FORT GEOGRE G. MEADE, Md -- The new car smell, the rev of the engine and the satisfaction of driving off the lot in a vehicle you now own.
Some young troops buy vehicles when they get to their first duty station. They get roped in with bad deals and worse vehicles. I have compiled a few short cuts, which may help you avoid being ran-over by debt.
Affordability
The first thing you need to think about is if you can afford a vehicle.
“You should not spend more than 20 percent of your net income on repaying your credit obligations,” said Jim Murphy, a Marine Corps Community Services personal financial management counselor for Headquarters and Support Battalion, Head Quarters Marine Corps, Henderson Hall Arlington, Va.
There are financial advising services available on almost every military installation. They have a lot of useful tips about purchasing a vehicle in your area.
If a new troop makes $1,300 a month, they should spend no more than $260 on credit obligations. These payments would include student loans, credit cards and other debts.
Making a budget can divvy your finances to help you spend money where you want. If you figure out how much you spend on food and other expenses you may be able to spend a little bit more on a vehicle.
The operating cost of your potential vehicle should also be considered. Here are a few examples:
· Gasoline
· Insurance
· Car washes
· Tune ups
· Tire rotations
· Oil changes
· Emergency equipment
· Taxes and licensing
Because, who wants a car they can’t afford to cruise in on the weekends?
Finding your ride
Now it’s time to look for your new steel chariot. First is deciding whether you want to buy new or used.
New vehicles almost always have fewer mechanical issues from the start, but they lose value every minute after you take them off the lot. According to edmunds.com, cars lose up to 60 percent of their value in the first five years.
Used vehicles tend to be more likely to need maintenance from the start, but they don’t lose as much value after the purchase. You can check the vehicle’s history report or other vehicle consumer reports to make sure you will be getting your money’s worth .
After choosing new or used, decide what type of vehicle you need. You may want to ask yourself:
· What is the vehicle going to be used for?
· Will it accommodate your life style?
· How long is your commute to work?
· How much gasoline can I afford?
These questions will help you to decide which class of vehicle you should buy. Vehicles fall into categories, which include classifications such as compacts, sport utility vehicles, sedans and trucks. Try not to commit to one manufacturer. Different manufacturers may have better prices for vehicles with the same features and capabilities you desire.
Every manufacturer has their strengths and weaknesses. You will have to do your homework. There are many websites offering reviews on vehicles and manufacturers. A few good sources are J.D. Power and Associates, Consumer Reports and Edmunds.com.
Manufacturer websites often announce recalls on components and other mechanical issues with their vehicles. If there are recalls on the vehicle you are looking to purchase make sure the dealer repaired it to the manufacturer’s standard.
Financing
Financing is critical to ensuring you do not get t-boned by debt. Research is another big thing here—Don’t go with the first loan offer you see.
Ask yourself these questions:
· Are you going to get financing through the dealer?
· Are you going to be getting a loan from a bank or credit union?
· What is an acceptable Annual Percentage Rate?
Once you make a choice, don’t settle, keep trying to find a better deal. The loan’s annual percentage rate is the amount of interest you will pay on your loan each year. The financial institution and the current market establish APR.
The rate you get depends on your credit score. I suggest checking your credit score before you jump into trying to get a loan. Building Credit can help in the future, if you do it correctly. If payments to your creditor are made on time this creates a better credit score.
A higher credit score can help obtain a better APR. A bad credit score can stop you from obtaining future loans or lines of credit. Failure to pay back lenders can also harm your military career, by making you look unreliable to your leadership, and keeping you from obtaining a security clearance.
Research lenders in your area, sometimes the smaller financial institutions can offer better deals than nationwide ones. Think about saving up for a down payment, this can also lower your monthly payments.
Leasing is another financing option offered by many dealerships. I suggest you read the contract multiple times before you make any decisions.
When thinking about leasing a vehicle you need to explore all options. You normally have lower payments per month, but you may get fined heavily if you break the contract terms.
If you drive more than the set amount of miles you can be charged extra. You can also get charged for excessive wear and tear of the vehicle.
Taxes, titling, and registering your vehicle are costs tagged on to the final price tag of you new vehicle.. Every state has different taxes that may apply.
To find the average APR for your state or look at the national average, check out this website. www.autos.yahoo.com/car-finance
Working with dealerships
One good tip is to stick to dealerships that have manufacturer certifications.
Some dealerships in your area may be off limits to military personnel. Small, used-vehicle dealerships near military bases many times attempt to prey on inexperienced service members. Keeping your command informed can prevent you from going to these dealerships.
Test-driving a vehicle is an opportunity you should not pass up. Drive the vehicle the way you drive. If you commute to work on the interstate, then take it on the interstate. If you are always in stop-and-go traffic, then find a patch of stop and go traffic.
If you are buying a used car and have a preferred mechanic, take the vehicle to them and get it checked out. Do this with the dealer’s consent, of course.
Once you get back to the dealership don’t let the dealer sweep you away with just one vehicle. The dealers may offer you to take the vehicle home for the night. I suggest not taking the offer. It is a selling tactic used to make you more attached to the vehicle. Look around the lot, ask the dealer about the other vehicles they have in your price range.
Take a couple days and if you still love it go back to the dealer and make your purchase. Shop around while you are waiting, you may be able to find a vehicle you like more.
The dealer may offer a maintenance plan, which may help you in the long run. These plans have set times you bring your vehicle to the dealership to receive routine maintenance. Most maintenance plans are only recognized by the selling dealership.
I suggest taking a trusted friends or leader with experience in dealing with dealerships. Many times they will know how to get more out of the dealer for less.
If you have doubts about the dealership you are interested in, do your research; there are plenty of resources on the Internet to determine if a dealer is reputable.
Buying a new vehicle can be a long, strenuous process. If you do your research, keep your leadership informed and use your car savvy friends, you can save money and make the trip to owning a vehicle all the smoother.