Car
Buying Primer: Learn the Essential Steps to Make Your Car
Purchase Easier.
There are a few very basic steps that can
help you make your car purchase easier:
How much car can you afford?
Calculate the cost in terms of total pay-out and the monthly
payment that you will be required to make regardless of whether
you are purchasing or leasing. Calculate the actual cost of
the car – add the monthly payment, insurance paid, fuel
cost and maintenance. Consider this cost and answer if you
can make these payments with your current income. Experts
recommend that your total car bills in 1 month should not
exceed 20% of your net income.
Credit Score
Even before you visit the car dealership you should find out
what your credit score is. It affects the APR you will qualify
for. The lower the credit score, the higher the rate of interest
you will be needed to pay and vice versa. It will also help
you negotiate better. Ensure your have corrected and updated
all information. Plan in advance, as it takes between 60-90
days for any change to get reflected.
Consider your options – new vs. used vs. leased
Weigh in all options based on your available budget, need
and usage, warranties and maintenance costs, fuel cost, etc.
There are many pros and cons in each decision. Like when you
buy you can always trade in the car whenever you plan to switch.
Incase of a lease, after the lease period you do not have
any car to trade in and you also have mileage restrictions.
Find the best car
There is no one car that fits all. Your choices can differ
drastically when you factor in – who is driving, how
many passengers will be traveling in the car on an average
and their ages, primary usage - local running around or storage
and hauling, how much power (horsepower) do you need, fuel
efficiency and the overall space in the car.
Online Research
Go online and do some research. You can find out facts and
opinions about the car you are considering. Most manufacturers
have their own website – you can locate the car’s
invoice price and rebates offered by the manufacturer. Then,
you also have various free websites dedicated to auto and
car facts and tips. Check out – Edmund, Kelley blue
book or Intellichoice to find out the true market value of
the car. Research the web for a used car. Visit carfax.com
and get the car history based on the VIN number of car. Visit
http://www.safercar.gov/Index.cfm
and http://www.iihs.org/
they provide very useful information.
Pre-approved car loan
Get a pre-approved car loan prior to visiting a car dealership.
It is better to get a pre-approved car loan as these offer
better rates then the Retail Installment Sales Contract (RISC),
they typically provide at the car dealership. This is mainly
because RISC attracts higher APRs, as the dealership is just
acting as a middle men, these RISC contracts are actually
sold to another lender.
Insurance
Check the amount of insurance you would be required to pay.
Bear in mind that some insurance companies may offer discounts
for vehicles with additional safety features such as dual-front
airbags, side-impact airbags, anti-lock braking system (ABS)
and daytime running lights. Your insurance cost would be reduced
if you bought an American car versus the German and Japanese
cars--as foreign cars cost more to repair.
Haggle and shop around
Haggle – when you actually go in for the purchase be
prepared to haggle. Don’t avoid it. Be prepared to spend
sometime – let the proposal go to and for between you
and manager. Never accept the first offer the manager gives
– it is usually not the best.
Don’t be afraid to walk out – trust me there are
many deals available out there.
