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Put
Yourself In the Driver's Seat When
You're Buying a Car
Is that new sports coupe calling your
name? Can you picture yourself driving
the coast in that red convertible?
Would a new truck make your life easier?
Well, before you step into that showroom,
you owe it to yourself to do some
research. And not just about gas mileage.
By taking a few easy steps before
you buy a new car or truck, you'll
help ensure that the road to purchasing
your new ride is as smooth as can
be.
Before you start car shopping, you
should check out a copy of your credit
report. The information on your credit
report is used to calculate your credit
score, which often influences the
interest rate you'll get on
your auto loan. People with higher
credit scores will likely qualify
for lower interest rates because they're
considered a better credit risk.
When you check your report you should
look at:
- Possible Inaccuracies: Sometimes
mistakes happen, or credit files
of people with similar names are
merged. Make sure possible inaccuracies
aren't impacting your credit
rating. Are all the accounts listed
on your report indeed yours? Are
the listed payment histories accurate?
If you've found possible
inaccuracies on your credit file,
you should dispute them immediately.
The process can take more than
one month, and you want to make
sure you're putting your
best foot forward with lenders
before buying your car.
- Inquiries: Multiple inquiries
can lower your credit rating.
If you've been applying
for a lot of new credit lately,
it may be a good idea to wait
a couple months before applying
for auto loans.
- Your total credit picture:
Lenders often concentrate on the
past two or three years of your
credit history when considering
your credit worthiness. Have you
consistently paid your bills on
time? Is your debt load reasonable,
relative to your monthly income?
If not, you may want to consider
concentrating on lowering your
overall debt for a few months
first, as well as building up
a positive payment history.
Once you feel comfortable with your
credit situation, then it's time to
do some other basic investigations:
- Research the vehicle you're
considering. Lots of Internet
sites feature ratings from current
owners and independent companies,
such as Consumer Reports.
- Look at various loan sources.
Check with your bank or local
credit union as well as the automobile
dealer to see who can give you
the best rate.
- Create a budget before you
go shopping. How much of a monthly
car payment can you afford? Keep
your budget in hand when you're
shopping so you're not tempted
to buy a Mercedes when you're
on a Honda budget. Otherwise,
you may end up with the burden
of a car payment that's
too much to handle.
- Check on insurance rates before
you buy. Your insurance rates
can go up by hundreds of dollars
a year when you buy a new car.
You may be able to handle the
auto loan payments, but can you
swing the premium?
- Consider both new and used vehicles.
Used cars may not boast that same
new-car-smell, but they often
are a better buy. New cars and
trucks depreciate at a much faster
rate during the first two or three
years, so you can save some dollars
by taking home a pre-owned vehicle.
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