Tips for First-Time Car Buyers

Even with more transportation options than any time in history including ride-share options like Lyft and Uber, getting your own car is an important moment. You get more control over where you go and when. No waiting around for your ride. No sitting in the car while the person driving you hops into the pharmacy because it was on the way. You (quite literally) are in the driver’s seat.

Of course, there’s a lot to consider and learn before you head to the car lot. That’s why we put together this list of tips for first-time car buyers.

Review Your Credit Report
Whether you’ve checked it or not, you have a credit report. This is step one because it takes the most time to change if your report needs corrected.

Head to AnnualCreditReport.com to get a free copy of your credit report. All 3 credit bureaus (Experian, Equifax, TransUnion) are available there. You can get one free copy each year. Some people get all 3 at once while others choose to spread it out (ex: Experian in January, Equifax in June, TransUnion in November) to review throughout the year. If you’ve never checked before or it’s been a few years, you’ll probably want to just get all three.

Make sure everything on there is accurate and up to date. If you spot an error, go through that credit bureau’s process to get it resolved. One mistake could have a negative impact on your credit score and cost you money with higher interest rates, etc.

Keep Your Score High
Your credit reports won’t show you your credit score, but you can check your credit score using Credit Sense in the LPCCU Netbranch. Credit Sense is a free feature available to members and gives you access to your credit score, monitoring alerts if there are inquiries on your credit and money saving offers from LPCCU tailored just to you. Note that there are different versions of your score weighted for specific purchases like buying a car or house so the financial institution might not see the exact same score you see.

The best way to keep your credit score high is consistently paying debts on time, not opening multiple credit cards at once, and keeping balances low.

For someone who hasn’t borrowed money before, your score could be sitting at zero. While that’s not necessarily disqualifying (everyone has to start somewhere), it’s good to know going into your car-buying process.

Know How Much You Can Afford
Don’t just guess at this. Contact the credit union to discuss how much you can afford and use our free payment calculator to look at different loan term and payment options. The last thing you want to do is get into a situation where your new ride is taken away because you can’t continue making the payments. Figure out the difference between your income and current expenses. Don’t plan for every leftover dollar to go toward your car. There should be some cushion for unexpected expenses and upkeep.

If you don’t need to get that car right away, see how much you could save up in the next 6-12 months for a down payment. This can help save you money in a couple ways. First, it reduces the amount you need to borrow. (Remember, money you borrow gets paid back with interest.) It might also help you get a slightly lower interest rate altogether.

One thing’s for sure – sitting down with a member of our Loan Department to get pre-approved will give you a clear picture of the amount you have to work with. That’s important information before moving on to the next step.

Research Car Options
There’s no shortage of information out there when it comes to cars. You can find out pretty much every little detail about a certain make and model thanks to sites like Edmunds, Kelley Blue Book, NADA, and Carfax. Remember, this is your first car – not the only one. Unless you have an extremely high budget for your monthly payment, focus more on needs than wants.

A used car definitely gets you more bang for your buck. It doesn’t lose nearly as much value as a new vehicle and can be much more affordable. Feel free to contact our Loan Department and we can help you find out the market value of a used car or truck before you go shopping. The last thing to consider when researching car costs is the insurance premiums for different vehicles, so be sure to keep that in mind as you are doing your homework.

One More Thing
A vehicle is a big investment. Buying it is the first step but be sure you take good care of the car with regular oil changes and tune-ups. Spending a little bit here and there for regular maintenance is much better than a surprise expense (and inconvenience) from a major breakdown.