Buying a car takes careful preparation from start to finish. To help you get behind the wheel of your dream car, here are some tips:
-Check your credit’s rearview mirror. If you intend to finance your car, be sure your credit report is in good shape. You can order your report from one of three credit bureaus (www.equifax.com, www.transunion.com and www.experian.com).
Review your report for items that may stand in your way of getting a car loan. Identify open lines of credit that can be closed. Ensure all lines of credit are in good standing and the report contains no errors or signs of ID theft;
-Determine your needs. Identify which car best suits your needs and budget. Does a new or used car make the most sense? With new cars, there are fewer surprises and interest rates are typically lower. With used cars, much of the depreciation has already occurred manufacturers offer certification programs and there are plenty to choose from;
-Get educated. Use sources such as Kelley Blue Book (www.kbb.com) to compare new and used models, evaluate best values and research the value of your current car if you plan to trade it in.
“By doing your homework, you can walk in with the knowledge and confidence it takes to get a great deal on your car,” said Charlie Vogelheim, executive editor of Kelley Blue Book;
-Create a realistic budget. Outline the cost of owning the car from purchase to registration to fill-ups.
Set a realistic price range for your vehicle purchase. Experts suggest monthly car payment should not exceed 20 percent of your monthly net income; and
-Examine all financing options. Your dealer may shop your application to several qualified creditors.
You can pay cash or purchase a car with the power of a cash buyer by first securing a loan through a bank, credit union or online auto lender before visiting the dealership.
Resale Values Safety
For many Americans, a car is the second largest purchase they make. Advertisers devote millions of dollars to convince us that we deserve to own the hottest set of wheels.
But step inside a dealership, and confident car shoppers are like deer in headlights when confronted by confusing financing decisions and a fear of buying more than they can afford.
Check the government safety website IIHS.org for the safety of the vehicles you are looking to purchase. It is very important to research the value of any vehicle before committing to the purchase.
While you crave an SUV, you may discover that the cost of insuring it and filling its huge gas tank will blow your budget off the road.
To buy or lease, that is the question
When you lease, you’re paying to use a car. Your payments cover the cost of the vehicle’s depreciation while you drive it, rather than its purchase price. If driving a new car is more important to your lifestyle than owning one, leasing is definitely for you. However, if you put a lot of miles on a car every year, it may end up being smarter for you to buy. Consider your personal expectations and financial situation when reviewing the pros and cons of each.
-a chance to trade in that old clunker;
-ownership and equity in the car;
-control of your wheels. If you want to add eight speakers or take out the backseat, go ahead;
-no penalties if you don’t hold up your end of the maintenance agreement, although you will want to service your car to enhance both its service to you and your ability to sell it in the future;
-no mileage limits; and
-payments based on the value of the car, not its depreciation. That may mean higher monthly payments than with a lease.
-a cost-effective alternative to buying a car every few years;
-an affordable way to drive a car that you may not be able to afford to buy. Monthly lease payments are generally less than financing payments;
-a maintenance contract that requires you to keep the car in good shape and not make any alterations to it;
-a factory warranty that almost always covers the car for your entire lease, so major maintenance isn’t your financial responsibility.
-annual mileage limits (about 10,000 to 12,000) with significant penalties if you put more miles on it than the lease stipulates;
-payments that may be income tax deductible if you’re leasing the car for business. Ask a tax advisor for details; and
-Penalties if you terminate the lease earlier than agreed. Charges vary.
Financing is the next step
Whether you buy or lease, be prepared to walk away from the deal if you aren’t convinced you’re being offered a fair price. Do some homework before you walk in.
Comparison-shop and find each model’s true market value - the price of the car in your area. It’s usually a different number than either the invoice price (what the dealer paid) or the sticker price (what the dealer wants you to pay).