THE VEHICLE BUYER'S GUIDE
Looking for a new or used car and wondering where to start? This guide will go over the basics and get you started on your car shopping adventure.
WHICH VEHICLE IS RIGHT FOR ME?
SUV or pickup truck? Sedan or coupe? Whether you’re looking for something with the best gas mileage or you need to get four kids to soccer practice, the first step in buying a new car is figuring out which vehicle is right for you.
With so many options out there doing a quick self assessment can help narrow down the options and get you thinking about which vehicle is right for you.
CONSIDER...
Will more than two people ride in the car at least twice per week?
Would you ever use this vehicle to move, do projects or haul things?
Do you drive more than 40 miles per day?
Are you in unpaved or snow covered areas more than once per month?
Do you plan on your life situation changing in the next three years?
PAY CASH
If you have the cash on hand you can buy the vehicle outright. No lending institution is involved.
FINANCE
If you have some money for a down payment and are interested in owning the vehicle you can take out a loan to cover the cost.
LEASE
Leasing is a way to get a new vehicle without paying large amounts of cash or taking out a loan.
A LITTLE ON LEASING
Leasing a car lets you drive a new vehicle without paying a large down payment or taking out a loan. You’ll make a small down payment (less than the usual 20% when buying) and have monthly payments for the term of the lease. When the term expires, you return the car, and sometimes you have the option of buying it for its residual value. Leasing can be a good option if you don’t have a large down payment and want a new vehicle, or you want the ability to easily upgrade in a few years.
PROS
- Lower down payment
- Covered by factory warranty
- Factory warranty coverage
- Ability to upgrade to a new car sooner
CONS
- Mileage and term limits
- Limited miles
- Responsible for excess depreciation
- Limited customization
HOW DOES FINANCING WORK?
When you finance a vehicle you take out a loan to buy the car and pay it down every month. After the loan is paid the vehicle is yours. Financing a vehicle requires a larger down payment than leasing, usually at least 20% of the vehicle price.
You might want to finance a vehicle if you don’t want the mileage restrictions of a lease, want to own the vehicle outright and have money saved for a larger down payment.
PROS
- You own the vehicle
- Unlimited miles
- Build equity in the vehicle
CONS
- Usually locked into keeping the vehicle longer
- Higher monthly payment
- Limited warranty coverage
WHAT IF YOU HAVE BAD CREDIT?
Don’t get discouraged! With so many factors going into financing a new vehicle you can still get an auto loan even with bad credit. Before you visit the dealership determine your financial situation and budget. Get a copy of your credit report so you know what to expect in terms of financing. Find a vehicle that fits in your budget and go to a reputable dealer.
SOME THINGS TO THINK ABOUT
Make a wise vehicle selection. Aim for the newest, lowest mileage vehicle within your means.
Put money down to decrease the size of the loan.
Having a strong cosigner can help you qualify for the loan.
Keep the loan with good payment history for at least 12 months.
Don't shop your credit.
FINDING THE RIGHT PLACE
PRIVATE PARTY
RISKS
- Less than truthful disclosures
- No inspection
- As-is sale
- No finance options
BENEFITS
- Could find the 'gem'
- May get a lower price
PRIVATE LOT
RISKS
- Negotiation is often involved
- Minimal inspection/reconditioning
- Limited ability to back the product
- Often older and less desireable inventory
BENEFITS
- Potential to negotiate a good deal
- May have unique inventory
- May purchase your trade
DEALERSHIP
RISKS
- May require negotiation
- Salespeople may be commission-based which can lead to up-selling
BENEFITS
- Larger selection
- More likely to stand behind the product
- Service and parts are readily available
- More likely to recondition the vehicle
- Financing and protection options
- More likely to buy your trade
SHOPPING IN GENERAL
FIND THE RIGHT VEHICLE
Before you even get to the lot do a self assessment to determine what you need in a vehicle.
ASK A LOT OF QUESTIONS
If they can’t answer or you don’t understand, it’s probably not a wise investment or the right place for you to buy from.
THEY SHOULD BE THERE TO HELP YOU
If you feel pressured or uncomfortable while making your purchase think about buying somewhere else. You should never purchase something in which you don't see the value.
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