Nothing smells better than a new car, but the process of sorting through options, figuring out what you can afford, arranging financing, and then negotiating can be complicated and nerve-racking. To make the process easier it helps to have a plan for selecting and financing your new set of wheels.
Consider the costs
In addition to the sticker price, cars come with a lot of hidden costs that don't show up on the sticker. Insurance, interest on the loan payment, taxes, licensing fees, maintenance and gas, to name just a few. You'll have to factor in all these costs to get a more accurate idea of what your monthly expenses will be once you own this new vehicle.
See current BECU car loan rates to calculate interest on your vehicle.
Car Buying Calculators
What can you afford?
For most people, a new car is instantly going to be the second or third largest monthly expense they have. And for the most part, this expense is going to be there, month after month, for up to six years.
So it's important to put this new purchase in the context of your overall budget, to make sure the monthly payments don't put you in the red. If you don't have a budget already, BECU has resources you can use to create an initial budget and figure out how much you can safely afford. You can start here, with the BECU Budget Planner.
Regardless of the vehicle you select, whether you're buying it from a dealer, private owner or off the Internet, it's a huge help to be pre-approved for a loan so you know how much car you can buy. Having a good credit rating at this point will put you in a better position to qualify for good rates.
There's more to the cost of a car than just the sticker price. You have to also consider annual percentage rate (APR), trade-ins, rebates and other incentives. Don't just assume 0% financing is the best option. Crunch the numbers to see if a rebate or other options will save you more money over the life of the loan.
There are hundreds of brands of vehicles and literally thousands of different models to choose from. Unless you're a car fanatic, you might not have a particular vehicle in mind when you start shopping.
If that sounds like you, you may want to start by asking yourself "what features are most important to me?"
If you have a family with young children, you may want to consider a minivan. If you're a skier, an SUV might be right for you. Or if you live a long way from work, you might want to consider buying a car that gets good gas mileage.
Of course, no matter what model you decide on, safety is paramount. The Insurance Institute of Highway Safety can you help you identify the best picks for your needs.
After you decide which features you need, received recommendations from friends or done some research on the web, you can choose the car you'd like to purchase, or create a short list.
Where to look
These days there are lots of places to purchase a car. You can buy one off the Internet, from rental car agencies and buying services—you can even buy a car through Costco.
Credit unions have created a great place to shop for cars called the AutoSMART Network. It's an online marketplace where you can arrange financing and receive special deals on vehicles offered by select dealerships. Open seven days a week, AutoSMART offers one-stop shopping to credit union members.
So, you've arranged your financing and targeted the car you want. What next? If you're considering a used car, it's important to make sure that your prospective purchaser has no deal-breaking flaws or great surprises. Here are a few things to focus on:
- Interior: Is it free of obvious wear, tears to the upholstery or does it smell like smoke? If you have certain allergies, you might also want to know if the previous owner had pets.
- Exterior: In addition to looking for dents and scratches, be on the lookout for bodywork done after an accident.
- Test drive: While taking the car for a drive, check to make sure the car is responsive to accelerations, braking, and is in alignment.
Get the Carfax
A CARFAX Vehicle History Report will tell you if the car has been in an accident and how many previous owners the car had. The information in this report will either sway your decision or help you close the deal.
For extra peace of mind, it's a good idea to take your car to a reputable professional who can check out the car and identify any significant problems.
Ready to negotiate?
Whether you're buying from a dealer or a private owner, being as informed as possible can improve your negotiating position. The web is full of resources that can help. Kelly Bluebook is especially useful for figuring out what you can expect to pay for specific models of new and used cars.
The best thing you can do before buying a car is prepare, prepare, prepare. Information is king when negotiating with dealerships. Have a solid idea of what the car you targeted could cost.
Other things to keep in mind:
- Get quotes from at least 3 dealers when buying new
- Remember, everything, EVERYTHING, is negotiable
- Set aside plenty of time for this purchase so that you aren't rushed into a bad deal
- It's OK to think about it – if you need to, take 24 hours before you finalize the deal
- Target those times of the year and end of the month when sales people are more likely to cut you a good deal
Finally, remember: you're in control. If something doesn't feel right, just walk away. You'll find another car to drive away soon enough.