Smart-Alec's© Buying a Car Advice

Next to buying a house buying a car is one of the most important and stress filled moments of your life. But it needn't be so if you know how to buy a car. So let us begin.

Step 1 : Credit Check

One of the first things people find out when they buy a car is the condition of their credit. This is were the rubber meets the road (sorry). It doesn't matter how much you like a car, unless you have the money in the bank or stuffed in a mattress, someone is going to have to lend it to you.

There are two problems that occur with credit. The "no prior credit" problem and the "bad credit" problem. Believe it or not in many cases there is no difference between the two. One can be as bad as the other.

No Credit

If you have already gone through the "How can I get credit if no one will give me credit" experience you know what I mean. I remember the first time I tried to get credit. Young, newly married and yet gainfully employed, I couldn't find a single furniture store to get a lousy bed to sleep in. Oh, they had plenty of furniture, but I had no prior credit. It was really frustrating and when I did find one particular store which had its own "in house" credit program, I was finally approved although I paid through the nose on interest for what amounted to be really cheap furniture.

You too can expect this if you are new to the credit world. You are going to find it hard to get credit, and if you do , the amount of interest might shock you. Now before you get discouraged, take courage. This is NOT the rule. When I got that lousy bed on high credit it was the early 80's and the credit world was much different than it is now. Lenders are actually a little more eager to lend to a new borrower at a more than reasonable rate. But be forewarned, the wolfs are out there and will prey on you if you let them. Don't settle for a high credit rate as a rule, look for the exception.

Bad Credit

If your credit is established but a mess, you have another problem. Here you will almost always find the rejections frequent unless you accept a higher rate of interest. But this isn't always the case.

About two years ago my wife and I went to buy a new car. During the credit check the salesman brought up the point that we had a few (actually 2) late payments on a credit card. Because of that, we were going to get the loan, but at 16% interest! My wife blew a fuse and I nearly fainted.

However, it's a good thing that I had learned a thing or two about credit. That high of a interest rate wasn't warranted in my case (and unless you have a bankruptcy that high of a loan is never warranted). Here's an inside tip. The credit check they do at the dealer is a pre-check for qualification of credit, NOT the final credit check. The finance company sets the final deal and can give you a better rate UNLESS you agree and sign the contract prior. How do you get this better rate, Here's what I did.

I told that salesman that the interest rate was unacceptable and that 8% was more than fair. I told him that unless he got that rate on the deal by noon the next day, he would not be selling a car to me. He moaned and groaned about that being impossible, but low and behold by noon the next day I had a call at the office. It was the salesman, and get this, the offer wasn't 8%, it was 7.5%! They really wanted us to buy that car. I'll held my ground and in spite of a less than glowing credit report I got a car at a more than reasonable rate.

What they didn't know that I knew that is there was a thing called the "Prime Lending Rate". You will find it in the financial section of any newspaper, and it is posted daily. The day that you go and look for a car look it up and take the figure with you. I did this and I knew that the prime rate at that time was 8%.

Granted if you have serious credit problems you might not get that rate. It might be a little higher, as the lending institution is taking a "higher risk", but don't accept a higher rate without a fight. There are a lot of car dealers, and they have to move those cars, so act in charge of the deal and you will find the best deal possible.

Now the long and short of this is to keep your credit in as good as shape as possible. But I know that this is easier said than done. One of the greatest crimes in occurring in this country at this time is the "hooking" of people on credit. I know that everyone is responsible for paying their debt, but if you were to see all the maneuvering behind the scenes to get you to into the 'grip' of credit you would find it abhorrent. The result is that many young people get hooked while still in college causing them to graduate with gigantic credit balances by graduation.

Step Two

Used or New?

The next question to look at is whether or not you want a new or used car. This is entirely dependent on you and your needs. In many ways a used car may be the way to go. For instance the purchase price will be incredibly lower, and therefore more in line with your budget. On the other hand buying a used car can be a nightmare if you go into the deal not knowing how to do it.

Buying a Used Car.

If you are going to buy a used car first determine the make and model and year you are interested in. Then pour over the many different bargain car trader magazines that are out there. If you want to save some time you can visit www.kbb.com (Kelly's Blue Book) online. There you will find the retail price of the vehicle you are looking for. It's an indispensable tool. You can search for the car you looking for by the year, make and model as well as any options you desire to have on your vehicle.

Then equipped with the suggested retail price, you are ready to visit used car lots. You will find a lot of them all over the place so take your time and shop around. Just a piece of wisdom, stay with the larger dealership types, its just my experience. They are usually more organized you stand a better chance not getting ripped off - although you still need to be careful (let the buyer beware).

Its also a good idea to let your mechanic or a good one you know take a look at the vehicle as well. Don't take nothing for granted, know what you are buying. Most reputable used car dealers (yes there are some), will offer at least a limited warranty. In fact Alec recommends that you don't buy from anyone who doesn't offer one.

Also good to know is that most states offer a "Lemon Law" of sorts to protect you against a being overtly ripped off. To find out if your state offers one log on to www.carlemon.com there you will find most of the information you will need to protect yourself.

Buying a New Car

Buying a new car has some of the same problems as those of a used car. You still want the best value for your buck you don't want to get ripped. Now with a new car there is a manufacturers suggested retail price (MSRP) which can guide you. But even so you can still pay too much. This is where the net can help. You can log onto any of the major car makers on the net and shop your price by selecting the make, model, options you desire and then the site will tell you the suggested price. This isn't the highest or lowest price, but it will give you a starting point to bargain from.

Which brings me to a point. Just because there is a MSRP that doesn't mean you can't still bargain for a better deal. Once you have the the suggested price you can still haggle a better deal from the dealer. Remember the first thing, YOU are the buyer. The seller DOES want to sell you a car, YOU are therefore in the position of power. If you suggest a fair price for the car you want, then stick to your guns. If the salesman doesn't want to sell the car to you at your price then tell them you are going elsewhere. Watch what they do then. Believe me, when they know you "know" what you are doing, then they will do back flips to get the deal done.

Alec hopes this helps, if you need more info drop Alec a line and he will get you the info you need.

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Copyright 2000, Hubbynet. Material presented here is for information purposes only. Real estate laws change state to state. As with any financial decision contact your attorney or a financial adviser. Hubbynet is not responsible for misprints although we have done all things possible to make sure the information is accurate and as current as possible.