Buying a car is not easy. BadCreditHelpers.com has put together this Purchase Handbook that will hopefully help you make wise decisions when looking to purchase an auto.
1. How much should
I spend when I buy a car?
Your monthly finance payment on a car should be approximately fifteen
percent of your monthly income. Evaluate your finances to know what you
can afford as a down payment as well as what you can afford to pay per
month. Keep this information to yourself, do not share this with the dealer.
Research the cars that fit into your range, and narrow down your selection. Use
our
car
payment calculator to help determine monthly payments and what
you can afford as a down payment.
2. Used Cars vs. New
Cars
Don't just assume that either a new car or a used car is
the right choice. Take a second to match your situation and desires with
the advantages and disadvantages of each.
|
Advantages of new cars. |
Disadvantages of used cars. |
| Warranty: Full factory warranty. | Warranty: May only have balance of factory warranty or no warranty at all. |
| No potential abuse. | Where
has it been? How has the car been treated? |
| Factory support. | Limited or no factory support. |
| Lower financing rate. | In general, higher financing rate. |
| Full range of leasing options. | Limited or no leasing options. |
| Lemon Law coverage. | Limited or no Lemon Law coverage. |
|
Disadvantages of new cars. |
Advantages of used cars. |
| Higher price. | Lower price. |
| You take the hit for depreciation. | Initial depreciation has already been taken. |
| Little price variation. | More price variation (you can always go one year older on a similar car and pay less). |
3. Needs vs. Wants
Choose what kind of vehicle you want. Then match your needs,
then your wants. Many car buyers do it the other way around
and end up with a vehicle that they like on the one hand (it is what they
wanted) and hate on the other hand (it doesn't fit their needs). Make
a list of features that you absolutely must have (needs), and then
make a list of features that you would like to have (wants). Your
wants should only be purchased if they fit into your budget.
You need to do this long before you ever set foot in a car dealership
showroom. Trying to decide which features are important to you while in
the dealership will only cost you money and cause you grief.
|
Examples of Needs |
Examples of Wants |
| 4 Doors | Blue car with tan interior (or any specific color) |
| Station wagon or Minivan | Sport wheels |
| Automatic Transmission | 6 disc CD Player |
| Air Conditioning | Upgraded interior |
| Luggage rack | Sunroofs/moonroofs (unless you are really tall!) |
| Child safety seats | Spoilers/ground effects |
| Towing package (if you are planning to tow a boat, trailer, etc.) | Engine with more horsepower than you need. |
| Rear defroster/heated mirrors | Electronic gauge package |
4.
Prepare Your Finances
When looking to finance an auto, it is VERY important to run a
complete credit check. You want to eliminate the possibility that there
might be errors present that could harm--or stop--your auto financing.
You can get a
FREE
copy of your credit report from
Identity Guard by clicking
here.
Also, did you know that applying for loans you can't qualify for could
put more bad marks on your credit. If too many potential lenders have
checked your credit, others will wonder why you're suddenly trying to
increase your level of debt with every finance company in town.
5. GAP Insurance
GAP insurance covers the difference between what you owe on a
car and its actual value, should the car be "totaled" or stolen.
When you finance a car, the dealer will most likely suggest you purchase
GAP insurance, which can cost up to $500. If you think this situation
is likely, then your auto financing plan is probably too long. Whether
you need GAP or not, be wary of how dealers try to sell GAP. Dealers may
insist the only way to give you financing is if you purchase GAP insurance-this
is untrue. When negotiating car financing terms, be sure to ask if GAP
insurance has been added to the cost, as the dealer may not tell you.
6. READ EVERYTHING!
When finalizing
a new or used car purchase, make sure that you READ EVERYTHING BEFORE
SIGNING, including all of the fine print! Decide in advance if you
need a warranty, and don't let any "dealer extras" or additional
charges slip by.