Purchasing a car can be both a stressful and fun time for a consumer, especially a first time buyer. A car may be one of the first purchases a consumer makes on her own, and comes with a sense of independence. Asking the right questions at the dealership can help the buyer make the right decision not only on the financing, but also which car will best suit her needs.
Should I Buy or Lease?
Many dealerships offer special promotional rates and pricing for leasing a new car instead of buying. Talking over the benefits and disadvantages of both can help the buyer know which route is best. A lease allows the customer to, in a sense, rent the car for an extended period of time. Monthly payments are made each month, and at the end of the term the car is returned to the dealer and can be either bought out by the customer or traded for a new car. Leases come with a mileage limit, and can result in additional fees if the driver goes over the limit. Customers who are unsure of what type of car they want or those who like to change cars every few years may be a good candidate for a lease. Unlike leases, buying a car allows the customer to make monthly payments towards full ownership of the car. At the end of the loan term, the customer owns the car outright. Purchasing a car can be best for those who have a Job that requires travel, such as a sales rep.
Is It Best to Buy New or Used?
After deciding on a budget and whether to lease or buy, the customer will then need to determine if a new or used car will best fit his needs. New cars typically come with promotional interest rates for credit qualified customers, along with the possibility for cash back incentives and warranties. The buyer also has the benefit of knowing that he is the one putting each mile on the car, providing a sense of security. However, used cars have the benefit of coming with a lower purchase price, which can allow a buyer to get more car for the money. Also, buying a used car allows someone else to take the large hit in value that comes along with purchasing a car, since the car depreciates most in the first few years of ownership.
How Does Financing Work?
Once the buyer has selected the car she wants to purchase, the next question should be how the financing process works. She may ask if the dealership offers an in-house finance department that will secure a loan, or if she can pursue finance on her own, which may be a better bet. Questions about what, if any, down payment will be required, as well as if a co-signer is needed to secure financing are also important. After either party secures financing, the buyer should then inquire about the terms of the loan. Loan terms can include the interest rate, the total number of payments, the payment due date, and the amount of each monthly payment. Search the Internet for great deals on car loans through private lending clubs and organizations.
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