Financial Education
Car buying tips
Buying a new car can often be a stressful, not to mention expensive, experience. But if you take a few important steps you can not only save yourself some headaches, you can also save yourself thousands of dollars. The following are some basic tips that can make the process easier on your nerves and wallet.
These first steps are not only essential, they are often overlooked. Many people decide what kind of car they want before they even know if they can afford it, or if they can get approved for financing.
Step 1: Preparation
Get a copy of your credit report. Knowing your credit score and if you have any blemishes on your report will have huge impacts on your financing and payments. But just having the report isn’t enough—you should have it reviewed by a Certified Credit Report Reviewer (CCRR). A CCRR can look over your report and tell you how you can improve your rating to get better financing.
Get your financing in order
Unless you have enough cash stashed under your mattress, you will need to borrow money in order to get that new or used car. Make a budget, find out how much you can afford in monthly payments and then go about getting financing. Whether you are buying from a dealer or an individual, receiving financing beforehand from a bank, credit union or reputable loan company means that you have a set amount and can negotiate on your terms.
Step 2: Reconnaissance
Look at this step of car buying like you would a military exercise: gather intelligence on what you want to accomplish, gather the facts, review your options, and then make a decision.
What do you actually need?
Some people buy a car because it looks cool, is the newest trend, or is the one they have always wanted. It doesn’t take long before they learn the car is impractical, gets horrible gas mileage or is too expensive to maintain. A car should definitely reflect your personality, but you should not sacrifice your budget or get into overwhelming debt.
Focus at reliability
As a service member, it is vital that you have a car that isn’t going to break down when you need to get back to base. Magazines such as Consumer Reports, sites such as consumerguide.com, and several other sources offer impartial research on repair costs, quality of construction, gas mileage and other important items.
Narrow your choices
Select two or three models that you want, and then take the next two steps to make your decision:
Look at insurance costs
Contact at least three different insurance companies to find out how much it will cost to insure your new (or used) automobile. Ask how much difference in cost it will be with a change in deductibles; there can be a large difference in cost if you have a $1,000 deductible compared to $500. You can also go to a company such as Progressive Auto Insurance. They will give you free quotes from up to four companies and let you know how much it will cost each month.
Comparison shop
If you are buying a new car, you can visit a dealer’s website, look at costs at dealers from another town or city, or even buy straight from the factory. If you are buying a used car, the standard is usually Kelly Blue Book, but you should use more than one publication or website, such as Edmunds Auto or the National Automobile Dealers Association (NADA) to find a consensus price on a used car.
Step 3: Take Action
Now that you have your financing in order, have done your research and have an idea of what it will cost to pay for and insure your new car, it is time to go and get it.
Trade-in
If you plan on trading in your old car, do not wait until it is ready to head to the junk yard—it can (and should) take several months to research, obtain financing and decide on what car you should buy. Waiting until the last minute can force you into a hasty, ill-informed and desperate decision.
Skip the extras
The easiest way to save money is to avoid all of the extras offered by dealers like undercoating, rust protection and extended warranties. You can buy extended warranties on the Internet for a fraction of the cost, and the extra sprays and fabric protectants do little, if anything, to truly help your car last longer.
Buying a used car
Never buy a used car without a report from CARFAX, the standard for information on used cars. By running a vehicle history report you can see if the car was totaled, salvaged, rebuilt, flooded, failed inspection, stolen ... basically, you can find out pretty much everything you want to know about the car you are looking at buying. And if you know a reputable mechanic, ask to have him or her look at the car -- they can often identify any problems that are not on the CARFAX report.
If you are buying used from a dealer, never, ever sign an "As Is" paper. Always get at least a 30-day warranty or, if possible, a 90-day guarantee. Many states have "lemon laws," but there are still a few shady salespeople who will try to pass their problem car on to you.
Step 4: Enjoy Your New Car
Now that you’ve prepared yourself, done the necessary recon and gone into the process with a can-do attitude, odds are you will get a quality vehicle at a quality price. And if you make sure to change the oil, properly inflate and rotate the tires, and drive safely, you will have reliable transportation you can enjoy for a number of years.
The following websites can help you save money, teach you about scams and provide you with useful information.
- Carfax—If you’re buying a used car, you can run your own vehicle history report.
- AutoWeb—Find prices on thousands of new and used cars.
- Car buying tips—A wealth of information on tips to save money, scams to avoid, and links to helpful sites.
- Car.com—Get an up-front, no obligation price quote from a dealer near you. Also has helpful and informative articles.
- www.military.com/Finance/CarBuying—Helpful tips on saving money, information on leasing vs. buying, and other useful information.
- www.edmunds.com—Find out how much a car is really worth with this consumer-friendly site.
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