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Good Car, Good Buy or Goodbye

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by

Bankitis

on 8 April 2014

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Transcript of Good Car, Good Buy or Goodbye

Choosing the Car
Auto Biography
Shopping for the Car
Loan & Credit
Purchasing the Car
Negotiating
Warnings
Know before you go
If you're going to a dealership
Dealers can take advantage of enthusiasm
Don't give deposit until the dealer approves your offer
Avoid being switched to a lease without doing your research
Don't trade in your car without knowing it's value in advance
Avoid financing automatically at a dealership
If you're buying a used car (especially through a private owner)
Make sure that the odometer is honest and that the car has never been totaled
Check Carfax and Autocheck for the history of the car (searchable by VIN)
If the car has been in a junkyard then a salvage title will show up on the report
Inspection is non-negotiable! If the seller won't let you and your mechanic to inspect the car, walk away!
Test drive
For young buyers
Make sure the deal is finalized before driving off (dealership)
Last minute shopping on Saturdays. If not approved automatically there is a greater chance that the rate and loan terms can change
Good Car, Good Buy or Goodbye
Objectives
Choosing the car that's right for you
Shopping for the car
Purchasing
Insurance
Warnings
What do you really need?
What is the purpose of your Car?
Rushing into a deal without considering how you will really use the vehicle could be a
$30,508
mistake!
New vs Used vs Repo
New
- Right out of the factory
- Custom order
- Full price $$$
- Depreciation
Used
- Older model & previously owned
- Save 30-40% over a new model
- Certified Used Car Program
Repo
- Cars taken back by the financial institution when someone is unable to make their payments.
- Voluntary surrender
- Inventory changes frequently
Choosing the Car
Buying
Leasing
Choosing the Car
Choosing the Car
Great option if you typically trade in for a new car, want to avoid a down payment, don't drive more than 12,000 miles each year and are able to keep cars in good condition. If you move around a lot or not planning to stay in the US for a long period of time. Short term to saving money.
Leasing
Choosing the Car
Buying
Great option for you if you don't mind driving an older model after a few years and if don't want to make monthly payments forever. You can postpone getting a new car for many years. Long term to saving money.
What do you need to get a loan?
- Income
- Credit Score
- DTI (Debt to income)
Pre-approval
- Gives you confidence and upper hand when negotiating
- Ensures that you don't buy more than you can afford
- Provides an opportunity to find the best interest rate available rather than relying on dealers.
Income
Credit Score
DTI
Co-signer
Items Needed
If you are able to save money for a 20% down payment then there's a better chance for a loan and a smaller monthly payment.
Be sure to bring your most recent payment stubs
Shopping for the Car
Credit scores range low of 300 to high of 850. Higher than 700 is great!
Pull your credit report, understand it, pay bills on time, get current with your payments, pay down credit cards, avoid inquires, keep accounts open.
Come to a credit management workshop or stop by PSCU for a free credit score analysis.
Measures the amount of debt you have compared to how much you owe
36% is ideal
37%-42% is a little high but still credit worthy
43%-49% hard to get credit at this level
50% or more
Loan Details
Lessons from Transformers
Tyana Grayson
Debt to Income
Monthly Obligations
Monthly Income
DTI %
43%
Shopping for the Car
The Budget
Plan on spending 10%-15% of your total monthly income on automotive expenses
- CNNMoney
Income: $2,800
Subtract
monthly
expenses
$200 - Savings
$850 - Rent
$120 - Credit Card
$35 - Best Buy
$200 - Student Loan
$875
How much you have left over
for other expenses
When budgeting for your new car, keep in mind the following:
Insurance: can cost up to 12% of the of the purchase price but it typically ranges from 5%-8%
Registration: Depends on the state. Fees can be 2.5% of the purchase price but fees declines every year.
Admissions testing - usually falls on the seller but if buying from a private party then there may be some difficultly getting for them to pay. Regular - $25; Diesel - $75 and only certain places will test them.
Taxes: Sales tax, city tax, county tax
Titles: this can be worked into the loan and at the point of sale.
Dealer Handling fee/ processing fee
Shopping for the Car
The Price
Shopping for the Car
Search online (NADA, Craigslist, etc)
Look at different dealerships (online)
End of the year or month
Auto buying services
Northern Auto Brokers & Signature Car Buying Simplified: personal shoppers, not limited, bring the car to you, partnered with PSCU

When Budgeting for your car, keep in mind the following:
Look up dealer cost, dealer rebates, subsidized lease deals, or other special breaks (nadaguides.com, kkb.com, truecar.com)
Decide on the price before you step into the dealership
"Invoice Price" - whole sales price that the manufacturer bills the dealer on shipment.
Dealer incentives: need to research because this can give you more negotiating room
Good starting point: 2% over the dealer invoice price.
Do your homework before
Start bidding as low as you reasonably can but not so low to seem like you're uninformed
Start at invoice price
Establish that you're a serious buyer
Keep in control
Purchasing with other people involved
Don't hesitate & don't get emotional
Prepare to go back and forth
Take it to another dealer
When you hit your target or come close to it, agree on a price. (At this time you can talk trade-in, if it applies)
Purchasing the Car
Closing
1. Financing
2. Extended Warranty
-depends on the vehicle
-be careful of mark ups in warranty
-anything over $2,000 can be excessive
3. Additions

Finance Managers is paid based on what they sell (average: $1,000-$1,200 per car)

Be sure to get copies of
every document
The Insurance
1. Understand that, to the agency, you're a statistic/series of risk factors
2. Shop around - not all agencies price the same. Get a quote
3. Look at service, not just price
4. Don't just do the minimum required by state
5. Ask about discounts
6. Bundle Insurance
Resources
PSCU
Northern Autobrokers
NADAguides.com
Kelley Blue Book (kbb.com)
Autotrader.com
Carfax.com
Truecar.com
Questions?
Thank You!
Public Service Credit Union offers FREE Credit Score Analysis for all members.
$1,395 Before Car Expenses
$100 - Gas
$420 - Car Loan/Expenses
May need it if you don't have a good credit score or if you don't have enough credit history. Considered a risk by lender
Co-signer must have good credit/history
It helps if you are related to the co-signer
Caution: having a co-signer means that the credit score of both individuals will be affected by the loan payments.
Full transcript