When shopping at retail and grocery stores, we tend to have an idea or list of what we’ll be purchasing. But when planning to purchase something more expensive, like a car, for example, comes into play, a longer, thought-out plan needs to be enforced. At Valley Federal Credit Union, we’ve put together seven tips to help you when searching for a new vehicle.
VFCU has great rates to help you purchase the car of your dreams! Call or visit us today to learn how we can help you.
Form a Budget
While it’d be great to own a sports car, being able to afford one can put a damper on your efforts. A good tip to always follow is to spend no more than 25% of your monthly income on car payments. This can also include gas, insurance and anything vehicle-related.
If you’re unsure of how to do this, add your total monthly income and deduct what you’ll be using to pay other bills like groceries and rent. This will give you a good idea of how much you can afford. Even if you happen to have a small budget, a loan with a low interest rate can certainly keep your budget under control.
Certified, New, Pre-Owned or Used?
No matter the condition you’re looking for, there will always be caveat to be aware of. A new car, for example, will come straight out of the factory line, and with it, a full warranty, lower interest rate and peace of mind, but you’ll also be paying a hefty car note.
A certified pre-owned car is a popular choice but comes with a higher interest rate and shorter warranty. Used cars, on the other hand, have been making the buying process popular in recent years. They’re the least expensive and provide a variety of choices, regardless of budget.
Start Narrowing Your Top Five
Heavily research the car that has caught your eye. Visit automaker websites to see if they have the features you’re looking for and look around at other dealerships in your area. Try choosing a car that costs less than 5% of the budget you’ve put together to give yourself some wiggle room for gas, repairs, insurance and other operating costs.
Assess the Costs
After you’ve narrowed your top five choices, determine if each fits into your monthly budget by estimating ownership costs. Obtain an auto insurance quote and do a calculation of how many miles you drive annually. This will give you a good overview of how much maintenance, gas and insurance will cost you.
One thing most car buyers don’t know is that dealers also sell loans. The reason they’re also in this business is because they receive commissions off of loans. While we know that car dealerships usually use flashy ads that tout low interest rates, usually only 10% of buyers qualify for 0% or low-interest deals. Visit us first to secure a good deal on an auto loan since we offer them as low as 2.3% APR!
What’s the Invoice Price?
Once you’ve done research on car sites, which includes wholesale prices for used cars and invoice prices for new ones, look at the manufacturer’s retail price. This is the amount the dealer paid for the car, and it’s best to start your negotiating there. Keep in mind that dealers need to make a profit off of the sale as well, but use the invoice or wholesale price as your starting point before discounts are applied.
Research Discounts and Test Drive
Auto dealers are always running cash-back deals, and these should be deducted after the price is negotiated. Also keep in mind that automakers also offer student and military discounts, so ask around. These discounts can be combined with cashback rewards.
VFCU Has the Loan You’re Looking For
We know car shopping can be a stressful and confusing experience, especially if you’ll have to create a strict budge in order to afford one. Being a member of our credit union in Harlingen has its perks, including getting low rates on car loans. Call or visit us today so we can help you afford the car of your dreams.