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Five Tips For Car Buying

Next to buying a home, buying a new car is often the second most expensive purchase a person will make in their lifetime. Being prepared during the buying process will ensure you make a decision that’s best for you and your situation. Here are our top 5 tips for buying or leasing a new or new-to-you vehicle:

1. Set a budget. This is the single most important thing to consider when purchasing a new vehicle. You don’t want to enter a financial commitment and end up being in over your head with monthly payments that are too high or a term that’s too long for you to handle. Sit down and go over your household income against your monthly expenses. Determine how high of a car payment you can handle while still leaving wiggle room for unforeseen “rainy day” type expenses. A good rule of thumb when budgeting car expenses is no more than 25% of your monthly household income for all the cars in your home, including fuel and maintenance costs.

2. Narrow your list. Start your search for a new car by researching online. Know what type of vehicle you want (sedan, SUV, pick-up truck, etc.) first, then research different makes and models. Read performance reviews and check manufacturer websites to see the current incentive offers before rushing to the dealer for a test drive.

3. Decide if you’re buying or leasing. Buying new is the most expensive option, but you’ll likely snag the lowest interests rates, as well as the vehicle’s full warranty. With a used option, you’ll get the best value for the car, meaning you can get many of the expensive features for less. The tradeoff is often a higher interest rate as well as a shortened warranty. There’s also the risk of not knowing the car’s history. Leasing means you don’t own the car, but the low payments allow you to lease a high-end car for less. The downside of leasing is you must stay in the parameters of your lease or you’ll pay penalties, and when your lease is up you must either lease again or purchase a new car, but will have nothing to use as a trade-in, since you have no ownership in the leased car. Fitzsimons Credit Union offers leasing and financing options, contact us at (303) 340-3343 for more information.

4. Know the invoice price & negotiate wisely. You should be able to research the price your local dealership paid for the car in question. With that figure in mind, you’ll want to negotiate a price for the vehicle as close to that figure as possible. Keep your old car’s trade-in negotiations separate from the negotiation of the new car’s purchase price, and settle on a price before you add in any dealer or manufacturer discounts on the car.

5. Look outside the dealer for financing. The best interest rate might be found at your or credit union, rather than through the automaker. Although many manufacturers offer 0% financing for new car purchases, only 10% of buyers will qualify for that rate.