There are so many things to consider before purchasing a vehicle, such as budget, car model, financing options, insurance coverage, and so on. This could be overwhelming, especially for first-time buyers, and even lead to bad decisions. To help you make an informed decision and make the car-buying process more straightforward and efficient, here’s a step-by-step guide:
- Know Your Budget
When budgeting for a new car, consider the following:
- Purchase price
- Taxes
- Insurance
- Maintenance costs
- Loan costs (if financing)
- Down payment (may be required in some cases)
You also need to figure out a comfortable monthly payment by determining your maximum spending limit without putting a financial strain on yourself. When determining your overall budget, always remember to leave room for unexpected expenses or emergencies.
- Get Pre-Approved
Know how much you can work with prior to heading to a dealership. These are some of the benefits of getting pre-approved:
- Streamlined shopping
With a pre-approval, you can focus on cars within your budget.
- Knowing your potential interest rate
This will help you compare financing options and make informed decisions about the best loan terms for you.
- Peace of mind
A pre-approval can give you the confidence to shop for a vehicle and reduce stress and uncertainty during the buying process.
- Shop Around
This is the step where you compare vehicles, figuring out what is best for your lifestyle and which one will meet your specific needs. Research different car models and consider the following:
- The model’s typical repair costs
- Fuel efficiency/mileage
- Future resale value
- Size
- Reliability/safety features
You should also compare prices by reviewing multiple dealers, online car-buying platforms, and private-party sellers. And remember: do not be afraid to negotiate the price for a fair deal.
Another essential part of choosing a car model is to do an inspection and go on a test drive. First, schedule a test drive to assess its condition and find out how driving the vehicle feels. Then, check the car’s history for accidents, damage, or other issues. If buying from a private party, have the vehicle inspected by a mechanic to determine potential issues.
- Research Add-On Protections
Compare the products offered by trusted financial service providers and dealerships. Explore the products, including what the potential benefits are and if they are suitable for your situation. Here are a few that you can consider selecting:
- Guaranteed Asset Protection (GAP)
GAP insurance is a type of coverage that protects you financially if your car is totaled and the amount owed on the loan exceeds the car’s current market value.
- Depreciation Protection Warranty (DPW)
DPW is a type of coverage that protects the value and equity of your vehicle from depreciation.
- Debt Protection
This is a type of coverage that can protect the borrower from unforeseen circumstances including involuntary unemployment, disability, loss of life, and other protected events as defined in the contract.
Take the Next Step Toward Owning Your Dream Car
Now that you know what to look for, research, and do before making a car purchase, you’re one step closer to driving a vehicle home. To apply for an auto loan with flexible terms and competitive rates, turn to Heartland Credit Union. We have an amazing team that can assist and guide you no matter what your financial goals are.
