It’s that time again in my world. Time to think about acquiring a new vehicle. Ick. Sorry, that’s all I can come up with. Ick. There are people who love car shopping–I am not one of them. It seems other people know so much more than I do about cars and financing. It’s not that I can’t learn. I could if I wanted to. I just don’t really want to. Which leaves me at ‘ick.’
Fortunately, Girlfriend Guru MIATA EDOGA is here to save the day. This week she applies her fabulous financial expertise to the subject of cars. Just in time for me to start shopping. Or maybe I’ll start next week. What car shopping advice do you have, girlfriend?
The Detroit Auto Show is this month. People flock to shows such as this one to check out the industry’s hottest new trends. Don’t you love that new car smell? Even if you aren’t a “car person,” it’s easy to fall into some traps with new vehicles:
1) Remember that new cars depreciate as soon as they roll off the dealer lot. When you buy a new automobile, it’s nearly a guarantee you’ll lose money. I understand that some people in sales need a new automobile every few years. Examine your situation closely…do you need a new car, or is a pre-owned ride a better fit? For most, purchasing a pre-owned car is the smarter option. Request a car history report before buying and take it for inspection to a trusted mechanic. You don’t want to purchase someone else’s lemon.
2) Loan rates are low, but don’t get sucked into a discussion about monthly payments. The best car is one that you can pay cash to buy. If you have to take out a loan, check your credit report first. You can secure a free credit report each year from annualcreditreport.com, which is the only free credit report endorsed by the U.S. Federal Trade Commission. Once you know you have a clean credit report, don’t always take out the loan offered through the dealer (though, different from some advice I’ve read, I wouldn’t avoid the dealer offer entirely–often dealers have negotiated rates you won’t be able to beat elsewhere). Check local banks and credit unions (a good friend found her best rate at her credit union a few weeks ago) for competing rates, as well as online sites. Opt for the shortest loan period possible, and try to pay off the loan early. You don’t want to be stuck paying for a car you’re no longer driving. (On that note, start a fund on the side to pay cash for your next automobile, too!)
3) Leasing is rarely the best choice, but if you’re going to lease, begin by negotiating the price of the car. Lease payments are based on the difference between the sales price and a fixed number called the residual value (the amount the lending institution thinks the car will be worth at the end of the lease). If you forget to negotiate the price of the car, you’ll raise your monthly lease payment.
Buying a car doesn’t have to be a horrific experience. By arming yourself with a little knowledge, you can come out ahead and with the ride of your (or at least the ride of your pocketbook’s) dreams!
MIATA EDOGA is the President and Founder of Abundance Bound, a 10-year old company committed to utilizing humor, inspiration & lots of love to give individuals around the world the necessary tools to thrive financially, while keeping focus on the things they treasure most. Visit the Abundance Bound Facebook Page for your free copy of Financial Success for the Creative Soul!
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