How to buy a car with these simple steps

Marty shaking a Member-Owner's hand in front of a car.

Setting yourself up for success

Is that fire-engine red sports car calling your name? An energy efficient hybrid? Do you just need a vehicle that can take you from point A to point B? Whether you are looking for something flashy, or basic and dependable, these tips will steer you in the right direction.
According to the U.S. Bureau of Labor Statistics, a vehicle is the second largest expense for people today. If you view it as a necessity rather than an investment, you can make a sound financial decision when choosing the car that is right for you.

Determine your Budget

A critical first step to car shopping is figuring out what you can afford. You will want to estimate what your monthly payment will be, along with fuel costs, maintenance and insurance. Depending on where you live or work, you may have to consider budgeting for parking costs too.  
A standard recommendation from financial experts is to keep your car expenses (including fuel, insurance and repairs) to less than 20% of your overall expenses. Selling your current car, rather than trading it in, can save you money as well. 
Be sure to contact your insurance agent to find out what it will cost to insure the type of car you are considering, and when you need to notify them of the purchase.    

Check your Credit Score

You can access your free credit report at which will include a summary of your accounts, payment history and information that is reported to credit bureaus by your lenders.
The higher your credit score, the better rate that you’ll be able to secure on your loan. Some of the steps you can take to improve your credit score are establishing an ongoing record of on-time payments, maintaining low balances on your credit cards, having a mix of different credit cards and loan accounts, and making minimal inquiries for new credit.

Do your Research

Once you have determined your budget, the search begins! The number of online tools and digital resources available today have enhanced the buying journey.
In fact, today you can experience a 360-degree view of a car’s interior, do a virtual walk-around or watch detailed demonstrations of features and options with a mere click of your mouse. There is a wealth of information on websites from local car dealers, or you can look at online auto rankings in various categories, such as safety, make and model, or price.
Figuring out what car to buy depends on your budget, but there are several questions you can ask yourself when doing your research:
  • What will you be using the vehicle for?
  • How much space do you need?
  • Will you be driving it long distances or just a few miles each week?
  • What is the weather like where you live?
  • What kind of safety and efficiency features are important to you? 
If you are looking for a used car, be sure to ask for a vehicle history report from Carfax or AutoCheck using the vehicle identification number (VIN). This provides a description of the vehicle, number of previous owners, accident information, recent mileage and recall checks.
To figure out the true value of a particular vehicle, a reputable resource is Kelley Blue Book, which provides value estimates based on reader reviews and industry reports.

Talk with a Lender

Lenders can help you determine an affordable payment and loan amount based on your income. If you are a first time buyer, a student or have not established a history of credit, it is important to show that you have a steady income. 
To be sure that you are receiving sound advice, it is a good idea to talk with a trusted financial advisor or family member. Vehicle loan calculators can help you figure out the affordability by loan term and calculate a loan payment. “I recommend talking to a lender before you shop for a vehicle to know what payment and loan amount you are comfortable with, as it makes the purchase faster if you are approved,” said Mary Lornson, SVP Lending at Community First Credit Union.    
Getting pre-approved before you even step onto the car lot is highly recommended. Let’s say you have a pretty good idea of what car you want, but just don’t want to spend the time looking for it. There is an option for that too! Some lenders offer a free auto buying service to help you find just what you are looking for.
Marty Thurber our Auto Buying Service Manager has been doing this since 2002. “I work with our members to help determine their budget and do the research, so all they need to do is arrive at the dealer to take a test drive,” said Thurber.
In addition to helping credit union members find a car that they love, he can help prepare you for the types of extras/add-ons that the dealer may suggest when closing the deal. Being educated upfront can help prevent surprises during the closing process.
Marty’s top tip for people looking for a car is: “Do the research and educate yourself! Use all of the resources you have available to you, and by doing that, you will make better decisions,” he said.

Take a Test Drive

If you’ve followed the steps above, you have done your research, gotten your financing pre-approved and have identified a few vehicles that you want to try. The next step is to take a test drive to see how the car feels and performs.
If you still aren’t sure after comparing your top choices, consider renting the car(s) for a day or two to give you more time to drive it.
Some things to look and listen for during your test drive:
  • Be sure the seats are comfortable and ceilings are high enough for all family members
  • Check the radio, heater, air conditioner and power window switches
  • Check the turn signals and brake lights to be sure that they work properly
  • Look at the tires for signs of wear
  • Examine the vehicle for any dents, windshield cracks or rust
  • Drive the car on quiet roads and on the highway to observe its performance, and listen for any unusual sounds
  • Try parking the car and check the turning radius
  • Look at the cargo space, interior features and dashboard to make sure the gauges work properly
  • Make sure the steering does not pull to one side, which can be a sign of alignment problems. 

Consider GAP Insurance

GAP, which stands for “guaranteed auto protection,” is a supplemental insurance policy that you should consider if you owe more money on your vehicle than your auto insurance policy would pay out if it is wrecked or stolen. Remember that a car will start depreciating in value the minute you drive it off the lot, so GAP insurance will help fill the gap in coverage.
GAP insurance is recommended for people who put no money down and have a longer payoff period. It can also be helpful for those who lease a new car if it isn’t already included in the lease agreement. 
New cars depreciate quickly, and your basic auto insurance policy will only cover the actual cash value of the vehicle, not what you paid for it. Keep checking the Kelley Blue Book or National Automobile Dealers Association (NADA) to check the value of your car and whether it is less than the balance on your loan. Once your loan balance is low enough to be covered in full by a collision insurance payment, you can cancel the GAP insurance. 
GAP insurance is not required, but it can give you considerable peace of mind and protect you from financial hardships due to unforeseen circumstances.

Ready to Roll

It seems obvious, but remember to have your driver’s license and proof of auto insurance with you when you’re ready to take your car home.
At this point, you are probably excited to finalize the deal and move on, but taking the time to review the numbers when signing your papers will ensure that no extras have been added. If you don’t understand something in the purchase documents, just ask.
If this is your first car purchase or you just haven’t bought a car in a while, these car-buying tips will help you get ready to roll in no time!
Auto Buying Service

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