It’s graduation season and many of your members are currently assisting their children with the purchase of a first car, ranging from advice to financial support. The purchase of a first car can be overwhelming, exciting and frightening all at the same time, but it can be a pain-free process if they keep the following tips in mind:
- Needs before wants. Before purchasing an automobile, it’s always important for members to first think about what they really need in a car, not just what they want. When thinking of teenage drivers, safety is a top-of-mind need for parents, including features such as front- and side-impact airbags, anti-lock brakes, etc. Other “needs” might include good gas mileage, automatic transmission, passenger and cargo room, and four-wheel drive.
- Budget. It’s important to set a price and stick to it. If cost is a factor, buying a used vehicle may be a great option. Members can get a vehicle that’s almost as good as brand-new without suffering the significant depreciation that occurs as soon as the vehicle is driven off the lot. According to Edmunds.com, used cars – even those that are only a year old – are 20 to 30 percent less expensive than new cars. Buying used also means credit union members:
- May be able to afford a model with more luxury/performance than the new version.
- Can get a vehicle that may still have a factory warranty and/or is certified.
- Can save on insurance costs.
- Long-term ownership costs. Vehicle expenses don’t end with car payments. When calculating expenses, members should keep in mind that vehicles can depreciate at different rates, and can cost more to maintain or insure. Vehicles that have good gas mileage will also provide long-term savings.
- Internet Research. Before venturing off on the car search, members should consider taking a look at some of the numerous leading online car shopping sites. It’s tough to keep up with the hundreds of makes/models available, and it’s good to know all of the options. Government Web sites like www.safercar.gov produced by the National Highway Traffic Safety Administration (NHTSA), can provide specific information about front and side crash rating results and rollover ratings to aid consumers in their vehicle purchase decisions. The Automobile Association of America (AAA), http://www.ouraaa.com/automotive/purchase/index.html, also has a number of helpful tools on its Web site including crash ratings, CARFAX reports, crash test data, and estimates for the overall cost of vehicle ownership. Compare!
- Vehicle history. The risk of a used car is its past. Members should run a vehicle history report on any used car they are considering for purchase. CARFAX offers a comprehensive report that will provide vital information.
- Test drive. Members need to consider how the vehicle is going to be driven when completing their test drive. A swing around the block might be appropriate for a student who will primarily use the vehicle for local transportation, but a highway run will be necessary for those who might be going to college out of state and driving home for holidays and visits. If vehicles are driven in mountainous areas or in heavy stop‑and‑go traffic, it’s a good idea to test the vehicle out in those conditions as well.
- Financing. Members can receive some of the best financing through their own credit unions. This keeps negotiations with the dealership simple, allows members to get a competitive interest rate ahead of time, and encourages members to stick to their budget.
- And finally, a trusted company/salesperson. If buying from a business, consider one that certifies its vehicles and offers a return policy, such as Enterprise Car Sales, which has 120 makes/models of used vehicles that it puts through a 109-point inspection by an ASE‑certified technician and then prices them below Kelley Blue Book value.