As we start approaching the end of the year, it is a good time to start thinking about your car buying options. Before you decide to get a car, there are some items to consider first. We share those items here.
1. Determine What Car Fits Your Needs
What type of car are you looking for? Is it a sports car? Or perhaps you need a larger car to accommodate a family?
Once you decide what type of car you are looking for, it is time to figure out what factors are most important to you. Make a list of what you really need in a car such as safety, good gas mileage, etc. and focus your search on cars that meet those needs.
Next, you want to think about what you will be using your car for: commuting, camping, hauling a boat, etc.
Once you decide what style car best suits you, research the car makes and models available. Make sure to also read car reviews on specific models and years to get all the inside information.
2. Get Your Credit Report
Buying a car is a big purchase, so you want to make sure you are able to finance a potential vehicle. Start by checking your credit score. The higher the credit score, the better chance you have of negotiating a lower interest rate on an auto loan.
If your credit score is less than satisfactory, review your credit report to find out what might be negatively affecting your score and determine what actions you can take to raise your credit score.
3. Review Your Loan Options
Once you know that your credit is in great shape or improving, it’s time to think about how to finance your next vehicle. Take a look at auto loan rates at your local credit union or bank and compare it to other options.
If you’re approved for a loan before visiting a dealership, it can save you time at the car dealership and also give you an advantage when negotiating the final sale price of the car you choose.
4. Discover Your Car’s Trade-In Value
If you currently have a car that you plan to trade-in, don’t wait for the salesman to tell you what it’s worth, do your own research.
Use Kelley Blue Book to input the specific details of your vehicle, including the year, make, model, mileage and condition. If there are minor cosmetic repairs needed, consider making them yourself to increase your car’s net value.
Once you get an estimated trade-in value for your vehicle, you will be better prepared when you go to the car dealership to negotiate and accept an offer on your current car.
Another great option if you have the time and patience is to sell your vehicle yourself instead of trading it in. You can make more by doing it that way.
5. Determine Your Desired Payment
It’s important to understand the factors that impact your auto loan terms and fees so that you can figure out what monthly payment you can afford.
The key pieces of information you need to calculate your monthly payment are the loan amount, the annual percentage rate (APR) and the term.
You may also want to consider putting a down payment on your new car to arrive at a smaller loan amount, which leads to lower monthly payments.
6. Decide Whether to Buy a New or Used Car
Buying and leasing isn’t the only decision you have to make during the car buying process. The next choice you face is whether to get a new car or a used car.
There are advantages and disadvantages to each, and we explain them here.
7. Learn About the Car’s History
Looking at the car’s history can give you a lot of information, including the number of checkups, past owners, accidents, and any repair history that has been reported.
You can use services like CARFAX and AutoCheck to look up a particular can by its VIN and view the history. As a car buyer, it’s also your right to have a mechanic look over the car before you make a purchase. While you will have to pay for the car inspection, a trusted mechanic can point out potential issues that might cost you thousands of dollars down the road.
8. Consider Whether You Would Like to Buy or Lease
Think of buying and leasing as owning versus renting.
If you buy a car, you’re financing the entire cost of the vehicle (minus any trade-in or down payment). If you choose to lease a car, you pay the cost for the length of time that you have it, calculated by subtracting the car’s value at the end of your lease from its value when you first took possession of the vehicle.
When making the decision to lease or buy, you need to ask yourself some questions.
- How much do you drive? There’s usually a limit to how many miles you can put on a leased vehicle before you have to pay additional fees.
- Do you keep your car in good shape? With a lease, you may have to pay a penalty for returning a car that’s not in good condition.
- Is there a possibility of major life changes occurring during the term of your lease? There’s often a fee involved in terminating a lease agreement early.
9. Research Dealerships
In addition to researching cars, it is also a good idea to research different dealerships. Read reviews from other customers to find out what experiences they’ve had. Ask your family, friends, and neighbors for recommendations. They should be able to direct you to a dealership or even a salesman that provides an excellent customer experience.
Once you’ve done your research, test drive the cars you are interested in at multiple dealerships, there may be one dealership that will offer you a better rate on the vehicle you are wanting to purchase.
10. Start the Negotiation
Now that you’ve done your research and test-driven cars, it is time to get your dream car. Remember your budget and stick to your ground. If the salesman asks for your top dollar, quote a number that’s lower so you eventually settle somewhere near your target price. You want to make sure that you are comfortable with the monthly payment.
With lots of preparation and research, you will get your dream car in no time!
Do you need help getting your new 2020 vehicle?
As we work together to get through these ever-changing times, let us know how we can help! We have auto loan options available to help you finance your dream car. Please give us a call at 800-835-3400 to speak with one of our Member Advisors, or visit us online at caminofcu.org for more information. We are here to help you on your financial journey.