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 consider before buying a car.
1. Review Your Budget and Find Your Trade-In Value
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 vehicle. How much money do you have saved for your down payment? What’s the best interest rate can you find? What fees and licensing costs will you have to pay? These are all essential things to keep in mind before buying a car.
Look at your recent bank statement and monthly bills to determine your budget for a down payment and monthly payments. Add the trade-in value of your current vehicle to this budget — you can use this to make a larger down payment that will lower your monthly payment and interest.
Going to the dealership with a set price in mind can prevent you from walking away having been pressured into purchasing a more expensive vehicle than you anticipated. Determine what you’re willing and able to pay using a car payment calculator.
The cost of purchasing a vehicle is more than just the price of the car itself, so make sure to plan for additional expenses such as the registration fee and sales tax or add-ons you might want such as an extended warranty.
2. Determine Your Wants and Needs
Once you’ve figured out how much you can spend on your vehicle, it’s time to assess what you want and need at this stage of your life. A single person in their 20s will have a vastly 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 style. 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
You’ve found one or two vehicles you love, and you’re almost ready to make your decision. But before you sign the paperwork, make sure you understand the ongoing costs associated with the vehicle you’re interested in. For example, some models have parts that cost more to repair, which means they’ll have significantly higher lifetime maintenance costs. Others require premium gas, which will cost you more every time you fill up. Make sure you can afford the car you choose throughout its lifetime.
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 your homeowners policy 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. 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. Our published rates are based on up to 100% 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 your preapproved amount that you can use at any authorized car dealer. Your AutoDraft will be valid for 120 days from the date of issue.
You’ll fill out information on the AutoDraft, including the term of payment (number of months). The dealer will take care of the rest when you’ve found the ride for you.
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 rate may be better, but if it takes longer to pay off the loan, you could end up paying more in added 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-rate auto loans, flexible terms, and a quick loan approval process for your new and used car needs.
*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.