Car Buying 101: What You Should Know
Many car buyers, especially first-time buyers, make big mistakes in the process. Our car buying 101 guide provides the information you need for a smoother buying process. We hope it will help you get a better deal and secure a car and loan you can afford.
Get preapproved for an auto loan before you begin shopping for a new vehicle
This seems like common sense, yet many car-buyers skip this important first step in their excitement about shopping for a new vehicle. A pre-approved car loan means you have already been approved to borrow a certain amount of money, even if you have not yet chosen the vehicle. Auto loan pre-approval can help you set a realistic budget for your new vehicle and give you greater negotiating power with a dealership. Your lender will ask how much you are looking to borrow, as well as information on your income and debts. He or she will determine how much you can afford based on your income and expenses. The pre-approval process is relatively quick and easy and can save you time at the dealership and cut down on the stress of worrying about last-minute funding. A local credit union, such as Spirit Financial Credit Union provides pre-approval for auto loans. You can apply quickly and easily right online.
Determine your budget
Don’t go into a new car purchase blindly when it comes to cost. Not only do you need a vehicle that fits your needs, but one that fits your budget as well. How much can you afford in the form of a monthly payment? Don’t forget to include a down payment in your budget. A vehicle down payment Is typically at least 20% of the purchase price. Experts recommend your car payment be no more than 15-20% of your take-home pay. Check out Spirit’s handy online auto loan calculator to help you determine your monthly payment.
Find a vehicle that fits your needs and lifestyle
The type of car you search for not only needs to fit your budget, but also your lifestyle. Evaluate your needs and preferences to determine the right type of vehicle for you. Consider things like size, durability, and usage. Ask yourself these questions:
Will it be used just by you for getting back and forth to work?
Will it be used as a family vehicle and to transport children to activities?
How many passengers will you need to carry?
Will you be primarily driving on highways or city streets?
Are you looking for an all-wheel-drive vehicle for camping, fishing, and off-road activities?
How important is fuel economy?
How much garage space do you have available?
Answering these questions will help you identify the right makes and models for your lifestyle.
Research online to get an idea of pricing
There is a wealth of information online when it comes to car shopping. From auto manufacturers to dealerships, you have access at your fingertips to vehicles, safety ratings, reviews, pricing information, current deals, and more. If taken advantage of, these online resources can help make the car-buying process easier and much more efficient. Another advantage of beginning your car shopping experience online is no pressure from salespeople. Start by using our online car shopping tool, CarShop365. It’s a easy way to search for vehicles, compare models, locate dealers, check out loan rates, get pre-approved, and much more all from the comfort of your own home.
Visit dealerships and test drive vehicles
You may have a favorite local dealership, and it’s fine to include them in your search, but you should also comparison shop with a few other dealers. Don’t feel intimidated by a high-pressure salesperson. Let them know you are comparison shopping and there for a test drive. A test drive is an essential part of any new car purchase. Make sure the vehicle feels comfortable and is ideal for your needs. Try to test drive on roads you will be most traveling, such as city streets, highways, etc. Is there room in the vehicle for a car seat if needed? Is there enough cargo space for your needs? If you’re interested in a particular vehicle, ask about previous model years as well. They might offer a much better bang for your buck. If you’re happy with a certain vehicle you've test-driven, get pricing information, and an offer, then move on to the next dealership for comparison. Never settle on your first stop or first deal.
Negotiate
Negotiating a price is an important part of Car Buying 101. Having done your online research in advance and visited several dealerships puts you in a much better position for negotiating. Use your knowledge of the offers you’ve gotten and the pricing you’ve found online as a base for what you want to pay. You can mention that you’ve gotten several offers from other dealers. Do not mention a trade-in or any rebates you’ve found. Tell the dealer you have already been preapproved for a loan, so he or she knows you have funds available.
Only after you negotiate a price for the vehicle should you bring up rebates and talk about your trade-in. You should have an idea of what your trade-in is worth beforehand. If a better trade-in offer from another dealership makes for a better overall deal, then don’t be afraid to walk away. Finally, negotiate on the total price and not monthly payments.
Auto Loans made easy
Spirit Financial Credit Union auto loans provide many benefits, from competitive rates and flexible terms to pre-approvals and more. Learn more about the car buying process by reading 3 Steps to Get Top Dollar For Your Car Trade-In and Ten Tips for the Best Deal when Buying a Vehicle.