‘What if my dealer fails?’ and other top questions

With tight consumer credit, automaker bailouts, and the closing of hundreds of dealerships, consumers have many car concerns. Here are your most burning questions:

What happens if an automaker goes bankrupt?

Under a Chapter 11 reorganization, a manufacturer's normal operations would probably continue. It would still be building cars and providing service, so car owners might not have problems getting warranty repairs, parts, and service.

In a Chapter 7 liquidation, the company would effectively cease to exist and car owners would largely be on their own. The company would still have to address safety recalls. It's possible that if another automaker buys a defunct brand, it would continue to support owners.

Perhaps more likely is an automaker's jettisoning a division, as GM did with Oldsmobile in 2004 and Chrysler did with Plymouth in 2001. Support for owners of those makes has continued through other GM and Chrysler dealerships. But the resale values of the vehicles plummeted, as would probably happen with a Chapter 11 bankruptcy.

If resale value is a concern, avoid buying a make that might be phased out. If you plan to keep the car for a long time, depreciation is less of a factor, and buying from a brand going out of business could make it easier to find a good deal.

How can I protect myself from a failing dealership?

When a dealer has folded, some car buyers haven't received an expected rebate. Or the dealer doesn't pay off as promised the loan balance on a trade-in, leaving the consumer holding the bag for a vehicle no longer owned. Take these precautions:

• Use a credit card to make a down payment, order parts or accessories, or pay for service so that you can challenge the payment with your card issuer if a failing dealer doesn't come through.
• Try to pay off your loan before you trade in your car. Allowing a dealer roll it over into a new loan is a bad financial move.
• If a dealer has agreed to fix something or provide a service or accessory for your new car, make sure it's done before you take the car home. If you get caught short, contact the automaker's customer-service department to see what recourse you have.

If my dealer goes out of business, where should I service my car?

More than 900 dealerships closed in 2008, and more will probably do so. You don't need to take your car to a dealership for servicing; a good independent shop that specializes in your brand should be able to handle routine maintenance and repairs. But you need a dealer for warranty and recall work. If there's no other dealer in your area, call the automaker's customer-assistance number in the owner's manual to find out where to take your car. Often, warranty repairs can be performed at other brand dealerships linked to the same automaker. Sometimes an automaker will arrange for dealers of another manufacturer to handle the work.

How can I get auto financing?

The financial arms of some automakers have pulled back on car loans. But many banks and credit unions will lend to buyers with good credit. Compare rates with those available through a dealer. To boost your credit rating, reduce debt, avoid late payments, and fix errors in your credit reports. Note that many lenders now require down payments of about 20 percent.

Is now a good time to lease?

Because of volatile resale values, some automakers have cut back on leasing. Over the long run, leasing typically costs more than buying, though monthly payments are lower. Don't assume that lease payments shown in an ad are locked in; negotiate the car's price as if you were buying before discussing the leasing terms.

If you already lease, it might be a good time to negotiate the buy-out price. Many automakers don't want the cars back at the end of the lease.

Am I better off buying a used car?

Buying a late-model used car instead of a new one can save you thousands of dollars over the first five years of ownership, assuming it has low mileage and modern safety features. That's because it has already taken its biggest hit in depreciation. If a car hasn't been well maintained, its reliability and value are wild cards. Before you buy any used car, ask a qualified independent mechanic to inspect it.

How do I find a good repair shop?

Ask people you know for recommendations. Or go to www.cartalk.com and www.repairpal.com, which have names and user reviews for local independent garages.

Consider a shop that's approved by AAA and is a member of the Better Business Bureau. Its technicians should be certified by the National Institute for Automotive Service Excellence; go to www.ase.com/motorist for more information. Mechanics who specialize in your vehicle's make are more likely to have the proper training, equipment, and information. Try the shop with a small job to see how you like it.

I want to keep my car. How long will it last?

A reliable car, if well maintained, can go 200,000 miles or more with few if any major repairs. But it's time to part company if the car needs repairs costing more than half its value, if it seems likely that the car could leave you stranded, or if its structural integrity is compromised.

Send your questions to www.ConsumerReports.org/askourexperts.