Financial Library

Financial knowledge leads to financial success, and the articles below can help you take more control of your finances now. Plus, Wealth News newsletters can add to your understanding of investing and planning.

Get the Best Deal When Buying a Car

Aug 15, 2017 ​

Couple in car

While shopping for a vehicle is exciting, it is also no simple matter. You can avoid buyer’s remorse by making important financial and practical decisions before signing on the dotted line.

What’s Right for You?
Shopping for a car can be complicated and time-consuming. It involves balancing your desires with your economic reality, deciding whether to buy or lease, and knowing what is the best deal for you. To make the process efficient and improve your chances of driving away happy, you will need to consider your needs, your wants, and your spending plan. Buying a sports car when you need a minivan isn’t a good use of your money. Also, don’t get carried away and end up with a car that’s out of your price range. Your spending plan, not a salesperson, should dictate your decision.


Save For a Down Payment

While it is possible to buy a car with no money down, you will end up paying a lot more for it if you do so. To decrease the amount you finance, it’s wise to make a significant down payment.

Effective saving begins with first determining how much you want to save, then setting a reasonable date to achieve your goal. Using an automatic deduction can make the process easy. Contact us to arrange to have a set sum deducted from your checking account and automatically deposited into savings.


New, Used, or Lease: Advantages and Disadvantages of Each

After you determine how much you can afford to spend, the next step is to decide between buying new, buying used, or leasing. While leasing a car may enable you to get “more car” for less money than what you might be able to purchase, remember that leasing is essentially renting, and when the lease is up, you must return the car, and pay any extra fees for mileage or damage. You do have the option to buy the car outright, but in the end, you will usually pay more over time by leasing – then purchasing.


Credit Reports and Credit History

Your credit history will have a serious impact on the interest rate you will be offered. You can check your credit history every year, free of charge at https://www.annualcreditreport.com/index.action.  The better your credit history, the more likely you are to have a good credit score and get a better rate. Other factors, such as length of employment, income, and expenses may also be considered when determining terms of a loan.


Financing Options and Implications

Because financing increases the total cost of the car, the loan you get is very important. Make sure you understand the following aspects of the loan agreement before you sign any documents – the exact price of the car, including tax, title, and license; the amount you’re financing and the charges to do so; the annual percentage rate (APR); the number and amount of payments; and the total sales price.


Beware zero-percent financing

Zero percent financing sounds like an amazing bargain – after all, how can you beat a no- interest loan? Often, you can. Such “deals” frequently come with inflated prices for extended warranties and loan insurance, high application fees, and pre-payment penalties. True zero percent financing can be elusive – it is usually only offered to those with very good credit – and it is often not available for the most popular cars and trucks.


Dealer and Finance Company Loans

At an auto dealership, you will be encouraged to use dealer financing. While not all dealer loans are bad, in most cases a loan from your financial institution will be preferable. Visit us before you shop, so you can find your vehicle armed with the knowledge of how much you can spend.


Negotiate

To get the best price on your new car, you will often have to negotiate with a salesperson. Developing your bargaining skills will be worth it in the end, as it can often save you 10 to 20 percent off the advertised price. You may be able to negotiate a particularly good price on overstocked or less popular cars.


Trade-In Your Old Car

If you already have a vehicle, you may be selling it. To get the best price, make sure you know your car’s worth. Check reference books or the Internet to know its value (try www.kbb.com and www.nada.com). You can either sell the car yourself, or trade it in to the dealer. You’ll get the best price if you sell it yourself, but take into consideration the additional time and negotiations you’ll have to make with potential buyers. Trading in your old car is most often the easiest option. Be sure you talk to the salesperson about your trade in after you’ve negotiated the best possible price for your new car.


Save On Car Insurance

Car insurance monthly payments, often called premiums, can be a substantial expense. However, you can improve your chances of getting the best deal. Establishing a good credit score helps, as does establishing a long-term residence or getting a mortgage – both show you’re responsible. Avoid getting tickets and practice being a careful driver. Finally, do the comparison shopping between both local and national companies to find the policy that works for you.


Lending Laws

There are several federal laws that protect your consumer rights when leasing or purchasing a car, including the Truth in Lending Act, the Federal Consumer Leasing Act, the Credit Practices Rule, and the Equal Credit Opportunity Act. For more information on each, visit the links below.


Federal and State Agencies

  • Some state laws may provide you with additional rights. Contact your state’s consumer protection agency or Attorney General’s office (www.naag.org).

So if you need a new vehicle, step on it and check out what we have to offer - Nusenda has loans available for new, used, or specialty cars; motorcycles; and RVs - with some of the lowest rates and most flexible payment options in the market.

© 2017 BALANCE. All rights reserved.

 

Big bank services, small town attitude.

Nusenda Credit Union. The Power of WE®.



Learn more