Buying Your Next Car.
If it’s time to start thinking about buying your next new or used car, make sure you do a little homework before you visit the dealer. These 5 Easy Steps to Buying Your Next Car will help you save time and money when you’re ready to purchase.
1. Find the best car for your needs.
First, pinpoint your absolute “must-haves” for the vehicle. Do you need a fuel-efficient car to drive 60 miles to and from work each day? Does the car need to accommodate 4 kids and your spouse? Will you be towing a camper? Make a list of your needs and then make a list of the extras you might want.
2. Determine monthly payments you can afford.
Next, determine your all-in purchase price and the maximum monthly car payment you can afford. Use this quick and easy Car Loan Calculator to help. Most financial experts suggest spending no more than 15% of your take-home pay on your car payment.
What about a longer loan repayment term to decrease the loan payment?
Extending the financing term by 6-12 months will decrease the monthly payment to a more affordable amount, but you will also be paying for the vehicle for a longer timeperiod. Who doesn’t want a lower monthly payment? Of course, we all do…but extended financing terms also mean that you’re more likely to pay for car repairs while you’re still paying for the loan. If you must extend the financing term, consider Mechanical Breakdown Protection and GAP insurance to help control your future out-of-pocket expenses.
3. Consider the full costs of ownership.
The monthly loan payment isn’t the only expense you’ll have with a car. Be sure to consider the following items when considering different vehicles:
- Length of manufacturer’s warranty – the longer the warranty, the better. Once the warranty expires, you’ll have to pay for needed repairs out-of-pocket.
- Costs for regular maintenance – oil changes, brakes, tires, etc. Large trucks, SUVs and luxury vehicles will carry higher costs for standard maintenance.
- Annual fuel costs – Consider the vehicle’s MPG (Miles per gallon) rating and whether the vehicle takes Regular 87 octane or Premium 93 octane gas. Annual fuel costs can differ widely from one vehicle to the next.
- Insurance coverage – The insurance premiums for sports cars are usually much higher than on 4-door family sedans. Check with an insurance agent to find the monthly or annual insurance costs for vehicles you are seriously considering.
These items will vary from one car to another and could make a significant difference in your overall cost of ownership.
4. Take a Test Drive.
After you’ve narrowed down your list of vehicles that will suit your needs and your budget, now it’s time to have some fun — test drive the vehicles. Why? Because a vehicle with a great warranty, price and low cost of ownership could turn out to be the most uncomfortable, cramped and least satisfying to drive.
If possible, drive the car on roads that are similar to those you take every day. Note the vehicle’s acceleration, brake feel, comfort and if the radio controls, heat/ac and windshield wipers are intuitive and easy to use.
5. Find the Best Loan.
Researching your car loan is just as important as researching your next car. You should check financing options at your credit union and the car dealership. Keep in mind that the best deal may not always be just about the loan rate. If you want GAP and Mechanical Breakdown Protection, be sure to compare these costs as they are usually financed as part of the loan. Dealerships are known to charge hundreds to thousands more for GAP and Mechanical Breakdown Protection than your friendly, neighborhood credit union. Remember, COPFCU is a not-for-profit cooperative owned by you with the goal of improving your financial life – not charging you thousands over market.
You’re Ready to Go!
Hopefully you’ve found these 5 Easy Steps to Buying Your Next Car useful. If you’d like more information on the car buying process, check out the COPFCU Car Buying Guide.
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