Besides a home, buying a car is one of the largest purchases you’ll make during your life and the average person will own 9 - 12 vehicles in their lifetime. Here are a few things to consider for your first... and every future car purchase.
What do I need this vehicle to do for me?
It sounds simple, but most people don’t take the time to prioritize the most important features of a vehicle before they shop. Safety ratings, gas mileage, cost of repairs, insurance costs, passenger and cargo room, 4 wheel drive or even heated seats... these things may be very important to you, but unless you’ve ranked which are most important, it will be difficult to find just the right vehicle that fits all your needs.
How much can I afford?
Before you shop, it’s important to know how much of your income you want to commit. Experts recommend that your monthly transportation expenses (including the loan,gas, insurance and maintenance) not exceed 15-20 percent of your monthly net take home pay (if you are calculating that on 2 incomes, this would cover all vehicles).
You definitely want to Apply for the Loan
before you ever step foot near a car dealership. Only by getting pre-approved do you have bargaining power and can successfully negotiate the common sales tactics that take the focus off the actual cost of the car and focus instead on a monthly payment (making a too expensive vehicle fit your monthly budget is possible by writing the loan for more years more than you wanted to have a payment) or manipulating the interest charged on the loan (if unsure of your credit score and interest rate pricing).
Loan Length vs. Payment Amount
When people buy a car, they typically only consider the monthly payment amount. Paying over five or six years will lower your monthly payment, but understand that you will pay much more in interest charges than you would with a loan paid over three or four years. And cars depreciate in value. If you still are making car payments after five or six years, you may be paying on a car with modest resale value at best.
Negotiate a Fair Price
Be informed before you shop, know what that vehicle is truly worth and decide what you are willing to pay. You can find more information on values and vehicle history at NADA & Carfax (this report is typically provided free from auto dealers, but not individuals selling a vehicle).
Protecting your purchase
ACMG offers ways you can protect yourself and your vehicle investment at discount prices.
- GAP (this insurance covers the difference between the insurance settlement and the remaining loan should the vehicle be declared a total loss)
- Payment Protection (in the event of disability or death of the loan holder)
- Mechanical Repair Coverage (continues seamlessly after the manufacturer’s warranty expires)
- And of course, reliable and affordable Auto Insurance at special member rates with TruStage
Budget assistance to plan for major purchases like a car or home is also available from GreenPath. As a member of ACMG, you can take advantage of the free GreenPath financial education and counseling program
. GreenPath counselors are available Monday through Thursday 8 a.m. to 10 p.m. (EST), Friday 8 a.m. to 7 p.m. and Saturday from 9 a.m. to 6 p.m. To use this new service, simply call 1-877-337-3399 or visit them on the web at www.greenpathref.com