There comes a time in life when you realize you need to buy another car. But you have no idea how to begin.
You Google a “how to” but, after reading it, the task still seems so big that you don’t know where to start. So you turn to Dad!
After all, he’s bought lots of cars for the family, so he must know how to do it.
You find out that Dad does know a lot and is willing to help you every step of the way. But you have to do the legwork because that’s the best way to learn!
Here are tips from the Dads playbook on buying a car:
Lesson #1: Purchasing a pre-owned vehicle is a smart financial decision.
So you should feel good about taking that path. When you buy a pre-owned vehicle, you avoid the huge depreciation that comes right after you buy a new vehicle. Did you know that a new vehicle is worth several thousand dollars less than its sticker price right after you drive it off the lot? Also, shopping for a used car means you can probably select a model with more bells and whistles than you could ever afford if you were to buy something brand new.
Most “franchised” dealerships (those dealerships connected to specific brand names) offer pre-owned as well as new vehicles, so you can often work with the same dealership to explore all your options and make the choice that’s right for you. You may also check used car dealerships or buy privately from an individual selling a car on local listings such as Craigslist or publications such as Auto Trader.
The biggest concern that most people have when buying a used vehicle is that they might be “buying someone else’s troubles.” What if the vehicle is no longer under warranty? So listen to Dad closely for Lesson #2:
Lesson #2: What To Do Before Purchasing “Used”
Research the Vehicle’s Value
Research the value of the vehicle you plan to buy. When you apply for financing, lenders compare the value of a vehicle to the loan amount to help determine if your loan will be approved and what interest rate you will be charged. There are several pricing sites online.
Check NADA pricing when valuing a used vehicle. The NADA site displays three values for vehicles. The lesser of the purchase price or “clean retail” is the closest to the value that First Reliance Bank will use in determining the amount we can lend on the vehicle.
Plan Your Down Payment
If at all possible, put some money down. This can help you get approved for a loan, get the best interest rate, and keep your monthly payments low. Your credit score has a lot to do with your rate and if your loan will be approved.
Estimate Payments Before You Buy
You can use First Reliance Bank calculators to estimate monthly payments for various loan amounts at different interest rates and terms (number of months). One thing you may find is that the maximum term that a lender offers is not available for a used vehicle. In other words, when you’re doing your research on monthly payments, don’t count on 84 months as a loan term. Also get the details on dealership special promotion interest rates. Often they are only available on certain vehicles and for certain terms that may be for shorter monthly terms such as 36 months.
You can also call First Reliance Bank at 888.543.5510 and ask to speak to a Personal Banker to get pre-approved so you’ll know exactly what your payments would be for a particular loan amount and term.
Check The Vehicle’s Condition
“Certified” programs from major brands offer assurance that a vehicle has met certain standards. Take the time to understand what the certification covers and what protection you have in case of a problem after the sale. Don’t hesitate to ask questions. Even if you are purchasing a “certified” used vehicle, it’s a smart move to have the car inspected by a mechanic you hire. In addition, the Federal Trade Commission’s consumer web site recommends the following:
Take A Good, Long Look
Make sure the body parts line up, the paint matches, doors open and close easily, and the tires show even wear. Lift the hood. Check under the hood for leaky hoses, worn belts, and dirty oil. Automatic transmission fluid should be clear and reddish, and not smell burned. Radiator water should have a light yellow or green color.
Take a Seat
Turn the ignition key to “accessory” and make sure all of the warning lights and gauges work. Start the car and check all lights and accessories and make sure no warning lights remain lit on the dashboard. Pay close attention to the airbag indicator lights. If these lights fail to illuminate as you start the car —or stay lit after the car is running — it is a warning that the car’s airbags are not functioning correctly.
Perform a Safety Check
Fasten the seat belt and take a test drive to ensure that you are comfortable driving the vehicle. Make sure head restraints, roof structures, and windshield designs do not interfere with your ability to see clearly. Test the vehicle at dusk or early evening to determine if the head lights light up the road as well as you’d like. If you already have a child safety seat, install it to make sure it fits well.
Hit The Road
Take the vehicle up to 35-40 MPH. Make sure shifting is smooth and steering is straight. When braking, a pull to the left or the right could indicate a brake problem. The steering wheel should not shimmy at high speeds and cornering should be smooth.
Check The Vehicle History
A CARFAX report can be helpful, and many dealers will provide a report, but keep in mind this reporting can only track repairs that were reported to the insurance company or dealership and cannot guarantee a complete history. An inspection by your own mechanic can help detect unreported repairs.
Check The Cost Of Insurance
Contact your current insurance provider and ask about the cost of insurance for the make, model, and year you are considering. While you can always shop around for insurance, contacting your current provider lets you easily compare the cost of buying the same coverage you have now for another vehicle. A “bargain” could prove costly if it’s expensive to insure!
Check the Dealer
If you are considering purchasing a used vehicle at a smaller, ‘independent’ used car lot, here are some tips for checking out the dealership:
Ask around about the dealer’s reputation. Does anyone you know use or recommend the dealer?
Does the lot look “professional”?
Buying From an Individual Owner (instead of a dealership)
When buying through the classifieds instead of from a dealer, the Federal Trade Commission recommends that you do the following: Check the name on the title and match it to the name on the seller’s driver’s license. Many individuals disguised as private sellers are actually unlicensed, unregulated “curbstoners,” who may pass problem cars on to unsuspecting buyers.
First Reliance Bank offers competitive interest rates and we’re here to help you with your financing needs. Give us a call and we’ll be happy to get your loan pre-approved. 888.543.5510.
Sources:
- First Reliance Bank staff
- Federal Trade Commission Bureau of Consumer Protection web site: http://www.ftc.gov/ “Buying a Used Car” April 2006
- Federal Citizen Information Center web site: http://www.pueblo.gsa.gov/ “Buying a Used Car” March 2002
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