You’re probably excited about buying a car, but you need to make the right maneuvers before you can drive it home. Here are tips to find a good deal on a car that you’ll enjoy driving and can afford to maintain for however long you own it.
The Costs of Ownership
Unless you pay cash, you’ll be making car payments anywhere from two to seven years. A financial rule of thumb on car buying, you should spend no more than 20% of your net income on a new or used vehicle. This cost includes the car’s sticker price, the interest rate on your auto loan, taxes and fees, insurance, fuel costs and maintenance and repairs. Edmunds’ True Cost to Own® Calculator can help you calculate the extra costs you may not have considered.
New vs. Used
Buying a new car is less hassle than buying a used one, but did you know that its value drops by 20% the minute you drive it off the lot? By contrast, a used car allows you to bypass those first years of depreciation a new car owner incurs. The downside with buying used is you take on a former owner’s problems. If you do your homework, you can purchase a safe and reliable vehicle and avoid potential headaches. Here’s how:
- Get a Carfax Vehicle History Report on a specific car or search listings that come with vehicle history reports.
- Pay for an inspection by a local mechanic before you buy.
- If you purchase a car “as is,” be sure to research it thoroughly and consider purchasing an extended warranty service plan.
- Take it for a test drive and drive it over different road services.
- If you’re shopping for a later-model used car, consider purchasing from a “franchised” dealer. A franchised car dealership usually sells both new and used vehicles, is affiliated with an auto manufacturer and has a manufacturer’s name in the dealership name (examples: “Smith Chevrolet” or “Springfield Toyota”). When you shop for used vehicles at a franchised car dealership, you will find certified pre-owned vehicles that have been mechanically inspected and carry warranties. Also, state authorities and automakers more carefully monitor franchised car dealers.
- Visit the Insurance Institute for Highway Safety’s site, iihs.org for helpful articles and videos to help with your car-buying decision.
Secure Financing, Then Go Shopping
When you are pre-approved for an auto loan, you’ll have more negotiating power and won’t have be limited to whatever financing the dealer offers. But just because you’re approved for a specific loan amount doesn’t mean you have to spend that much on your car. Stick with the 20% rule so that you can afford the ongoing costs associated with ownership. When you’ve selected a vehicle to buy, the dealer will run your credit as a security measure and you can drive off the lot that day.
Look for Special Programs and Incentives
Automakers offer a variety of rebates and incentives to provide savings and foster loyalty. If there’s a certain make and model you’re interested in, check out these savings programs. Read How to Use New-Car Incentives and Rebates
Your Credit Union Car-Buying Resources
SchoolsFirst FCU is committed to providing you a variety of cost-effective products and services that can help you save money. We offer:
Car Buying Services
Auto Convenience Checks: When you apply for an auto loan at SchoolsFirst FCU and are approved you can ask for a convenience check to use at the dealership. There’s no loan application or waiting for approval. You pick out your car, and simply write the dealer a check. Checks may be used at franchised California dealerships only.
Autoland: An Autoland personal consultant will help you find and finance your perfect vehicle. Autoland will even deliver your car to your closest SchoolsFirst branch.
Car Buying Service powered by TrueCar: TrueCar shows what others have paid for the car you’re considering.Enjoy negotiation-free Guaranteed Savings on new cars, as well as used car discounts.
Enterprise Car Sales: Enterprise offers a variety of makes and models of used vehicles at great prices.Each vehicle has been rigorously inspected by an ASE-Certified Technician.
FastTrack: FastTrack’s network of more than 300 dealerships let you get SchoolsFirst FCU financing right at the dealership.
Learn more about our Car Buying Services.
Whether you’re buying new or used, or you want to keep your car and refinance your loan from another lender to lower your payment, we can help you find the right solution. We also offer a First-Time Auto Buyer Program created for Members who may have difficulty getting a loan because of no credit or limited credit. School Employee Members can skip two payments each summer using our Summers Off program. Learn more.
Let our insurance agents find you the right policy at the best possible price and with all available discounts. We can find you great insurance for any new or used car — not just on vehicles financed with us. We can also help you get an insurance quote on RVs, boats, motorcycles or collector cars.
Guarantee Asset Protection or GAP
Guaranteed Asset Protection can help fill the gap between what your vehicle insurance will pay and what you owe on your loan if your vehicle is totaled or stolen.
Mechanical Repair Coverage
Mechanical Repair Coverage helps Members pay for covered auto repairs when an unexpected breakdown occurs.
Learn more about auto insurance.
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Extra Credit provides general information to help improve our Member’s financial lives. Every situation is different, so please contact us for guidance on your specific needs. The advice provided in Extra Credit is not intended to serve as a substitute for speaking to a loan representative, financial advisor, or BALANCE counselor who can help tailor a solution for you.
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