Buying a car can be an exciting yet exhausting experience. You are faced with a dizzying array of autos and options. Knowing how and where to finance the vehicle can further complicate the process. Knowing what you can afford, how you plan to pay for it and what you are looking for before you begin shopping can make buying a car much easier.
How You Plan to Pay for the Car
The most important thing you must know about buying a car is not the type of car you plan to buy, but how you are going to pay for it. If you have the money in the bank to buy the car, then you are set to go. But if you have some money, but not enough for the whole purchase, you will need financing. Check your credit before attempting to purchase the car, and if your credit score is low, spend a few months rehabilitating it before making the purchase, if possible. The difference can be thousands of dollars in interest.
How Much Can You Spend
Whether you are paying cash or financing, you need to know how much can afford to buy before you even start shopping for a car. This might mean calling your bank or credit union to see how much money you can borrow, even if you plan to finance through the dealership.
How Much You Can Spend on Car Maintenance
The difference between a used subcompact and a new muscle car is more than just cosmetic. Cars can have wildly varying maintenance costs, as well. Before you buy, know how much you can afford to spend on gas and routine maintenance.
How Much Your Car Insurance Will Be
The other important difference between that used subcompact and the muscle car is insurance rates. Check with auto insurers before you make a purchase to get an idea of what rates on cars you are interested are. The difference between models can be substantial.
Do You Plan to Trade a Car In
Trading a car in can provide a built-in down payment. Whether you are buying new or used, you can trade your current vehicle in if it is paid for, or if you owe significantly less than it is worth. If you owe more on the vehicle than the resale value, it is probably better to wait until you have paid more on the car before trading.
You should also know how much your car is worth before attempting to trade it in. You may be better off selling it yourself than accepting a dealer's offer. The Kelley Blue Book can give you an idea of how much your car is worth.
What Type of Car You Need
One of the biggest mistakes consumers make when shopping for a car is not knowing what they need. Knowing how you plan to use the car, whether for work, for shuttling the kids back and forth, or for pleasure trips can help narrow down your options and make finding the car that is best for you easier.
How Much the Car You Want Is Worth
Once you have settled on a car, it is a good idea to do some research to determine how much the car usually sells for. That way, there is no sticker shock when you get to the dealership, and there is less chance that you will end up paying too much. Research models you are interested in by calling dealers to ask for prices and checking websites such as Kelley Blue Book and NADA.
Whether to Buy New ...
Chances are, you already know by this stage whether a new car is in your budget. If you are on the edge, check for rebates, special financing or other incentives that may make buying a new car as attractive as a used one.
... or Buy Used
You can get great deals on used cars without buying someone else's problems. Many used cars come with the remainder of a factory warranty and options for purchasing extended warranties that make them much less expensive to purchase and insure than a new car.
Where You Will Buy Your Car
If you are unsure where to go to buy a car, ask friends or family for recommendations. Then, talk to several dealers before you make your purchase to find a dealer and financing you are comfortable with.
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