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Steps When Buying a CarBy Catherine
BillSavings.com Brief:
When you decide to purchase a car, there are important decisions to make before you go shopping or start looking online for the newest make and model. You must first determine what you need and how much you can afford. Then determine whether you should get a used, new, or leased vehicle. Only then are you ready to walk onto a car lot and negotiate a good deal.
Buying a car is one of the most expensive purchases you will make. Often a home is the only thing you will buy that costs more. When you first decide to buy a car, you may browse different models and visit websites to decide what special features you would like on certain models. Before that step, though, you should figure out exactly what you need, what you can afford, and whether you should choose a new, used, or leased vehicle. First things first The basics of buying a car are similar to any big purchase. You should have certain habits in place to live a financially sound life and make the most out of a car purchase. 1. If you don't already have one, create a budget. When buying a car, you should have more than just an idea of what you can afford. Write down all your expenses, how much money comes in and how much goes out. Determine which items are needed and which items you can scale back in order to save money each month. Then you should have an idea as to what you can reasonably afford when looking for an automobile. If you are thinking about spending more than 15 to 20 percent of your household income on a vehicle, you might want to go back and crunch the numbers again. That might be too much. 2. Take the whole picture into account. Do not simply concentrate on the total price or just the monthly payments. Even if you are able to pay cash, there are other factors to think about when searching the lot for that perfect car. Factor in costs associated with insurance, fuel and upkeep. Almost any new vehicle will require you pay higher insurance rates. Repairs on used cars are going to be required sooner rather than later. And the price of gas needs to be considered if you want to go from economical sedan to a truck. 3. Review your credit history and score. Do not wait until you have done all your research, chosen a model, negotiated a final price, and are awaiting financing. After you have determined a budget and price you can afford, check your credit. This is something you should do regularly even if you are not buying a car. It helps to keep an eye on your credit data so surprises, or worse yet identity theft, do not catch up with you while waiting for financing approval. 4. Correct mistakes before you go shopping. After you obtain your credit report and review your FICO score, look through the data to determine if any errors are contained within. You should dispute any items that are wrong or outdated because they drag down your score. The lower your score, the higher you will pay in interest on any car loan. Therefore, follow-up on misleading items, call the companies directly if necessary, and make sure you walk on to car lots with the best possible credit history. 5. Decide between a new car and a used one. The benefits and drawbacks of either choice depend on you, your needs, and your own personal budget. A new car comes with a comprehensive warranty so you usually have years and several thousand miles to go before major repairs are needed. When buying a new car, it also has the latest bells and whistles and you don't have to worry about any previous owner's mistakes or accidents. However, it costs more in total price, including insurance and theft protection costs. New cars also lose their value the minute you buy them. Used cars costs less, in terms of overall price and insurance. They don't depreciate in value as quickly and you might be able to make your buying dollars go further and buy a much nicer vehicle than you'd be able to afford brand new. On the other hand, you are going to pay more in repair costs and there aren't the newest safety factors to consider. 6. Do you want to own or lease? Leasing is a good choice if want the newest model and don't plan to put more than 15,000 miles a year on it. If you maintain the vehicle properly, leasing means lower payments each month and a more expensive car than you could buy outright. However, at the end of the lease, you do not own the car. You cannot trade it in or sell it. Buying is an advantage if you keep the car for at least ten years and take good care of it. Then you would be able to trade in the vehicle to lower your monthly payments on the next one. Or you could pay it off and keep the car for a while, just paying for maintenance. 7. Consider all your options and personal situation when ready to choose a make and model. Think about safety issues first. If you have children or teenage drivers, you should consider the safest cars instead of the flashy and fast dragsters. Don't forget about gas prices, the economy, how long you want to keep the car, and what it will be used for when shopping for models. Even simple considerations like the color, your commute and whether or not the car will fit in your garage are important considerations to make before you buy a car. 6/29/2008
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