Tuesday, November 9, 2010

Strategies to Buy and Finance a Vehicle - Strategy #2

Okay, you've decided on how much you can afford. Hopefully, you will have the opportunity to "test drive" your new car payment before you buy. Plus, this savings could be your down payment. Finding the right vehicle for you may be intidating but it shouldn't be.

Buying a car for many people is an emotional purchase which can be costly. Not that you don't want to love the car you will spend a great deal time driving but you are much more likely to make a financial decision that you may not be able to live with for up to 8 years depending on the amount financed. So, it is worth doing your homework BEFORE you ever visit a car dealer or even one being sold by an individual.

There are two misconceptions that people fall prey to:
1. If you purchase from a dealer, the car will be guaranteed or will be free from maintenance troubles;
2. You get a better deal from an individual

Both are not true, many dealers buy used inventory from auctions and have no idea how well the car was maintained and they sell the cars "as is." Some individual sellers are actually folks that buy used cars, fix them up and sell the to the public instead of an owner that actually used it for their transportation.

Start with "window shopping" from comfort of your own home by searching local dealers on the web. Many post their entire inventories on-line and offer "internet discounts." Also search websites like AutoTrader.com that you can search autos offered by both dealers and individuals. Most of these sites allow you to search by make, model, body style, location, price and more.

Once you find vehicles of interest, you will need to determine the value of them by going to a website like Nada.com or Kelly Blue Book. These sites offer values on both new and used cars and have links to dealer inventories.

If you are purchasing a used vehicle, consider purchasing a CarFax or similar report that will give you information about whether the car has been in an accident or totaled for events like flooding. This is important because there are vehicles out there that make it on the market with a "salvage title" which means that an insurance company has "totaled" the car and sold it for parts. Many dealers offer reports for free. Ask to see it before you shop if so. If not, definitely purchase one BEFORE you sign on the dotted line.

It is helpful to make a list of your three to five to take to the next step. Strategy #3 will give you hints when you are ready to take that test drive ...

Tuesday, November 2, 2010

Strategies to Buy and Finance a Vehicle - Strategy #1

Buying a car is one of the most stressful events in most people's lives.  It's a big purchase that includes not only buying the car but includes a loan, as well. Most people don't think about these two things as independent of the other. Each must be considered for a deal you can live with. Unfortunately, most people end up buying on impulse and later regret it and sometimes can't afford it.

We will explore seven strategies to purchasing your new or new-to-you vechicle. First, we will tackle  what you can affort. Even if you are lucky enough to pay cash for your car, there are many expenses to take into consideration before you buy.

  1. Car Payment - Start with your budget or spending plan. If you don't currently have a budget or spending plan, write down all the expenses you have each month and your income. Don't cut emergency and long-term savings from your plan to accommodate your new payment. If you have the time, start putting in savings the amount of your new car payment to test drive your payment. This can also becomes your down payment and car expense fund.
  2. Lender - Most credit unions offer preapproval before you go shopping. When you are preapproved, you can concentrate on finding the perfect vehicle at the right price. To find a credit union near you, go to What's In It For Me website and enter your zip code for a list.  They can answer questions about warranties, credit life & disability insurance. Generally, credit unions offer lower loan rates, less expensive warranties and insurances.
  3. Insurance - Automobile insurance is priced differently based on make & model, miles driven, driving record and credit history (just one more reason to have a high credit score). If you finance your auto, then you will be required to carry full-coverage which is more expensive.
  4. Gas mileage - Depending on your commute and travel requirements, cost of fuel can make or break your budget.
  5. Maintenance costs - It seems strange to think about but how much a headlight, oil change and tires cost but these are the things that will also break the budget. For instance, some cars might cost $100 each while others cost $500.
Once you determine what you can afford, you can begin researching the make and model that fits your lifestyle. Strategy #2 will cover how to find the car that's right for you.

Friday, October 29, 2010

My Time is Up

It’s been fun going on this financial journey with you, but my time is over. I am leaving my credit union to pursue other opportunities. Although my original purpose was to help you, I have learned a lot myself. While I suck at sticking to a budget, it’s nice to know where my money goes now and I will do my best to live on a budget in the future.  I’m also fully prepared to pay my student loans when my lenders harassing me for their money. My next destination on this journey will be another blog- Broke College Grad.  You can get all the links to the recent grad information on this site on my Tumblr. I will post new information soon. Hope you have enjoyed this site. Stay financially free!

Thursday, October 28, 2010

30 Day Spend and Save (Budget) Challenge Update: I Give Myself a D+

My 30 Day Spend and Save Challenge is coming to a close.  If I had to give myself a grade for this challenge, it would be D+. The only reason I did not give myself an F is because I did save some money towards my goals.  I have learned about myself and money while doing this challenge. Here’s what I learned.

I LOOOVEEE to shop. I also love to eat out and go out with my friends.  I exceeded my clothes, entertainment, fast food, and restaurants budget.  All of this fun and pretty clothes adds up to a whopping $593. 14. Holy cow! My original clothes, entertainment, and restaurants budgets combined equaled $450. I spent an extra $143.14. This is money I could have put towards my emergency fund or moving fund.

Budget more money for the essentials. Sometimes I think my car hates me! Since my car was born in the mid-90s, it’s not very fuel efficient and it burns gas easy. I should have allocated an extra $50 in my budget for gas. Even though I’m not primarily responsible for groceries, I also should have put more money in my budget for groceries.

Budget for other expenses. Throughout this challenge, I had unexpected expenses. I had to renew my AAA membership, buy a lock for my gym locker, take some clothes to the cleaners, and pay for this job subscription service. (I’m thinking of cancelling that subscription.) I also had to pay for transportation for the trip I took to Philly this month. I will definitely add a miscellaneous category to my spending plan.

While I did exceed my budget, I’m not going to beat myself up. This was my first time ever trying to live within a budget and I learned a lot.  I’m taking all the lessons I learned from this month and using them to make adjustments in my budget and spending habits. Hopefully, I will be able to give myself a better grade next month.