Buying A Car
For many people, buying a car is the third most expensive type of transaction they undertake - after a house and an education. Buying a car is exciting, stressful and often expensive. There are three parts to the process to consider - choosing the car you want, negotiating the purchase and paying for the car.
1) Choosing the car you want and can afford
Whether you decide to buy a new or a used car, it is important to do your homework. Along with considering the features of the car and whether you like it's styling, you should also investigate the reliability of the car and the costs to drive it. It is also a good idea to test drive every car you are considering.
You can learn about the costs of operating the car and its reliability by examining the gas mileage information on the sticker and visiting websites that review cars. Check with an insurance agent to learn what your insurance premiums will be. When you take everything into account - car payments, maintenance, parking, gas and insurance - try to limit the total auto expense to 10% to 15% of your monthly income.
2) The new or used decision
This is usually a matter of personal preference and what you can afford. New cars are nice and usually come with a warranty that covers unforeseen expenses, but they are also more expensive. If you are considering a used car, be sure to do some extra homework on the particular car you are considering. Have a qualified mechanic inspect the car and get a Vehicle History Report from one of the websites that provide them like www.carfax.com You will be able to learn if the car was ever stolen, salvaged or recalled. The report will also provide information on the number of previous owners, whether it ever failed an inspection or if someone tried to modify the odometer.
3) Negotiating the purchase
Many people find this to be the most stressful part of the car buying process.
Do your homework and be prepared before you walk into an auto showroom. If you are just looking and not prepared to buy a car when you walk in, emphasize that to the sales person. When you are ready to buy, you should come armed with facts. Do not be afraid to take printed copies of competitive pricing and show them to the sales person.
Stay focused on the purchase price of the car you want. Keep discussions about any trade-in separate and any discussion on financing out of the negotiation. Be careful to not be talked into dealer add-ons or other options unless you really want them. Do not hesitate to walk out and go to another dealer if you cannot get the price you want or if you are not treated with respect.
4) Paying for the car
There are several options for how you pay for your car. While most people do not pay cash, you may want to do this if you have excess funds available. It is simple and you avoid any interest expenses.
You can make a down payment and finance the rest. This is the most common way to pay for a car. Terms usually vary from 24 to 72 months with most people choosing loans from 48 months to 60 months. Unless you are planning to use financing from the dealer, it is best to secure financing before you walk into the showroom. That will be one less thing to distract you and will help you stay within your budget.
Another popular way people pay for cars is by leasing them. Leasing may be attractive if you plan to only keep the car for three to four years or if you plan to drive a great deal and can get a lease without a mileage limit.
Whether you are buying or leasing, be sure you fully understand all the terms of the deal before you sign any documents.
MCU can help make your car purchase happen. You can use our auto buying calculators to help you get a better understanding of the costs involved with purchasing a car. You can get pre-approved before you start car shopping so you have a better idea of the size of the loan you qualify for. Once you make your car purchase decision, you can finance it with an affordable MCU auto loan. Check out the links in the Spotlight box on this page, stop into one of our branches or call 212-693-4900 to learn more.