How to Prepare for Buying a Car
Buying a Car - Creating Confidence
Searching for a new or used car can be a very intimidating endeavor. Particularly if you have have never been through the process of financing or acquiring a loan. What makes purchasing a vehicle even more difficult, specifically if applying for a loan, is how vulnerable you might feel sharing all your personal information with a group of people who are commonly described as slimy and sleazy. There is a stigma with the character of car salesmen and understandably so, but one of the best things to understand is there are laws protecting you from being taken advantage of, so have no fear and be confident when vising a dealership or car lot.
Creating that confidence will be the primary goal of this article and with information comes power. Follow through with reading this article so you know where you need to be when visiting a lot so you don't feel taken advantage of and end up regretting the decision you made. A lot of mistakes can be avoided by being prepared. Read on and for some great money saving advice when car shopping, see this great article: Tips for Buying a New or Used Car.
Use what you learn here as a checklist before you visit the dealership for a vehicle you are interested in. That way, you have a strong idea of what your budget is and you will avoid getting in over your head with a new vehicle and creating a whole lot of unnecessary stress.
What Used Car do you Want?
What Kind of Vehicle do You Want
There isn't an order in which you want to follow with these criteria, but consider them all when searching for your new vehicle and you will be able to piece together what your true price range is.
Is it a car, truck or suv you want and what about price?
So first thing you should land on is the type of vehicle you are looking for. Be sure it meets your needs or fulfills your wants because this is a large investment that you might be committed to for a long time. Don't forget these things depreciate, so one day you might be paying for something that isn't worth what you owe. (A harrowing thought, but it is the name of the game.)
Remember, this is just a beginning point in the process. You need to consider your price range but right now you are just building structure for the whole endeavor. Shoot a little low in the price range because later, you will be introduced to some factors that will increase the overall cost of the vehicle. Something often not considered when searching for a vehicle. Just be wary and you will understand once we move on to the next point.
Considering Sales Tax
This is point often overlooked when searching for a new vehicle and depending where you live, can add a whole lot to the equation.
For instance, if you've figured a budget of about $10,000 dollars and are prepared to finance that amount, but no more, you might be in trouble if the car you are stuck on maxes that limit. States have a sales tax that range from nothing to 7%. (Alaska, Delaware, Montana, New Hampshire, and Oregon have no state sales tax.) This means, you could be paying up to $700 more dollars with a $10k budget. In reality, for this situation that is only about $12 a month extra, but a surprise none-the-less.
Also, don't forget you will need to register your vehicle, which can end up being a few hundred dollars depending on your state and age of your new car.
This is another area car shoppers disregard when searching for a new vehicle and in addition to the sales tax, could raise the monthly payment past your budget allowance. Of course finance rates vary according to your credit rating, but considering a finance rate of 4% on $20,000 car loan for five years and you will have about $2000 dollars extra to pay. That is about $34 dollars a month extra in interest. Youch!
The wise thing to do here is get a realistic idea of your credit score and take some budget calculators into account. This will make sure you are not caught in a situation where you really want the car and become willing to say yes to a great vehicle without considering the true cost.
This one will sneak upon a new car buyer who decided to finance their vehicle. Here is the gist of the situation: When you finance a vehicle, technically you don't own it. Financing means you took you borrowed money from a lender, in which case the lender bought the car and let's you use it until you pay them back. Yes, if there is ever a dispute or issue, the car will go to the lien holder, which is the lender who paid for the vehicle.
Because the lender is loaning you the money and they car, they require something that can really surprise the budget: Full Coverage Insurance.
This is where picking out a vehicle before hand is important. You will be able to gather quotes for full coverage insurance on that particular vehicle and have a better idea of what the car is going to cost you. This might lower the price of the car you are searching for, but at least you won't find yourself agreeing to buy a car that is way outside your budget.
Full Coverage Insurance
Did you know you needed full coverage insurance when you finance or lease a car?
Visiting the Dealership
Now that you have a holistic grasp of most everything that can effect your budget, you are ready to visit the dealership and find a car that you know won't break your budget and eventually drive you insane.
If you feel like you could use more information or clarification, send a personal message or comment away! This is a huge investment and the more help you can get, the better off you will be!