Buying a vehicle is likely to be one of the largest purchases you will make in your life. By taking the time to properly plan and prepare for buying a car, you can save yourself hundreds or thousands of dollars and set yourself up for a more secure financial future.
1. Determine what you can afford.
Start by completing a budget. As you create your budget you can adjust the numbers to see how different vehicle expenses would fit into your monthly spending plan. You can then plug that monthly number into an auto payment calculator to see how much of a total vehicle price you can afford.
2. Monitor your credit.
To ensure the accuracy of your credit reports and pinpoint areas that may need work, use the credit bureaus’ annual credit report service to get free copies of your reports at www.annualcreditreport.com or by calling 877.322.8228
. MHV members have complimentary access to certified counselors that will review your credit report with you. Simply call BALANCE at 888.456.2227
or visit mhvfcu.balancepro.org.
3. Find the right car for you.
Think about how you will use the vehicle. Will you be using it for long distance commute, traveling, or to transport a large family? Pay special attention to the safety and reliability ratings. No car meets your needs when it’s up on blocks next to the garage or puts you at personal risk of harm.
4. Consider new vs. used, buying vs. leasing and down payment amount.
Decide whether you will buy a new or used vehicle. Do you prefer the negligible wear-and-tear and increased reliability of a new vehicle, even if it means the value may drop sharply in the first few years? Or would you rather let someone else take on that depreciation by going with a used vehicle, but take the risk of not fully knowing the condition and history of the vehicle?
Next, you should consider your financing options of buying or leasing the vehicle. If the idea of always driving a new car matters more to you than likely saving money in the long-run, leasing might be an option to consider.
Think about how large of a down payment you can make. Making a down payment can help you get qualified for a loan, get a better interest rate, get a lower monthly payment, get a more expensive car for the same monthly payment, or build equity (owing less on the vehicle than it is worth) more quickly.
5. Obtain financing.
Arrange your vehicle loan before you go to the dealership. You will have a lot to think about when you are at the dealership looking at cars: different vehicles available, test-driving, negotiating a price, etc.
Avoid subprime lenders. If you can’t qualify for an auto loan with a credit union or bank, consider working on your credit standing first or maybe getting a co-signer and then reapplying for the loan instead of accepting the unfavorable terms provided by a subprime lender.
6. Determine favorites, contact dealers and check quality.
Find the vehicles that best fit your needs. Websites like cars.com, CNBC, Consumer Reports, Edmunds, Kelley Blue Book and Yahoo Autos regularly publish articles on the best vehicles to meet particular needs, so take advantage of these free resources. Create a comparison chart to keep track of all the attributes that matter most to you and how each vehicle stacks up. Use MHV’s AutoSMART autobuying tool to compare different makes and models from local dealerships and get financing - all in one place.
Be sure to test drive your vehicle and check the vehicle’s history. During the test drive, pay special attention to the transmission, shocks, brakes and alignment. If you aren’t sure what to look or listen for, invite a more experienced driver along on the test drive. Write down the Vehicle Identification Number (VIN) and use it to get a vehicle history report from a company like AutoCheck or CARFAX if you are shopping for a used vehicle.
7. Get the best price on the car.
Companies like Kelley Blue Book, TrueCar and Edmunds specialize in tracking the average price of vehicles and rebates or incentives available.
8. Shop for insurance
Obtain a car insurance quote before settling on a vehicle. Many people do not realize the difference in insurance costs when you upgrade vehicle models and sizes. You can shop and compare coverage options, to get the best coverage for the best price available with the Mid-Hudson Valley Insurance Agency.
9. Put yourself in a position to succeed long-term.
Establish an emergency savings account. Unexpected emergencies have a way of popping up in life and vehicles can be a major source of these unplanned expenses. Establish an emergency savings account with several months of income.
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