by Reginald Garth, Financial Wellbeing Coach, HOPE Inside at St. Louis Office of Financial Empowerment
Thinking about buying a car? Here are some important tips to keep in mind.
Your Auto-Buying Checklist
RESEARCH YOUR CAR OPTIONS: There is a lot more to it than just saying, “I’m going to buy a car” or “I want/need a new car.” Do you know what you truly need? Many of the times when we go shopping for anything, we keep it general as opposed to specific. Remember, buying a vehicle is one of your three big-ticket purchases you will ever make. You will have to decide if what you want to drive is sufficient to what your daily needs are. Research the vehicle’s price, features, and benefits; do not go into buying a car blind.
Before you buy, PRE-QUALIFY for loans: many people will get a loan right at the dealership because it is convenient. Just because something is convenient does not mean that it is good. Dealership interest rates are often much higher than the loan rates you would get from your bank or credit union. Before going to the dealership, go to your bank or credit union first. Your bank or credit union can offer you an affordable rate that works best for you. Most dealerships are looking out for the best deal for themselves. Another way to pre-qualify: check your credit score before you go for the loan. Know your score and if it is not where you like or need it to be, you can always come see our Financial Wellbeing Coach, Reginald Garth to help you raise that score.
Smokey Robinson and The Miracles were right: “You better shop around!” It is your money that you are spending so why not get the best for your money? Do not just settle on the first dealership and the first car you see. Shop around! This also applies to getting an auto loan. It is perfectly ok to rate shop. When rate shopping for an auto loan, credit is pulled once and as long as you are shopping for an auto loan in a 30-day window, your other credit inquiries will NOT count against you. You can rate shop for credit cards and home loans too but auto loans have a 30-day window. Spending money should be just a serious as saving money. Always, always, ALWAYS do what is best for you.
Buy only what you can afford: You can wish and you can pray for a Cadillac but can you afford it after the initial purchase? Many times people qualify for loans that are more than what they really need and they get excited because it is more money to get what you want. Just because you qualify for it does not mean you should have it. You could qualify for a loan that is $40K or $50K, but then your payments are as high as your rent. Ask yourself, do you want to live out of your vehicle? Keep in mind upkeep and maintenance of the car. If you have a foreign or luxury vehicle, your costs will be higher due to parts and labor. You also need to be concerned about the insurance for said vehicle. Be mindful of your monthly income and expenses. You know what you can afford. Live and shop within your means. Trying to keep up or showing off for others only hurts you in the end.
As always, if you have any questions about budgeting or financing, or need credit counseling, our Financial Wellbeing Coach, Reginald Garth is available Mon-Fri 8am-4pm. You can contact him by phone at 314-613-3196 or by email at firstname.lastname@example.org.