By: Lindsay Maki
Member Advocate
Ishpeming Community Federal Credit Union
Are you looking for a new vehicle? Whether you’re looking to lease, buying used, or buying new, there are some things you should know and look for.
Buying a car
• You need to remember that there are three steps to the buying process. This process includes:
Buying your new car
Selling your old car
Financing your new car.
Make sure to look at each option carefully and get your best deal for each.
• Before you go to the dealership, figure out if you can afford a new car. The total of your debt shouldn’t be more than 40% of your monthly take-home pay. “These are some of the things we look at for our members when considering loan requests,” says George Isola, General Manager of ICFCU.
• Know exactly what you want before stepping foot into a dealership and stick to it.
• Know the car you want to buy before you go car shopping. An excellent way to research is the internet.
• Research which dealership to buy from. Find a reputable one and also one that you live near, if your car ever needs repairing. A convenient location is also a plus.
• Test drive the car and have it thoroughly checked out by a mechanic before you buy it. You want to do this especially if you are buying the vehicle “AS-IS” – without a warranty. Make sure to ask questions about the car; if it’s ever been wrecked, condition of the brakes, condition of the tires, etc.
• Check out the body of the car in the daylight. Make sure to look around the bottoms of the fenders, under the doors, and in the wheel wells for rust. Paint that doesn’t quite match may be signs of a new paint job, which could be covering damage.
• It is very important to get a “CARFAX.” CARFAX is a commercial web-based service that supplies vehicle history reports to individuals and businesses on used cars and light trucks for the American and Canadian marketplaces.
The information on CARFAX reports will include:
Title information, including salvaged or junked titles
Flood damage history
Total loss accident history
Odometer readings
Lemon History
Number of owners
Accident indicators, such as airbag deployments
State emissions inspection results
Service records
Vehicle use (taxi, rental, lease, etc.)
CARFAX receives information from more than 34,000 data sources including every U.S. and Canadian provincial motor vehicle agency plus many auto auctions, fire and police departments, collision repair facilities, fleet management and rental agencies, etc.
• Check out the tires carefully. Uneven wear usually indicates a bad alignment. Take a friend along and have them watch the car as you drive away. Have them look for wobbling or unevenness, which can signal frame problems.
• Check all of the warnings. Carefully read all disclosures on the car’s window sticker, door frame, title and contract.
• Have the Vehicle Identification Number (VIN) analyzed. Experian Automotive Information Systems maintains a database of more than 135 million VINs, which can provide mileage reports at previous points of sale, safety recalls issued for the vehicle, and insurance claim information. Recently making the service available to all commercial lenders, credit unions and auto dealers are the only ones that currently use this service.
• Remember that all things are negotiable. This includes price, features, financing, terms, trade-in, warranties… everything. Don’t be afraid to ask questions, or make counter offers.
• Keep the price of the new vehicle and the price you want for your trade-in separate. Don’t let the dollar amount depend on the other. If you don’t get what you want for your trade-in, it is doubtful that the salesperson will lower the price on the new car to make up the difference.
• Try to determine the actual value of your trade-in.
Financing
• There are 3 Golden Rules to help you to save money on financing
Make as large of a down payment as you can afford.
Look for the lowest interest rate
Repay the loan as quickly as possible
• Shop for financing first. Don’t wait until you have a car picked out. Often you can make an impulse decision that isn’t your best deal. A credit union tends to lend more money than a bank and often has more favorable interest rates. Credit unions also have arrangements with local dealerships, offering member-only sales. Make sure to call around to other banks and dealerships as well, to find your best deal.
• Look at the total cost of the deal, not just the monthly payment.
• Five and six year loans are available for most buyers but these extended loans are a terrible value. The longer you stretch out payments to make them easy and affordable, the more interest you pay on the financing.
• Some dealership finance companies offer low rate specials like 1.9% but make sure to look at the terms involved. Most often you’ll have to pay 40% down and finance for only 24 months.
• Never give the dealership a credit application until you know for sure that you are going to finance through them. Make sure you have exhausted all other sources.
• Get your best deal in writing and go home and sleep on it. Your thoughts will be clearer and the deal will most always be there in the morning.
• If you’re not having fun buying your new car, go home. This is not a time to give into high pressure sales pitches or your own tiredness. This occasion should be fun.
Leasing
• Leasing is going to cost you only the expected decline in the car’s value during the term of the lease. For example, if the $25,000 vehicle is expected to have a value of $17,500 in 30 months, your payments would be based on $7,500 plus interest and also the sales tax.
When you purchase a new/used car you must pay sales tax on the full amount.
Also, if you drive more than 1,000 miles per month, you should look at leasing with care.
• With leasing there’s no trade in risk for the vehicle you’re driving; when the lease is up they take back the car.
• Also, you may be able to drive a nicer vehicle than you can afford for the same amount of payment if you were to purchase the car.
• When the lease is done, there is nothing to show for what you’ve been paying for. When you purchase a car, you get to keep the car when it’s paid for.
Steer Clear of Laundered Lemons
• In Michigan, the Consumer Protection Act safeguards consumers by requiring merchants to disclose any defects or problems with the merchandise to potential buyers. Make sure to check the mileage. If it’s low, question whether the owner got rid of the car because of problems.
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The Ishpeming Community Federal Credit Union was established in 1949 with 14 members. Since then we have grown to over 13,200 members. The crucial difference between your credit union and other financial institutions is member ownership. Our credit union is jointly owned by all members and your loyalty and support keeps us strong and prosperous. We are a full service Credit Union that offers very low rates on auto loans and others. You can apply on-line or come into any of our branches. We have 2 locations in Ishpeming, inside the Marquette Wal-Mart, and Republic. Anyone living in either Marquette, Alger, Baraga, Iron, or Dickinson counties can become a member. To find more information on our loan applications and opening a new account, please visit our website www.ishpemingcu.org/applications for further details.
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