Updated on April 30, 2021
If you’re in the market for a new vehicle, you probably have several questions. Whether you’re wondering how to decide which car to buy or asking yourself how much you can afford, the number of factors to consider can be overwhelming.
To help you get started, we’ve listed seven tips below on what to do before buying a car.
1. Review Your Budget
Before you start researching the latest models and test driving vehicles, you first need to determine your budget and how you’ll pay for your new ride. What’s the best interest rate you can find? Do you have any funds saved up for a down payment?
Look at your recent bank statements and monthly bills to determine how much you can afford. Be sure to account for ongoing costs of vehicle ownership, like maintenance and gas. Some vehicles require premium fuel, which will cost you more every time you fill up. If you choose a vehicle that has expensive parts, it may cost more to repair in the future. Make sure you can afford the car you choose throughout its lifetime.
The cost of purchasing a vehicle is more than just the price of the car itself. Plan for additional expenses, such as the registration fees, sales tax, dealership fees, or add-ons you might want. Using a car payment calculator can help you get an idea of your monthly payment if you’ll be financing your purchase. Going to the dealership with a set price in mind can prevent you from being pressured into purchasing a more expensive vehicle than you can afford.
2. Determine Your Needs and Wants
Once you’ve figured out how much you can spend on your vehicle, it’s time to assess what you need and want at this stage of your life. A single person in their 20s may have a different checklist than that of a family of five.
Make a list of non-negotiables pertaining to vehicle size, safety features, fuel economy, and other options. This list will help you determine what kind of vehicle will best satisfy your needs. Then list everything you want but don’t necessarily need, like technology, conveniences, and add-ons. Keep this list in mind when researching specific models.
3. Research the Best Brands and Models
Now that you know what you need, you can choose the exact brand and model that best meets your specifications. Compare listings online to find vehicles with good reviews, a long average lifespan, and high safety ratings.
While you may want to do your initial research online, it’s also important to speak with an expert and see your options in person. Go to a local dealership and take your top two or three choices for a test drive. Pay attention to the car’s acceleration, comfort, and handling. This is also a great time to ask any questions you may have about the engineering or functionality of the vehicle.
4. Keep Ongoing Costs in Mind
If you have a vehicle that you can trade-in, make sure you know the value of it before going to a dealership. If you’re not sure how to determine what it’s worth, look up the Kelley Blue Book value and bring the information you find with you to the dealership. If you don’t feel that you’re being offered a fair amount, don’t be afraid to walk away and go to a different dealer. You can also determine if you’d prefer to sell the car independently and use the money as a down payment rather than trading the car in.
5. Get Insurance Quotes
Insurance companies consider the make and model of your vehicle when setting their premiums, so your new car could be significantly more or less expensive to insure than your old one. Find the vehicle’s VIN number and request a quote from your current insurance company and multiple other providers to find the best deal. You can often bundle your auto insurance with any additional policies you may have, like homeowners or renters insurance, to get a discount.
6. Check Your Credit
Before you apply for a loan, check your credit score. If you’re a PSECU member, you can check your score using our free credit score service.*
An excellent score may get you a lower interest rate on your loan if your lender uses risk-based lending. With this practice, the rate you pay depends on your credit score. The better your score, the better your rate. Note that PSECU doesn’t offer risk-based lending, so all members get the same low rates.
If you don’t have a good credit history, you may want to get your credit in shape prior to taking out a loan.
7. Consider an AutoDraft
Getting prequalified for a car loan can help you save money and get a better interest rate on your car loan. It allows you to know how much you’re approved to spend before you begin the auto purchase process.
You can get prequalified for an auto loan with PSECU quickly – usually within the same day you apply. When you’re requesting the amount you want to borrow, remember to consider not just the retail price of the vehicle, but also any add-ons, taxes, or fees. Our current rates are based on up to 130% of the retail price. Add-ons could take your loan above 100% and increase your rate.
Once you’re prequalified and are ready to buy a car, we’ll mail you an AutoDraft. An AutoDraft is like a check written for a preapproved amount that you can use at any authorized dealership. Preapproval is valid for 60 days, and your AutoDraft will be valid for 120 days from the date of issue.
You’ll complete a few pieces of information on the AutoDraft, including the monthly payment term. The dealer will take care of the rest.
Note that if you’re buying from an individual instead of a dealership, you can handle the transaction with an AutoCheck. An AutoCheck is made out to a specific seller for the exact amount of your purchase.
If you’re offered a different financing option, be sure to ask about the term. The payment may be lower, but if it takes longer to pay off the loan, you could end up paying more in interest.
Enjoy the Car of Your Dreams with a PSECU Auto Loan
Whether you’re buying a car that’s brand new or new to you, we’re here to help you finance it. We offer low-rates, flexible terms, and a quick approval process. View our loan options to get started today.
*PSECU is not a credit reporting agency. Members must have PSECU checking or a PSECU loan to be eligible for this service. Joint owners are not eligible.