April 10, 2017
Written by Gina Sanchez Juarez, Manager of the Center for Financial Stability at La Casa de Esperanza, Inc.
Next to buying a home, a car is one of the largest purchases you will make in your lifetime. Ready to go shopping? Use these tips to make the best decision for your family:
Make a list of needs and wants
Think about what features are most important to you. This might include: size, number of seats, gas mileage, or special features. Also, be sure to consider the weather; for those of us who live in the Midwest it is important that your vehicle will run great through a snowy, icy winter. Make a list of needs vs. wants so you can find the vehicle that is right for your family.
Get the best price
A car salesman will usually ask you what monthly payment you are looking for. Look out: this can distract many of us from the total price of the vehicle. Focusing on the total cost and your list of needs vs. wants can help when considering additional features.
Calculate your total monthly cost
Insurance is part of the set monthly payment for your car, so be sure you are comfortable in your budget with that total monthly cost (car payment + car insurance + gas + maintenance). Getting insurance quotes while you are considering car options may be a good way to help make your final decision. Ask your insurance company if any of the features you can add to your vehicle (anti-theft device, anti-lock brakes etc.) will reduce your monthly rate.
Compare and do your research
Before making any final decisions, compare the price of the vehicle you want to one or more other dealerships. To get an estimate of your final price, research what the car’s value is to the dealer and now add 3%. Typically, the cost to the dealer is less with all the factory-to-dealer incentives which makes adding the 3% a good negotiating tool to start out with.
Know your financing options
Here are your options when it comes to securing a car loan:
- Go to your bank or credit union. This is where you can get the best interest rates and terms.
- Obtain the loan through the manufacturer to yield the best interest rate.
- Go through the dealership. This will often lead to higher interest rates.
Be cautious of the add-ons the dealer will try to get you to purchase when finalizing the deal. Many of these can be pricey and if you roll these costs into the financing you are now also paying interest on them. Warranties that are not the length of the loan can also create a situation where you are paying for a warranty long after it expires.
YWCA Southeast Wisconsin is now able to help credit-challenged residents of Milwaukee, Waukesha, Ozaukee, and Washington counties secure low-interest vehicle loans through its Auto Loan Access Program. Call 414-267-3240 to learn more.
Are you great at keeping a budget or giving financial advice? Sign up to be a coach and help community members reach their goals at the upcoming Financial Empowerment Seminar.