance loans, but as with mortgages, some of the most competitive rates can be found on the Internet. The Auto Club's financial services program provides competitive auto loan refinancing rates for members through its Web site.

Driving Today Managing Editor Jack R. Nerad, the co-host of the nationally syndicated "America on the Road" radio program, writes frequently on consumer issues.

Where Are Americans Going This Summer?

The summer vacation season is in full swing, but one big deterrent is causing many Americans to cancel or delay vacation plans this summer. It's not the threat of terrorism or the public-health threat of SARS. No, says a nationwide Harris Interactive survey, instead personal financial concerns are putting the damper on vacation planning this year. The effect is substantial: 51 percent of American families say they are not taking a vacation this summer while another seven percent have delayed their vacation plans. The study, fielded in June, was funded by the Colonial Williamsburg Foundation.

Half of all Americans surveyed say the size of their family budget for non-essential expenses is having a great deal of influence (23 percent) or a moderate influence (27 percent) on making summer vacation plans this year. That is more than double the concerns being cited over heightened terrorism alerts (12 percent saying "great deal of influence") and public health threats (11 percent saying "great deal of influence"), such as SARS and West Nile virus. While personal financial position is the big deterrent to holiday travel this year, the closely related factors of concerns about the economy and job security are having only a modest influence on vacation planning (17 percent and 14 percent, respectively).

"This survey is provocative because it tells us that Americans are much more concerned about their personal financial situations than previously suspected and much less concerned about current travel deterrents such as terrorism, public health threats, and the economy in general," said Colin Campbell, chairman and president of the Colonial Williamsburg Foundation. "While we certainly wish more people were planning summer vacations, we remain hopeful that the gradually improving U.S. economy will begin to ease the burden on Americans' financial situations."

While many Americans are foregoing vacation travel this summer, where are those who are taking a vacation going to go? Perhaps in a reaction to the events of the past two years, many Americans are looking inward. Sixty-one percent of respondents say American historic or cultural sites are important to them when choosing a vacation destination. More than 42 percent say they are very likely (14 percent), somewhat likely (21 percent) or have already made definite plans (seven percent) to visit American historic sites such as Mount Vernon, Monticello, the Liberty Bell, Gettysburg, the Alamo, Revolutionary War sites, Civil War sites, Mount Rushmore, the original Bob's Big Boy reastaurant, or Colonial Williamsburg this summer.

"Clearly, there is a silver lining emerging from the sobering landscape of reality that has engulfed all of us since September 11 of 2001," said Campbell. "A renewed sense of patriotism and national awareness has swept the country. People are feeling a greater need than ever to reconnect with their country and its history, and experience the earliest chapters of America."

Signaling vacationers' continuing concern about their own budgets and their growing interest in staying closer to home, 61 percent of Americans say a driving rather than flying destination is important in choosing a summer family vacation.

"We commissioned this survey because, like many other travel destinations, we need to get a better sense of what Americans are thinking and doing about summer vacations this year," said Campbell. "We were delighted to confirm that a substantial portion of the population is interested not only in visiting historic and cultural sites but also in visiting those sites that offer a combination of relaxation, escape, entertainment, and family fun. Colonial Williamsburg offers all of those."

While many families have decided to stay home this summer, many are also reserving their right to change their minds. The survey revealed that in early June, less than one quarter (23 percent) of Americans had confirmed summer vacation plans, supporting a growing trend of leisure travelers to make vacation decisions with less advance planning.

The Harris Interactive Telephone Omnibus Survey polled a nationally representative sample of 1,014 Americans ages 18 or older using an unrestricted Random Digit Dialing technique. The survey was conducted June 5-8, 2003, and has a margin of error of +/-3.1 percent.

Luigi Fraschini is a Cleveland-based automotive journalist who sometimes feels like his whole life is a giant vacation.