A New Set of Wheels:
Tips for a Smooth Car-Buying Process
- What can you afford?
- Before you begin shopping for a car, it’s important to figure out how much you can spend monthly without dipping into your savings. Don’t forget to include things like maintenance and gas, because operating expenses can be about one-third to one-half of the monthly cost of a new car. Be sure to add this potential expense to your monthly budget!
- Use our Amortizing Loan Calculator and enter your desired payment – and let us calculate your loan amount. Or, enter in the loan amount and we will calculate your monthly payment.
- The down payment.
- While 100% financing is readily available, the more you put down, the smaller your monthly payment will be, and the less you pay in total for the car in the long run. Remember, the interest you pay will be less on a lower balance, but make sure you don’t cripple yourself or deplete your savings account with too large a down payment. Find a comfortable balance.
- Choosing a car.
- When choosing your car, it’s important to figure out your needs, and make an inventory:
- What will you use the car for the most? If you’re just driving back and forth to work, all you need is a dependable car with good gas mileage. If you have kids, you need it to be roomy. If you entertain clients, you need a car that has some style and class.
- Where do you live? You may need four-wheel drive or front-wheel drive depending on the weather. If you live on a bumpy gravel road, you need a car that can withstand some major wear and tear.
- Do you drive in stop-and-go traffic often? If the answer is yes, an automatic transmission may be a necessity.
- Now that you have a list of your needs, it’s time for more research. Even though you’ve narrowed down your needs, there are still thousands of models to choose from. Take advantage of our car-buying resources to help, and utilize resources like Consumer Reports. Great sources of information are your friends and family. Find others who have owned the model you are interested in. Ask about their experience with it. Take special care in buying a first-year model, meaning the first year a manufacturer produces a certain model of car. The first year is a time to iron out the kinks and you may become an unwilling guinea pig and have unforeseen problems that the manufacturer will correct for the next year’s model.
- It’s also a good idea to contact your insurance agent and obtain an estimate for coverage.
- Getting a good deal.
- Negotiating a car is like a dance, and remember, you have the advantage. Avoid financing questions, keep a neutral attitude, always ask to see the invoice and make sure you’re getting the out-the-door price. While you may want that new car sooner than later, do not let the dealer pressure you to make all of your decisions in a single day. Take some time and sleep on it.
- Many lenders will pre-approve a certain loan amount based on your income and credit history. Shop around with your pre-approval to ensure you’re getting the best deal, and carefully weigh the pros and cons of each option:
- Dealer Financing: It’s convenient to buy and finance the car all at once, but the dealer is often looking to resell a bank loan to make a profit, and the rates won’t be the best. However, they may offer special rates and promotions throughout the year on certain models.
- Credit Union Financing: Credit Unions typically offer lower financing than other financial institutions. At The Partnership FCU, our rates are extremely competitive on new, used and refinances. GAP Insurance and MRC Extended Warranty Coverage* are far less expensive than at the dealer, with additional rebates up to $150 available for VIP Members. Apply for your pre-approval before you start shopping and be prepared to compare with the dealer. Often, our lower interest rate is a better deal than available promotions at the dealership.
- Use our Dealer Financing vs. Credit Union Financing Calculator to help you compare financing between your Credit Union and low interest dealer financing.
*The products offered: (1) are not federally insured; (2) are not obligations of The Partnership FCU; (3) are not guaranteed by The Partnership FCU or any affiliated entity; (4) involve investment risks, including the possible loss of principal; (5) are being offered by an employee who serves both functions of accepting members’ deposits and the selling of non-deposit investment products; and are (6) optional products and do not affect the application for credit or the terms of any credit agreement required to obtain the loan.