9 Steps to Getting the Car You Want
Unless you are going to start collecting 400-foot mega yachts, a vehicle is likely to be one of the largest purchases you will make in your life. By taking the time to properly plan and prepare for buying a car, you can save yourself hundreds or thousands of dollars. Check out these steps to set yourself up for a more secure financial future:
1. Figure out what you can afford.
Complete a spending plan. As you create your spending plan you can adjust the numbers to see how different transportation expenses would fit into your monthly expenses. You can then plug that monthly number into an auto payment calculator to see how much of a total vehicle price you can afford.
2. Monitor your credit.
Review your credit reports. To ensure the accuracy of the reports and pinpoint areas that may need work, use the credit bureaus’ annual credit report service to get free copies of your reports at www.annualcreditreport.com or by calling 877-322-8228. If you would like a certified credit coach to review your reports with you, call BALANCE at 888-456-2227.
3. Find the right car for you.
Think about how you will use the vehicle. Will you be using it to cross snow-covered mountain passes with hairpin turns and thousand foot drops, or will you be using your vehicle for something more challenging, like chauffeuring your children?
Pay special attention to the safety and reliability ratings. No car meets your needs when it’s up on blocks next to the garage or puts you at personal risk of harm.
Check with your insurance provider. That cherry-red sports car might sound like the key to your eternal happiness, but you might not be as thrilled when you get your car insurance bill.
4. Consider new vs. used, buying vs. leasing and down payment amount.
Decide whether you will buy a new or used vehicle. Do you prefer the negligible wear-and-tear and increased reliability of a new vehicle, even if it means the value may drop sharply in the first few years? Or would you rather let someone else take on that depreciation by going with a used vehicle, but take the risk of not fully knowing the condition and history of the vehicle?
Figure out if you would rather buy or lease the vehicle. If the idea of always driving a new car matters more to you than likely saving money in the long-run, leasing might be an option to consider.
Think about how large of a down payment you can make. Making a down payment can help you get qualified for a loan, get a better interest rate, get a lower monthly payment, get a more expensive car for the same monthly payment, or build equity (owing less on the vehicle than it is worth) more quickly.
5. Get financing.
Get pre-approved before you go to the dealership. You will have a lot to think about when you are at the dealership looking at cars: different vehicles available, test-driving, negotiating a price, etc. Just like you shop around for a good deal on a car, shop around for the best deal on financing.
6. Determine favorites, contact dealers and check quality.
Find the vehicles that best fit your needs. Websites like cars.com, CNBC, Consumer Reports, Edmunds, Kelley Blue Book and Yahoo Autos regularly publish articles on the best vehicles to meet particular needs, so take advantage of these free resources. Create a comparison chart to keep track of all the attributes that matter most to you and how each vehicle stacks up.
Use the Internet or trips to dealerships to comparison shop. Once you know which vehicle will suit you best, start looking at particular models and add the prices of each to your comparison chart. Also, do test drives and check vehicle histories. During the test drive, pay special attention to the transmission, shocks, brakes and alignment. If you aren’t sure what to look or listen for, invite a more experienced driver along on the test drive. Write down the Vehicle Identification Number (VIN) and use it to get a vehicle history report from a company like AutoCheck or CARFAX if you are shopping for a used vehicle.
7. Get the best price on the car.
Negotiate each piece of the deal separately. Beware of salespeople who roll the different components of the transaction (purchase price, financing, trade-in, extras) into one deal or who make an offer in one area of the deal that sounds too good to be true. Take advantage of our Auto Advisors and they will do the negotiation for you.
Walk away if you are not happy with the deal. You know what you can afford and ultimately you control this transaction, so let the salesperson know you know where the door is and that you won’t hesitate to use it if they can’t meet your number.
8 Know your legal responsibilities.
Find out the insurance necessary for your state. The Insurance Information Institute’s website at www.iii.org has a list of the minimum insurance requirement for each state.
Learn what the DMV requirements are for your area. Contact your state’s Department of Motor Vehicles (DMV) to make sure you have the proper license plate stickers or any other items that might be necessary to register your vehicle.
Know what to do if you can’t make your car payment. If you find yourself in a situation where you are struggling to make a car payment, the worst possible thing you can do is to avoid your lender. Instead, work to avoid repossession by staying in contact and asking about hardship programs.
9 Put yourself in position to succeed long-term.
Establish an emergency savings account. Unexpected expenses have a way of popping up in life and vehicles can be a major source of these.
Save on gas. Consider ways you can get more out of the gas you buy, like using the air conditioning sparingly and removing heavy items from the trunk.
Save on your insurance. Shopping for the best insurance deal is always a good idea, but think about all the ways you could get a better deal, like improving your credit score, buying a used car instead of a new one and avoiding 4-wheel drive and high performance cars.
Read This Before you Break Your Lease!
Many tenants find themselves in a situation where they need to or want to move out before the end of the lease term. If you are breaking your lease, it is important to keep in mind that a lease is a legally-binding document, and if the remaining months’ rent is not paid, the landlord can sue you and obtain a judgment (which may allow them to garnish your wages or take other collection actions against you). Losing your job, taking a new job in another location, not liking the place, or buying a house does not allow you to be released you from your lease. However, there are a few exceptional circumstances in which you may be able to have your lease invalidated, including:
- The landlord lied about a fact that he or she knew played an important part in your decision to rent the unit, and the fact could not be easily verified by you in advance.
- The landlord failed to keep the unit in safe and habitable condition.
- You are a victim of domestic violence or stalking.
- You or your spouse is in the military and received orders to move or deploy.
Rental laws vary by state, so it is a good idea to do research or speak to a lawyer or tenant organization about whether your situation allows you to invalidate the lease before you move out.
While breaking your lease does not release you from the responsibility to pay rent, you may not actually have to pay it all. You should talk with your landlord as soon as you know you will be moving out. In most states, the landlord is obligated to look for a new renter for the unit. You can also look for a new tenant yourself. Generally, the landlord cannot refuse to rent the unit to a qualified applicant and still hold you responsible for the rent. Once a new renter is found and starts paying rent, you are off the hook—with a caveat. If the landlord can only rent the unit for less than what you were paying, you can be held responsible for the difference in rent until the lease expires. For example, if you were paying $1,100 a month and broke the lease with 6 months left, and the landlord could only rent the unit for $1,000 a month, the landlord is entitled to $600 from you.
Some landlords also allow tenants to be let out of the lease by paying a fee. Landlords are generally only allowed to be compensated for what their actual loss is, so they cannot demand that you pay an arbitrarily-determined fee. However, if your apartment is located in a soft rental market and it is unlikely that a new tenant will be found soon, it may be to your advantage to pay the fee if it is offered. You may want consult with a lawyer or tenant organization before signing a lease-breaking agreement and paying the fee.
If you choose to break your lease, you will likely have some financial loss. However, careful planning on your part can help you keep the loss to a minimum.