Purchasing an auto for the very first time can be a very daunting task. It often takes a lot of time and test driving before you find the vehicle that is right for you. Be sure to do your homework before taking the plunge.
If you plan to finance your purchase:
- First, work out a budget- how much of a monthly payment can you comfortably afford? Be sure to allow for the cost of auto insurance, maintenance expenses and gasoline in your budget.
- A good rule of thumb on the loan amount is to not exceed 70% of your gross annual income.
- A preapproval at Day Air Credit Union, before you go out shopping, can make the process much easier.
- Vehicles older than 8 to 10 years or those with high mileage (over 80,000) might not be considered acceptable collateral by the lender.
- If your credit history is limited, be prepared to make a down payment on the purchase- somewhere between 10-20% of the purchase price, plus the amount of the tax and title. The lender may consider less down with a qualified co-signer.
- Consider protecting your credit history and finances by including debt protection and GAP insurance on your loan. Debt protection will assist in making your auto payment if you become unemployed or are off of work due to a disability. GAP insurance offers protection if your auto is totaled or stolen by paying off all or a portion of your remaining loan balance that was not covered by your auto insurance. Both are available at Day Air Credit Union.
Whether you plan to pay cash or finance:
- Keep in mind that automobiles depreciate in value; new cars lose approximately 20% of their value as soon as you take ownership. You may want to consider purchasing a vehicle that is 2 to 5 years old instead of a brand new vehicle to avoid such an immediate drop in value.
- When you find a vehicle that you like, strongly consider having it inspected by a mechanic before submitting an offer to purchase.
- Consider purchasing mechanical breakdown protection or a warranty to reduce the possibility of out of pocket expenses for unexpected mechanical failure. Also available at Day Air Credit Union.
We all love our cars, but don’t let your first auto purchase be an impulse buy, take the time to research the type of vehicle you want, read consumer reports, know the retail value of the vehicle you are considering and have the vehicle inspected before making an offer. If financing, make sure the monthly payment is within your budget. Most importantly, we’re here for you, contact a Day Air Credit Union consumer loan professional today to help guide you through your very first auto buying experience.
Abby Hall | Consumer Loan Manager