Buying a Car

- Set Your Budget
A good rule-of-thumb to follow when setting a budget for a car payment is to not spend more than 10% of your monthly take-home pay on a car payment. This is to help with keeping your total car costs, including insurance, repairs, etc. at around 15-20% of your monthly take home pay. The new, fancy car on the market might be nice, but it is important to shop within your budget.

- Get Pre-Approved
Now that you have determined what your budget for your new car is, you can reach out to your financial institution to get a pre-approval. Getting a pre-approval has its advantages, and can help you get a better deal when purchasing a vehicle. Knowing your pre-approved limit can also help a dealership show you vehicles that are within your price range. This can help you make sure the car you like won't break your budget.

- Questions to Ask Yourself

New or Used?
Both new and used cars have their pros and cons. New cars typically come with a peace of mind of knowing major maintenance and repairs likely will not be necessary, but they typically come with a hefty price tag. Used cars are often more cost effective, but may require repairs sooner. When looking at used vehicles, it's always a good idea to ask for the vehicle's history report which includes items such as maintenance the vehicle has received, any accidents the vehicle was in, and how many owners the vehicle has had. It's important to research the pros and cons of new and used cars before deciding which one would work best for you.

How many people do you normally carry?
If you normally only transport yourself, chances are you likely don't need to look into a 7 passenger vehicle. Vehicles that have less seating are often cheaper than those that have more.

How much cargo space do you need?
When determining what car you need, how much you carry around with you will be a large factor. If you just need something that will carry your groceries, you probably don't need an SUV or pick-up that provides a lot of cargo space.

Fuel efficiency?
While it would seem like anyone would want the most miles-per-gallon from their vehicle, if you have a short commute miles-per-gallon may not be very important to you. Or maybe you don't want to deal with the hassle of gas at all and want to research electric vehicles. When looking at and comparing vehicles, you will want to compare the MPG for both city and highway driving and find what makes sense for your commute.

Fully loaded or base model?
Another thing to consider while vehicle shopping is how many bells and whistles you want in your car. If you're feeling fancy, you may want to look into higher trim levels which typically come with more tech features in the car. Keep in mind that higher trim levels tend to come with a higher price tag. If you're ok without some of the tech, looking at lower trim levels could save you some money.

- Factors to Consider

Car's Price.
One of the biggest factors to consider when buying a car is the price of the car. When researching the price of a vehicle, you should first look to see what the estimated value of the vehicle is. A lot of financial institutions will only finance a certain percentage of the value. If a dealership has marked up a vehicle well above its value, you may end up needing more cash down. It is also important to reach out to multiple different dealerships to find out what they are selling the same vehicle for. Keep in mind that the mileage and age of the vehicle can play a factor into the differences in price from one dealership to another when looking at used vehicles.

Cost of Ownership.
You probably already know that the cost of a vehicle doesn't end at the sticker price. The cost of ownership is the average cost most owners face when keeping up with maintenance and repairs on the vehicle. When researching cost of ownership for your potential new car, you will want to research any common mechanical issues associated with the vehicle and the price to fix that issue. You will also want to research if your vehicle requires specialty tires or oil, which can increase the cost of your normal upkeep of the vehicle. Understandably, the lower the cost-of-ownership of a vehicle, the more reliable that vehicle should be.

Vehicle's Safety Rating.
Obviously no one plans or hopes to be in an accident, but you must keep your vehicles safety rating in mind when shopping for a vehicle. Vehicle safety ratings are the ratings that signify how well a vehicle held up during crash tests. The higher the rating, the safer the passengers of the vehicle were in that vehicle.

Owner Satisfaction.
Owner satisfaction ratings are ratings that are given to vehicles based on if current owners of that vehicle would buy their vehicle again. This can be helpful because it is an opinion based ranking, which means that it can include a wide variety of factors such as the vehicle was always in the shop to the seats were uncomfortable. Researching owner satisfaction can help you determine if there may be any features about the vehicle that may be frustrating in the long run.

