If you are considering buying a car for the first time, you might not know where to begin. Making such a major purchase is most likely the first step in your financial life, so it is very important to take it seriously.
That’s the word from the experts at a national consumer education campaign called AWARE (Americans Well-informed on Automobile Retailing Economics).
To help first-time auto buyers navigate the financing system, it has put together this pop quiz:
• Do you have a budget? If you don’t already have one, create one. It will help you determine how much car you can afford. Don’t forget vehicle-related costs outside of a new car payment, particularly insurance costs. Premiums for many young drivers can be as much as the monthly car payment. Don’t forget to include maintenance, gas and taxes.
• Have you pulled your credit report? Your credit history may affect your finance rate, so it’s a good idea to get a copy of your free credit report before heading to the dealer. Go to www.annualcredit report.com for yours.
• Have you shopped around? Do some homework before you decide which car to buy and where to buy it. Call your bank or credit union. Talk to dealerships. Print out all quotes and keep them in a folder that you bring with you when you shop for the car. Whether you finance through your dealer or elsewhere, there are typically no penalties to refinance if you’re not satisfied.
• Do you know how finance rates are determined? Vehicle financers use a number of factors to determine the finance rate they will offer you, including your credit score, the price of the vehicle you would like to purchase, manufacturer incentives, the amount of your down payment, your debt repayment options and the length of the finance contract. The rate offered to you may be negotiable.
• Is there someone you could ask to be a co-signer if needed? If you are under the age of 18, are currently not employed, do not have a credit history or your credit history is not good, you may need a responsible person to co-sign the finance contract for you.
• Do you know the difference between leasing and financing? Know what an APR is? Credit insurance? Guaranteed Auto Protection? You need to educate yourself on these terms and understand the value and price of aftermarket products. If you don’t want something, don’t sign for it.
According to Eric Hoffman of AWARE, if you answered “no” to one or more questions, go back and hit the books before you buy a car or truck. Said Hoffman, “Consumers, especially those at the beginning of their financial lives, need to be vigilant about understanding the vehicle-financing process. If you make mistakes along the way, they can follow you for years.”
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So your ready to take the plunge and buy a new car? Here’s a little guide to help get you through the process.
Know your credit score. The higher your credit score is, the lower your monthly car payment will be. You can obtain a free credit report by writing a credit bureau, or just do a search online , there are plenty of websites offering a free credit report.
Get an auto insurance quote. After you have narrowed down your choice of your new car’s make and model, get a free insurance quote. You should make sure your insurance payment fits into your budget. It’s a wise decision to get quotes from multiple insurance carriers , to nail down the best possible rate. Also, if you have enough money saved up, you can pay the policy in full, to get a discount, instead of making monthly payments.
Now its time to visit the dealer. Car salesman are fast talkers, make sure your in the right frame of mind to deal with them. They make a living off commissions, so they try very hard to make a sale. While you can admire their eagerness , they can be annoying. Just ask politely for the facts. What are the standard options, warranty info, gas mileage, and anything else you want to know about the car.
Haggling. Trying to haggle over a new car’s price is like an art form. While sales people would love to make a sale, and haggle with you, they have to answer to a higher power. Usually they are tough to budge on getting a great deal. It also depends how the dealership is doing at the time, if its a slow month or quarter, they may bend a bit more.
However, this is one method I tried , and it did work for me once.
I just told them I would pay x-amount, nothing more, and to give me a call if they can meet my price. About five days later, they did call me back.
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Tips for buying cheap online car insurance and getting a free online car insurance quote
Smart shoppers can save money, buy cheap car insurance and get a reliable free online car insurance quote. The secret is to prepare before you log on to fill out the application.
Here are some tips from an experienced insurance shopper for getting the best deal:
1. Know your own driving record.
Insurance companies want the safest drivers as customers and charge a higher premium to drivers who have poor records.
Surprisingly often, a driver’s moving violation history has been recorded inaccurately by the courts or the state motor vehicle department.
Contact the DMV in your state. For a list, go to www.DMV-Department-of-Motor-Vehicles.com.
Make sure your record is accurate before a car insurance company checks it and decides to reject your application or assign you a higher than necessary premium.
2. Know your consumer credit report score.
If you have a less than stellar credit rating, you can expect to pay more for online car insurance — but don’t spend a penny more than necessary!
Many consumers never know about the inaccurate information that blemishes their credit reports and results in their paying higher insurance premiums. Don’t guess — get the facts.
For information on how to get a free credit report from each of the three major credit reporting agencies, go to www.annualcreditreport.com.
3. Know how much insurance you need.
Usually, personal liability and medical coverage are required, but the amounts can vary by state. Check with your state motor vehicle department to be sure.
The safest course is to buy the most insurance coverage you can afford. But if you’re on a tight budget, you don’t have to buy any more insurance than you’re legally required to carry.
4. Beware the low-ball scam.
That’s when a less-than-reputable company gives you an online car insurance quote that looks low but eventually isn’t. You sign up, they collect your money, and a few months later demand a higher premium than originally quoted.
To avoid the low-ball scam, check with the industry companies, such as www.AMBest.com, that rate car insurance providers. Don’t buy from any insurer whose rating is lower than B. The higher a insurer’s rating, the less likely it is to go out of business owing to insolvency, and the more reputable it probably is.
5. Etch your VIN.
Some insurers give a 10 or 15 percent discount on cars that have the vehicle identification number (VIN) etched into the windows. VIN-etched cars have a 64 percent lower theft rate than non-etched cars. An etched car that is stolen has a better than 85 percent chance of recovery.
Law enforcement authorities recommend VIN etching as a proven, effective deterrent to theft. The process is easy and takes as little as 15 minutes to etch the average car. Purchasing VINetcher, the do-it-yourself VIN Etching Kit, includes the option to register in the National Vehicle Identification Program for increased protection.
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