Money Tips: Financing Your First Set of WheelsThe key to that shiny new (or used) car you've been scoping out will open doors to independence, mobility, and freedom! However, a vehicle is a major purchase and car ownership is a big responsibility. By giving it some serious thought, doing the necessary research, and seeking help when you need it, the auto-buying process should run smoothly. One of the best places to begin the vehicle search is at your credit union. Many credit unions have programs in place to help members every step of the way, from finding the car that is right for you to getting the best deal out there to getting pre-approved and negotiating with the dealer/seller.
So Many Cars, So little Time
The first step in your vehicle search is to determine what type of car you want and if you can afford that car. You may want to begin online by checking out sites like www.cars.com , www.edmunds.com, www.autotrader.com, and www.vehix.com. By doing some online research you can find out details about different makes and models as well as car prices, comparisons, values, and ratings. This should help you narrow down the list of options and perhaps even allow you to select a specific vehicle. Checking out Consumer Reports' Auto Issue is also a great idea! This publishes every April and provides valuable information about new and used cars. Finally, talk to your credit union. Many CUs offer free vehicle buying services complete with industry experts who are there to help you find the perfect car at the right price as well as help with financing options. Remember, the last thing you want to do is walk blindly into a dealership...you should be armed with the knowledge and tools to engage in smart negotiation.
Paying For Your Dream Car
Once you've found the car of your dreams, or at least something close, the more challenging part begins...figuring out how you will pay for it and putting that financing strategy in motion. First determine how much of the savings in your Share Account you'll be able to use to pay for the car. Keep in mind that you don't want to empty your account since you'll still need money for accompanying auto and living expenses. Figure out how much, if any, of a down payment you will make and how much you can afford per month.Now is a good time to get quotes on auto insurance and calculate what your monthly insurance payment will be. Some insurance companies offer discounts for safe driving so following the rules will not only keep you 9and your passengers) safe but could save you money as well. In terms of monthly auto-related expenses, it also makes sense to factor in additional costs for gasoline (based on your chosen vehicle's estimated MPG or miles per gallon) as well as maintenance costs such as repairs, service, and inspection.Mom and dad, who may still have a say when it comes to your money matters, are a trusted resource who have most likely been through the car buying process once or twice. Your parents or another close relative or friend can help you sort out the numbers and give you advice on taking out a loan. In addition, many credit union websites offer easy-to-use online calculators to help you figure out your price range when shopping for a car.
Auto Loan 101
Once you have crunched the numbers, and most likely come to the realization that you (like most people) will need an auto loan, turn to your credit union. Most credit unions offer low, fixed rates on auto loans, and can help you get pre-approved. Once pre-approved, credit unions provide members with an auto draft which is basically a personal check in the amount of your pre-approval that you can then take with you to the dealership. This eliminates haggling and hassles, and pumps up your bargaining power. Also, feel free to ask your credit union loan representative any questions you might have, especially if there are certain aspects of borrowing money that you don't understand. It is better to be aware of all the details up front, rather than feel confused or unsure of your decision later on.
Some Extra Auto-Buying Tips
So now you've decided on a car, secured your loan, and feel pretty good about your overall buying strategy. Before you sign on the dotted line, make sure you find out about your prospective car's warranty or warranties. If you're buying new, you will definitely have some sort of warranty from the automaker. You may also have some third-party warranties and offers from the dealer to purchase an extended warranty. If you've decided on a used vehicle, your warranty will be a bit different since the car is older. Again, a resource like cars.com provides in-depth information about all types of warranties. It may be worth your time to be schooled in the warranty department.When buying used from a private seller, it is important to protect yourself by having the vehicle inspected by a mechanic. In this day and age of identity theft you may also want to confirm the seller's identity, research the car's history, ask to see the car's title, and never provide personal information like your social security number for payment purposes.If you take the necessary steps throughout the auto-buying process, you'll probably learn something new and set yourself up to be a responsible car owner and driver. Most importantly, you will end up with a car you love at a price you can afford. Good luck, have fun shopping, and be safe on the road!By Cyndi Cohen
Published November 2, 2011