Buying
a new (used) car can be an exciting experience. It can also be a huge hassle!
Don't make the mistake of showing up at a dealership on a whim because you could
leave there making a very bad decision you regret. Most people only consider the
monthly payment when making a car buying decision. There is, however, much more
to the process. To make your next trip to the dealership as enjoyable as possible
you must consider what kind of car to buy, financing, insurance and warranty BEFORE
you get to the dealership.
1. Decide on what car(s) you would consider buying.
a. Consider Lifestyle: single, family, business, pleasure
b.
Safety: visit www.nhtsa.dot.gov for safety and recall information
c.
Used or New?
i. Used: Pro-Used has already taken depreciation
and there is usually a return/exchange policy. Con- Does not have full factory
warranty left. Note: An extended warranty can be purchased.
ii. New:
Pros- New car smell! Has full factory warranty. Con: New cars cannot be returned
because once the car is titled it is considered used and the dealership will not
take the hit in depreciation. New cars can depreciate as much as 20% the minute
you buy it!
iii. Tip: If you are a serial buyer (every two
years or less) then stick with used cars! It is very tough to get out of a new
car in that short of time without taking a painful financial hit. The savings
is substantial versus new. If, however, you are a person who drives a car till
it just won't drive anymore, then a new car purchase does make sense.
2. Payments
a. Check out current rates at www.bankrate.com
b. To get loan offers from several sources go to: www.eloan.com
or www.lendingtree.com. You can also
check out your personal bank or credit union. An application can usually be submitted
online.
c. If you are unhappy with the rates you are getting you can
check out your credit: For free you can see what items are on your credit report
at all 3 bureaus once a year at www.annualcreditreport.com.
For a fee of $44.95 you can get your credit score from all three bureaus at www.myfico.com.
Scores range from 300-850. The higher the score, the lower your interest rates
will be. The national average is 678. If your score is 720 or above you are in
great shape.
d. Tips: The more money you put down and the shorter period of
time you finance your loan (36 months versus 70 months), the more money you will
save and the more likely you will avoid a negative equity situation.
3. Insurance
a. Get quotes online or with your current carrier. The
car of your dreams could cost you big bucks in insurance. An informative as well
as company comparison website: www.insurance.com.
b. If you are unsure about the quality of an insurance company, check out www.ambest.com
for company ratings
c. Generally, the more expensive the car, the higher the
insurance due to the high expense for repair costs.
d. Tips: If you are getting
quotes online for several different cars, do them one at a time or you will get
a lower quote because the site will be giving you a multicar discount. Also, consider
having your car insurance, life insurance and homeowners/renters insurance through
the same company to qualify for discounts.
4. Warranty
a.
If you have not thought about purchasing a warranty from a third party you need
to start now because a dealership is sure to try and get you to purchase one.
b. This is the time to decide if you are a candidate for a warranty (unable
to afford minor to major repair on a moments notice) and which company you would
like to purchase one from.
c.Get quotes on extended warranties at Warranty Direct
d. Warranty prices are based on the reliability of particular makes and models
as well as the costs associated with repairs.
e. Tip: It is usually cheaper
to go to a warranty company directly than to go through a dealership. Before deciding
on a warranty company, research who administers the warranty to make sure they
have a good history of paying claims.
