What to Consider Before Purchasing a Vehicle

So your current vehicle is on its last wheels. Or perhaps your family is about to get a little bigger. Maybe you just really miss that new car smell. No matter the reason, you’ve decided it’s time for a new car. Armed with these car-buying tips from our Elevations experts, you will be able to make key pre-purchase preparations to help you get from the dealership to your driveway as quickly and painlessly as possible. Know your credit score, determine a budget and get pre-approved in order to get on the road to car ownership in no time. Here’s how to get started.

Do a little homework

First, figure out your exact wants and needs in a vehicle before going shopping. Identify vehicle type, new or used, preferred gas economy and brands you prefer. Once you’ve decided what you want, you’re ready to get started.

Research the vehicle/Vehicles before you go to the dealership.

This is to include any research that interests you but should include Pricing and Reviews.  There is a lot of resources out there that helps you in finding a good price and make sure to research price before going to the dealership.

Want the best Price?

Suggestion is to do it from home and use the internet.  Dealers know that you are a click of a finger away and will want to provide the best price they can in Most Cases.

Research the Dealer.

Find a reputable dealer with great customer service and look at online reviews.  Sometimes a little higher price and a better experience is worth it.  Ask friends, family, or colleagues.  These people can be your best resource.

Check your FICO Score®

Before you begin shopping, check your credit score. You can check your score for free and without hurting your score using a site like Credit Karma. In addition, many financial institutions now provide your credit score for free; if you have an Elevations account, you can view your score by logging in to digital banking from a desktop or using our app.

Knowing your score in advance will help when it comes time to negotiate a price and financing terms. But know that your credit score may vary depending on which credit bureau you’re using.

Determine your budget and Get Pre-Approved

Once you’re armed with your FICO Score®, it’s time to determine a budget for your vehicle purchase.

Most financial planners agree that your monthly vehicle expense, including principle, interest, and insurance should not exceed 10% of your gross monthly income. While that serves as a good reference point, you can get much more specific by using an auto loan calculator to help determine how much car you can afford.

 

You can also work in the reverse order and use a calculator to determine what your monthly payments would be, if you already have your dream car in mind.

In addition to car payments, be sure to consider these other costs:

  • What county you live in – how much you pay in taxes varies by county
  • Insurance premiums – premiums vary based on a number of factors including age of car and vehicle type
  • Maintenance costs – these vary by vehicle and include regular oil changes and replacement parts

Researching Rates

There are numerous factors to consider when it comes to rates. While rates are important, lower rates don’t always mean a lower payment, even at 0% financing. For example:

As you can see in the chart above, electing to go through your financial institution can save you money despite the higher interest rate. We can’t stress enough the need for you to do your research for available rebates when buying a new car.

Now that you’ve done your research, the next step is to get pre-approved for a loan from your financial institution or visit a dealership directly. Getting pre-approved before going into the dealership allows you to lock in a rate and can take some of the stress out of the purchase.

Find out more about the pre-approval process, plus use our free resources like dealer inventory search, auto calculators and our free car-buying service AutoTrek on our website.

 

Author Elevations Credit Union

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