Auto Loans
Auto Loans:
Buying a car can be a stressful, if not downright scary undertaking. There are quite a few variables to decide before even opening a newspaper, website or visiting a dealership. The very first thing to recognize is budget. The easiest way to ensure buyer’s remorse is to over purchase. Having a budget before getting an auto loan, and sticking to it, is the only guarantee of walking away feeling confident with the new purchase.
It is important to note here that the dealerships will most likely not offer the best financing rates. The best bet is to secure financing from a private institution before embarking upon the car buying journey. This is also a sure fire way to stay within a budget.
When it comes to auto loan financing, it is important to compare the annual percentage rate (APR) with the length of the loan. Avoid focusing only on the monthly amount that you pay. Although that is important, the real cost of the car, the total amount paid, is found by looking at the price of the vehicle, the APR and the length of the loan. Shop around for the best prices. A word about credit insurance, some lenders will suggest that additional insurance is purchased to pay off the loan in the event of death or disability. It is not required by federal law and may already be included in an existing policy.
The average cost of a new car auto loan is approximately $28,400, according to the National Automobile Dealers Association. This is why having a strong foothold on a budget and a great deal of research before embarking on the new car buying journey.
Important research tools include searching vehicle publications for car features and prices. This will help you determine a dealer’s cost for specific models and particular options. Shop around and comparison shop in showrooms and online. It’s your right to use the words, “just looking,” firmly when necessary, while you are engaging in comparison shopping.
When you are finally ready to choose a vehicle and negotiate a price, be sure you are familiar with the terminology. The base price is the price of the vehicle without options, it is the price listed on the Monroney sticker price (MSRP). The Monroney sticker price is the base price plus the manufacturer’s installed options. This is the sticker affixed to the vehicle as required by federal law and can only be removed by the purchaser. The dealer sticker price is the Monroney sticker price plus the dealer installed options.
This is where the blood, sweat and tears of all that pre purchase work comes into play. Armed with research, comparison shopping and a firm understanding of the integral terms, all that’s left is standing firm in the negotiating process.
If, on the other hand, after settling on a budget and doing the research and comparison shopping, it is decided that a lease would be a better option, here are some points to consider.
Leasing:
A typical lease is a two or four year agreement with the option to purchase at the end of the term. The lessor has the risk of future market value of the vehicle. Leased vehicles have mileage limits, typically 12,000 to 15,0000 miles per year. Upon return of the vehicle there are fees associated with going over the mileage by the end of the term and these can be quite substantial. If there is a chance that more miles will be needed, a higher monthly payment can be negotiated in return for additional miles. Within the lease agreement normal wear and tear of the vehicle are normally covered. If the vehicle is returned at the end of the lease agreement with more than the expected wear and tear, extra fees will be charged. With a lease there are upfront costs, such as a down payment, first month’s payment, refundable security deposit, taxes, registration and other fees. The monthly payment is typically lower than a financed monthly payment because it only factors in depreciation, taxes, rent charges and fees. If the lease is ended prior to the original agreement date, the lessor is responsible for early termination fees. When leasing, read the fine print carefully.
Renting:
Renting a car can be a confusing journey through paperwork, fees, options and taxes. The first decision that needs to be made is what type and size of vehicle is necessary. Making this decision beforehand will save money in the long run by staving off the last minute impulse to upgrade. Comparison online or through a travel agent is most likely going to reap the most rewards in terms of special discount offers. When checking prices it is important to ask about including mileage packages as well, especially if the vehicle is expected to log over a few hundred miles.
It is of utmost importance to be aware of some lesser known facts. First, if you have a poor driving record you can be turned down even after you’ve reserved your vehicle. Be sure to ask if the rental company performs driving record checks before you arrive at the counter.
Some stand alone rental companies require an instate driver’s license (this does not include airport rental agencies). It is important to call ahead and inquire.
Typically there is a rental deposit which is usually debited against the credit or debit card and shows up as a hold. The hold, however, will actually prevent use of the funds until after the vehicle is returned. Sometimes it can take up to five days after the return of the vehicle for the funds to be taken off hold. Be sure to check with the rental company and the lending institution.
The rental company will highly suggest purchasing their rental car insurance plan (called collision damage waiver or CDW) which will only cover vehicle damages in the event of an accident. It is important to know if a personal policy through a local insurance carrier will cover rentals. If so, it may be worth it to skip the extra charges, typically $9-$13 per day for the unneeded insurance.
If you rent the vehicle with a full tank of gas, return it with a full tank of gas or be wary of the consequences of fuel surcharges. Be aware of any tolls that might be encountered on the journey as rental car agencies carry extra fees to pay the bill. Some states no longer have toll booths and in that even the toll is paid by charging the owner of the license plate. Inquire in advance about toll charges.
Even if the terms of agreement are arranged prior to arrival at the rental counter, it is important to read the contract carefully and ask questions about any fees, taxes or surcharges that are unfamiliar. It is important to make the company aware of any chance that the vehicle may be driven out of state or by a driver other than the renter also. Knowledge is power and in the case of car rentals, it is important that the scales are tipped more evenly so the renter has as much information as possible.
Maintenance:
Taking care of a vehicle after purchase sounds like an easy task but yet it is fraught with uncertainty. The two most important things to know are:
- Preventive maintenance is a surefire way to know the health and safety of a vehicle.
- If it looks, smells, sounds or feels like trouble, get educated about what the possible causes could be and then get assistance as quickly as possible.
Where to have a vehicle maintained is always a difficult question. Ask for references from trustworthy friends or neighbors. Do research online and look for customer ratings. Ask to see current state licenses and technician certificates. If there is a warranty, understand upfront if the repair shop will honor it. Ask for an estimate before any work is started and know what parts are being used for the repairs.
Be sure to keep receipts and all pertinent documents related to repair and maintenance on the vehicle and if possible continue to use the same dealership or free standing repair shop for the life of the automobile as this will ensure continuity of care.