How to Buy a Car
Whether you’re planning to purchase your first car or your next one, it’s a big financial decision and one you shouldn’t rush into. Not only do they cost a lot of money, but your selection may impact your daily life and your wallet down the road. The process of purchasing a new ride can feel overwhelming, but this article walks you through how to buy a car with a few simple steps.
Take a good look at your budget to determine how much you can afford to pay for your next vehicle. If you don’t have already have a budget, be sure to create one before you get started.
You can make this determination through a couple different methods:
Regardless of how you view affordability, there are other scenarios to consider as well:
Other costs to consider as you determine how much you can afford include:
Before you start shopping for your new vehicle, it’s important to get prequalified and/or preapproved for your loan. This will demonstrate to the dealer that you’re a serious buyer and may help ensure you get the best financing possible. Shop around at various financial institutions to find the best rates and terms. Then contact the financial institution via phone, web, or in person to start the process.
What Does It Mean to Get Prequalified?
Prequalification is the process of sharing your financial information with a lender to determine approximately what the terms of the loan could be, including how much you can borrow and the interest rate. Prequalification does not trigger a hard credit check and is not an agreement to fund a loan.
What Does It Mean to Get Preapproved?
Getting preapproved is considered a loan application that has been approved. The preapproval process does trigger a hard credit check and will result in an offer from the lender for a specific loan amount and rate that is generally good for 90 days.
Write down the vehicle features that are most important to you. Features to consider include:
Next, rank the features in order of most to least important. Then, start researching the different vehicles available in your price range that include highest ranking features on your list.
Now that you know how much you can afford, which features you want, and are preapproved for your loan, it’s time to start shopping. Take some time to view the inventories of several local and online dealerships to get a good idea of what is available. Be sure to educate yourself on the true market value of your desired car by consulting edmunds.com, Kelley Blue Book, or any other vehicle valuation company to determine a fair and realistic price. If you have the time, watch the inventories for sales and other incentives to help lower your cost.
Once you’ve found the right car for you, it’s time to contact the dealership and start negotiating. First, confirm the vehicle you have your eye on is still available. Next, let them know you’re interested and start the negotiating process. Make sure you are aware of any current rebates, incentives, or special financing deals the dealership is offering.
If you’re trading in your car, let the dealership know so they can determine a trade-in value you both agree on. Also, make sure you’re aware of any taxes and fees related to your deal upfront. Finally, watch out for the extended warranties and paint protection that dealers often try to sell. These huge revenue generators for dealerships are costly to customers and may offer little value in the long run.
If you have questions about purchasing a new vehicle, getting prequalified or preapproved for an auto loan, or any other banking needs, a Personal Banker from FNBO would be happy to answer them. Give us a call today or chat with a Personal Banker by downloading the Twig by FNBO app.Read More Insights