Buying an Automobile the SMART Way
If you feel like a fish out of water when you step into a car dealership and the sales people swoop down like hungry pelicans, you aren't alone. But let's face it, sales people negotiate car prices and deals hundreds of times every month, while you only do it once every few years--so of course they will have the advantage. However, if you are smart and do a little bit of homework before you go shopping, you can easily put the ball in your court. The first priority is to get pre-approved so you don't over spend and extend your budget beyond its capacity.
The Simple Basics of Buying a Car
The old saying "Don't go to the grocery store when you are hungry," applies to car buying as well--don't wait until you are in desperate need of a car to start looking for one. If you take your time and do your homework, you can overcome some of the pitfalls and frustrations many experience with car shopping.
Our Financial Service Representatives are always available to help you understand and navigate through this process. In addition, here are a few simple steps to help you drive away with the car of your dreams at a price you can afford.
- Establish what you can realistically handle for a monthly payment.
A good rule of thumb is that your monthly vehicle payment should not exceed 20% of your monthly take-home pay.
- Get pre-approved for your auto loan before you step foot in a dealership.
You do not always have to go through the dealership for your financing. Pay attention to the small print and restrictions of dealers' special promotion and rates--you may not qualify for these, or you may qualify for them even if you get your financing elsewhere. When you get pre-approved at Credit Union of Denver, you not only take the pressure off your buying experience, you will also know exactly what you can afford and how much your monthly payments could be. Remember, there is more to financing than just the payment-there is the interest rate, down payment requirements, and length of term. With C•U•D's easy 24 Hr Loan application, you can get approved for your loan quickly and easily, cutting out a lot of waiting time at the dealership.
- Search the Internet.
- Consider all the costs of ownership.
Believe it or not, one vehicle might be cheaper to buy, but more expensive to own! Vehicles depreciate at different rates, some cost significantly more to insure, some more to maintain, and in today's world of high fuel costs, fuel efficiency is a major factor to be considered before you buy.
- Test drive.
The goal of a test drive is to experience, as closely as possible, the same type of driving conditions the vehicle will be used in-stop and go commuter traffic, highway driving, etc. Pay attention to how the vehicle handles in all situations, how it maneuvers, and don't let the salesperson's pitch sidetrack you. Don't drive with the radio on, either-you can test that out later. It's wise to test drive more than one vehicle, and if you do, test drive them back to back to be able to compare the feel, the ride, and even the minor difference.
- Closing the deal.
You've done your homework; you've found your perfect vehicle, now all you have to do is close the deal. Some items to be aware of:
- 0% financing- read the fine print to make sure you aren't getting a "bait and switch" deal. That is, when the zero percent rate turns out to actually be an "introductory rate," which can jump much higher in a few months.
- Subject to refinancing clauses- some dealerships promise you a low interest rate and then hike it up in a few days.
- Dealer prep charge- this is a charge you can actually avoid paying. The charge is supposed to cover preparing the vehicle when it comes in from the manufacturer, but actually, the factory usually pays them for this.
- Never be afraid to walk away.
It can be the hardest thing to do, but if it doesn't feel right, follow your instincts and walk away. The vehicle, or another one just like it, will be there if you change your mind. It's a big step, a big commitment and you, not the salesperson, will be the one to live with your decision.