Preparing to Buy Your First Car

There's more to consider when buying a car than just whether it has a cool stereo and a good paint job. There's licensing, monthly expenses, insurance, and more. We've designed this six-step plan as an easy reference of what to consider before shopping for your new or used ride.

How to prepare to buy a car:

1. First, ensure your credit is good
2. Then investigate the cost of insurance
3. Add up how much money your car will truly cost
4. Determine how much you can spend
5. Get a Vehicle History Check
6. Stick with Credit Union financing

Step 1: Ensure your credit is good
Know your credit score up front and what it means to you.

How much money you can borrow to purchase a vehicle is dependent on your credit report. You can learn how to obtain & read your credit report on the AutoSMART web site before you visit a dealer. This car buying research site and dealer network is available exclusively to BECU members; check it out—they offer articles, advice, car comparisons, and calculators.

Your credit rating will also help to determine the interest rate you pay on the money you borrow to buy a car. Looking at the table below, you will see the importance of establishing good credit and maintaining a healthy credit score. If you don't, you'll be spending money on interest that could be going toward savings for your future.

With a high credit score, you might get a car loan at 5%. But if you have a low credit score (or no credit history), over the life of your loan you can pay up to nearly 4 times the amount of interest. Check out the difference in interest payments on a $15,000 car loan for 48 months:

Interest Rate (% APR)	Monthly Payment	Total Interest Paid on Loan in 48 Months
5% (higher credit score)	$345	$1,581
10%	$380	$3,261
15%	$417	$5,038
20% (lower credit score)	$456	$6,910

This information is for example purposes only and does not reflect BECU rates. Monthly payment and interest paid are not reflective to BECU.

Step 2: Investigate the cost of insurance.
Read on to discover ways to lower your car insurance bill.

It's important to shop and compare insurance companies to find the best policy and premium for you. Things you should compare when shopping are premiums, bodily injury coverage, property damage, medical payments, and the physical damage coverage limits for both collision and comprehensive insurance. Make your decision wisely. Take into account the premium you can afford and also what you would have to pay in the event of an accident.

When shopping for car insurance, certain factors that impact your rate are definitely out of your hands, like your age, gender, record of prior claims and your credit score. A bad credit score could increase your premium by 50 percent. Nevertheless, you can get a lower rate if you take some necessary steps. These tips from the Edmunds.com website are designed to help you get the best rate possible on your auto insurance:

Top 10 Ways To Lower Your Car Insurance Bill.

Step 3: Add up how much your car will truly cost.
There's more to how much a car costs than its "sticker" price.

You know a car costs more than just what it says on the price tag. There's sales tax, fuel, maintenance, new tires, oil changes & checkups, licenses & registration, interest on your loan, and depreciation. Edmunds.com has created a powerful tool to help car buyers figure out the "True Cost to Own" (TCO) cars they are considering purchasing.

Some buyers "might find that they can afford to buy a car, but they can't afford to own it," says Bob Kurilko, vice president of Edmunds' product development and marketing. "Understanding a vehicle's TCO is extremely important to a person on a fixed budget."

Learn what your car will truly cost using "True Cost to Own" (TCO) Pricing System.

Step 4: Determine how much you can spend.
You'll need to create a budget to know what kind of car you can realistically afford.

Create a budget. You can use AutoSMART payment calculators to figure out which vehicles fit your budget and what the monthly payment might be.

When figuring the cost for a vehicle, include all options and subtract any rebates or incentives currently offered for a new vehicle. Used or Certified Pre-owned vehicles are a smart option if you're looking for value. Also, consider whether you'll be paying cash or financing your vehicle. If you have a trade-in (perhaps a car that your parents gave you before you were able to buy your own), you can find out how much it is worth. Research trade-in values and make sure to factor in the condition of your vehicle.

Step 5: Get a Vehicle History Check
Know what you're getting into when buying a used car.

Before you purchase your next used vehicle, quickly research the history of the vehicle and find out if it has been involved in any accidents that may have caused major damage to the vehicle or if it is the subject of a manufacturer's buy back (lemon).

Click on the images below to begin your FREE Records Check with TitleGuard or CARFAX (vehicle history reports may have additional fees).

Once your research is complete and you have decided to buy, you can insure against "hidden" DMV title defects for up to $50,000 with TitleGuard Vehicle Title Insurance.

Step 6: Find out how BECU can help you buy a car.
Take advantage of what your credit union offers.

• BECU members get automatic access to AutoSMART Research and Buying Service. AutoSMART tools help you compare vehicles, research the best payment or financing options, access free lemon checks, find trade-in values, and more.
• At AutoSMART, you'll also get access a dealer network managed by CUDL® (Credit Union Direct Lending) available exclusively to BECU members. CUDL dealers offer BECU financing right on the spot making it even more convenient to buy the car you want.
• To learn more about BECU auto loans and how to determine what sort of car you can afford, you can sign up for our in-person seminar: "How to Buy a Car" and view online our "How to Create a Budget" webcast. Please see BECU Education & Seminars for details.

Download this Pocket Auto Buying Checklist from AutoSMART

This handy PDF helps first-time buyers remember:

• The Top 5 Things to do before you visit the dealership.
• The Top 6 things to do while you're at the dealership.

Next steps: Checkout AutoSMART Research and Buying Service and BECU Auto Loans.