So you’ve decided it’s time to buy a car, but where do you start? To help you navigate the car buying process I sat down with two expert auto lenders, Robin and Jess, to get their advice and tips for purchasing a vehicle. What I learned - there is a lot more to buying a car besides the test drive!
Expert Advice on Buying a Car from First Alliance Lenders:
Meet Robin and Jess, two experts when it comes to buying a vehicle!
|Robin has helped over 200 people in the last year alone get into a new ride, she definitely knows her stuff. Her dream car is a vintage (a.k.a. traditional British design) Mini Cooper Roadster.
|Jess has helped hundreds of people through the car buying process. She loves it when members come back to show her their new ride - “It’s so rewarding to see the excitement on their faces!”
Question #1: What are the top things to consider when buying a vehicle?
Robin answered “Personal budget is number one. You have to know what you can afford before you even start looking. Second, what is your plan for any repairs the vehicle might need during its life with you. So many people forget to think about this part and it puts them in a financial bind down the road. Lastly, do you want a new vehicle or a used one? There are pros and cons to each.”
Jess agreed with Robin but added “Don’t forget about the insurance costs, it is a requirement that a vehicle under a loan must be fully insured. A lot of people forget to add that cost into their monthly expenses when they are buying a car.”
Question #2: What are the most common concerns people have when applying for a car loan and what advice do you give them?
Jess said “I usually have members ask me if they are getting a good deal on the car they picked out. I always tell them they can check out values on NADA or even call us to look them up. Also, be sure to do their research before they purchase the car by checking out websites like Edmunds.com – where they list reviews on new and used vehicles from people that have actually owned them. The other thing I suggest is to have a trusted mechanic take a look at the used vehicle before you buy. It’s very inexpensive and very worthwhile.”
Robin said “Monthly payments are the top concern I hear. I always tell my members to work within your finances to get a payment YOU as the buyer feels comfortable with, don’t let the dealership or a lender tell you what you can afford. It can feel really good to be pre-approved up to $25,000.00, but is that really in your budget for a monthly payment that comes with that price tag? Be honest with yourself in what you can really afford.”
Question #3: How important is it to have a down payment when buying a car?
Robin said “Having a down payment on a vehicle can work to the buyers benefit; it can help you have equity in your vehicle, which if you are buying a new car is important because the price of a vehicle can drop by about 25% as soon as you drive it off the lot. Having equity in your vehicle means that your car is worth more than what you owe on it. This can save you from being upside-down on your loan, meaning you owe more than what the vehicle is actually worth.”
Jess added “Having a down payment will also get you a smaller payment, so it’s definitely a plus. But it is not anything to get hung up on; sometime you just need a vehicle and haven’t been able to save for a down payment. We, at First Alliance Credit Union, understand that happens sometimes, which is why we offer financing up to 100% of the purchase price for auto loans.”
Question #4: What kind of paperwork do I have to provide to get a car loan?
Jess said “At minimum a borrower needs to provide three things - first, proof of insurance, which for most people is just a valid insurance card. Second a proof of income, so your pay stubs. The third is the purchase agreement from the dealer; this is the paperwork stating you officially purchased the vehicle from them.”
Robin added “But depending on circumstances, there may be other items requested to help with the approval process. For example, self-employed members may be asked to provide the last two years of income taxes to verify income. Or for a private party sale we will require the copy of the vehicle title and a lien card release in place of the purchase agreement.”
The Wrap Up:
Robin and Jess definitely know their stuff when it comes to buying a car! Some key take-a-ways from my time with them are:
- Know your budget and plan for all related vehicle expenses
- Having a down payment is a good idea and saves you money
- Securing financing for a car loan is relatively easy and straight forward
Still have questions about the car buying process or auto loans? Check out my interview with Kim and Hayley. Plus, check out the recap of my Facebook Live Q&A session with Robin and Hayley were they answered real questions, from real people about the car buying process.