- Things to do When Test Driving a Car.

Examine the Car.
The first thing to do when looking at and test driving a car is to examine the physical aspects of the car. Do you notice any dents, rust spots, scratches, torn seats, etc. Also take this time to turn on all lights and make sure that all are working. A blown bulb is not a big deal, but a light being out could also be an indicator of potential electrical issues. The overall condition of the car will play a huge factor in if the vehicle is being sold for a fair price. It can also be an indicator as to potential future repairs you may need to make.

Let the Car Idle.
Before taking off in the car to test drive it, let it idle for a few minutes. You will want to listen to hear if it has any odd idling patterns or if it sounds like it is idling high. These can be indicators that there may be a mechanical issue with the car already, and a costly repair. During this time also look at the dash lights to make sure no warning lights come on during the idle. This is also a good time to see how comfortable the seats are.

Drive in Stop-and-Go Traffic.
Driving in stop-and-go traffic can let you listen to any noises the car makes when stopping or accelerating. It can also give you a feel for how touchy the brakes are. Make sure to take some sharp turns to make sure that the steering doesn't feel too tight. Hard steering when turning can be an indicator that the power steering is going.

Drive 55MPH or More.
Try to test drive the vehicle in a place where you can bring the car to at least 55 mph. You will want to feel for if the car has any difficulty changing gears when accelerating, if the vehicle pulls to one side, if the vehicle shakes at higher speeds, and to see how the vehicle handles at higher speeds. Any issues you notice when driving at higher speeds may be an indicator of a needed repair in the near future.

Test the Tech.
You will want to make sure that you test out all of the technology in the car. If possible, try to hook your phone up to the radio if it has bluetooth to see if your phone will have issues connecting. Test out the volume of the radio to make sure no speakers are blown. Make sure to test out any power windows, power locks, and adjustable seats. You will also want to make sure to ask if any of the features for the vehicle require a subscription. Some vehicle require you to pay a monthly fee to have all of the features of the vehicle unlocked.

- Research the Market Value.
Before negotiating the price of your new vehicle, you will want to do your research on what the market value of the vehicle is. Start by looking up the NADA or Kelly Blue Book value of the vehicle. This can give you a good idea of what the price of the vehicle should be around. You may also want to look at the prices of that vehicle being sold at other dealership and through private sales. This will help give you a better idea of the general price the vehicle you are looking at goes for. Going into a negotiation knowing the market value of the vehicle can help you know you're getting a good deal, or help you knock the price down some.

- Be Willing to Walk Away.
Sometimes sellers are unwilling to budge on their price, and that is okay. One of the important things to remember is that it is okay to walk away from a deal if it isn't the best choice for you. It is unwise to make a poor financial choice when buying a car just for the sake of getting a car.

- Don't Just Focus on Monthly Payment.
While ultimately the monthly payment will be what you want to consider in what you can afford, you also want to know what the bottom line, out-the-door price is. This is the price that will include any fees, add-ons, etc. This price should fall closely to the researched market value of the vehicle (barring any add-ons you added). It is easy for monthly payments to be lowered by extending the term on a more expensive bottom-line, so make sure to verify how much the total cost of the vehicle will be.

- Provide Documents to Lender.
You have picked out your vehicle and you're ready to buy! The next step is to provide your financial institution with any required documentation for your loan. This is to make sure that not only all the paperwork is in order, but to make sure the vehicle and the amount of the vehicle fall within any loan restrictions you may have. Once you've provided all of the documentation to your financial institution, it's time to close! You will sign a lot of paperwork at both the financial institution and the dealership, but both should explain every document you are signing. Always ask for clarification if you don't understand what it is you are signing.

- Bring Check to Dealership.
You've signed everything and you've been given a check! Bring the check to the dealership and they will give you the keys to your new car!