Car Buying Tips
Key takeaways:
Buying a new vehicle can feel overwhelming. Being prepared when you arrive at the dealership is the best way to get the best deal and take the stress out of car buying. What to prepare:
- Shape up your credit history and score to get better financing deals.
- Know your ideal vehicle, including make, model and market value.
- Get pre-approved for a car loan with your financial institution.
- Negotiate based on the out the door price when buying a new car, not the monthly payment.
- Understand insurance options that protect your vehicle's value.
Here are a few tips to consider before you go car shopping:
Tip #1: Check Your Credit Report
Start the car buying process by checking your credit report. A higher credit score can usually get you better financing options. If your credit score isn't where you want it to be, take steps to improve it. Pay your bills on time, don't take on new debt, and reduce your debt.
You'll also want to make sure your credit history is accurate. Check free sites such as CreditKarma.com, Experian.com or AnnualCreditReport.com to review your credit activity and credit score for changes.
Tip #2: Have a Specific Vehicle in Mind
Know what your ideal vehicle is, including make, model and market value. Check resources such as Kelley Blue Book to know what the car is worth. Knowing the fair price of a vehicle when you are heading into a sale can prevent you from overpaying.
Tip #3: Get Pre-approved for Financing
An auto loan pre-approval means a lender reviewed your application. It shows you qualify for an estimated loan amount, interest rate, and monthly payment.
Your preapproval helps you know your budget and makes it easier to compare dealership financing offers. This is especially handy when dealerships offer rebates or low interest financing through their own finance companies. When you come to the table with your own financing, it's easier to determine which offer is the best one for you.
A loan pre-approval also has advantages if you're buying a car through a private party. A preapproval sets your spending limit and guides your choices on the age of the vehicle and its mileage. Preapprovals also mean faster closings, which is a benefit if the seller has more than one offer on the car.
Emprise Bank auto loan pre-approvals are valid for 60 days. This gives you time to find the right vehicle. It also helps you negotiate the best loan.
Learn more about auto loan pre-approvals at Auto Loan Preapproval Process - Emprise Bank.
Tip #4: Focus on the Out the Door Price
You've taken a test drive and the car seems like a great deal. Now it's time to talk price.
Discuss the out the door price rather than monthly payments. An out the door price is a common dealer term that means the car price plus all fees and taxes. If you only focus on monthly payments, you may end up with a longer loan term than you want and ultimately, paying more in interest. By negotiating from the out the door price, you can keep the full cost of the loan more manageable.
An out the door price can be a little trickier with a private seller. You can get a property tax estimate for Kansas at Kansas Department of Revenue - Drivers License Status. For Missouri residents, visit Missouri State Tax Commission » » Frequently Asked Questions.
Tip #5: Understand GAP Insurance
GAP insurance covers the difference between your car’s value and what you still owe on your loan. Say you financed your new car plus a warranty, and rolled over an old loan balance. You may find you owe more than your new car is worth. GAP coverage pays the difference if someone totals or steals your car.
Some reasons GAP insurance might be right for you:
- You put down a small down payment. Less than 20% down may mean your car's value depreciates faster than your payments pay down the loan principal.
- Your loan lasts 60 months or more. Taking longer to pay off your car may mean your car's value depreciates faster than your payments pay down the loan principal.
- You rolled over your old car loan into this loan.
Final Thoughts About the Car Buying Process
Buying a new car is exciting and overwhelming. Make it more manageable by:
Making sure your credit score and history are spruced up.
- Knowing which car you want and its market value.
- Getting a loan preapproval to give yourself more negotiating power with the seller.
- Focusing on the total cost rather than your monthly payments.
- Looking into GAP insurance if your down payment was less than 20%, your loan lasts 60 months or longer, or you rolled over your old car loan.
Visit our auto loans page to view our current vehicle loan offers and apply for a loan online.