Buying a Vehicle.Everything you need to know....

Being an expert negotiator while shopping for a new car may help you get a ‘good’ deal, but understanding all the complexities of the auto financing process and your loan options will give you the edge you need to succeed during your search for your next vehicle.

We all know that buying a car is not viewed as an investment, but for some of us it can be the second or third largest purchase we make outside of our education and our homes. You will need to do more than just negotiate a price at the dealership to start maximizing your savings. So take control over your auto financing process and start shopping smarter with help from your local CHROME store.

Welcome!

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EVERYTHING YOU NEED TO KNOW BEFORE BUYING A CAR

Table of Contents

Intro: Buying a Car is One of the Biggest Purchases People Make

1. Determine How Much You Can Comfortably Spend2. Review Your Credit Report3. Buying or Leasing4. Boosting Your Buyer Confidence through Pre-Approval

1. Questions to Ask Yourself Before Choosing Your Next Car2. Take Your Search Online3. Wants Versus Needs4. Know What Special Offers and Rebates are Out There

1. Tips for Your Test Drive2. Negotiating the Deal Smart Shopper Negotiating Tips3. Closing the Deal

Welcome!2

Step 1: Planning & Prep4-8

Step 2: Research9-12

Step 3: Heading To The Dealership13-16

Table of Contents

Conclusion

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EVERYTHING YOU NEED TO KNOW BEFORE BUYING A CAR

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EVERYTHING YOU NEED TO KNOW BEFORE BUYING A CAR

Knowledge is a valuable asset as you shop for your next automobile. That is why your auto purchasing process begins well before the test drive. Carefully planning out a budget is the first step you should take, giving you a baseline of how much you can comfortably spend on your next vehicle.

Step 1: Planning & Prep

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EVERYTHING YOU NEED TO KNOW BEFORE BUYING A CAR

Maximum AmountReserved for Auto Payment

Take your monthly income after taxes, living expenses and other monthly costs you have to determine your net income.

Financial experts suggest spending roughly 10 to 15 percent of this sum on your monthly car payments, but keep in mind that the total costs of keeping your car on the road each month may add up to 20 percent of your monthly income.

Knowing how much you can afford to spend will keep you from biting off more than you can chew, while helping you pay off your financing as quickly as possible.

Determine How Much You Can Comfortably Spend1

Your Auto Loan Budget Calculator

Monthly Income & Savings:

Monthly Income After Taxes $

Monthly Savings -$

Monthly Expenses:

Mortgage/Rent Payment -$

Utilities -$

Food -$ Transportation -$

Insurance (Home, Auto, Life) -$

Clothing -$

Entertainment -$

Education -$

Credit Card Payments -$

Other Creditor Payments -$

Other Vehicle Payments -$

Miscellaneous -$

Remaining Balancefor Your Auto Loan: $

Financial Experts Suggest:

The 20% Rule

Net Monthly Income

x 20% (.20)

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EVERYTHING YOU NEED TO KNOW BEFORE BUYING A CAR

Your Payment History

Your Amounts Owed

Your Length of Credit History

Your New Credit Accounts

Your Types of Credit in Use

35%

30%

15%

10%

10%

Understanding your credit situation, history, and score will also prove extremely useful throughout the financing and purchasing processes. Lenders and auto dealers will use your credit report as a testament to your likelihood to repay your loan in a timely matter.

Thanks to the Fair and Accurate Credit Transactions Act, everyone is entitled to one free credit report per year. Take some time to review your credit history with a free credit report from www.annualcreditreport.com, and clean up any blemishes or mistakes that could keep you from getting the best interest rate and loan terms possible.

Review Your Credit Report2

How Is Your FICO Score Calculated?

Your FICO score is based on five factors:

Tips To Raise Your Credit Score?

1. Always make more than the minimum payment on your cards. Minimum payments generally imply that you are struggling to even make your payments and you are therefore considered a higher risk.

2. Never carry balances over 50% of the available limit on your credit cards. If necessary,break up high balances on to several different cards to avoid that 50% number.

3. Establish longevity. Don’t open and close accounts too frequently. Be selective of which accounts you want to open and maintain them for long periods of time.

4. Contact your creditors or a credit counselor. This won’t rebuild your credit score immediately, but if you can begin to manage your credit and pay on time, your score should increase over time. Seeking assistance from a credit counseling service will not hurt your FICO Score.

FICOSCORE

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EVERYTHING YOU NEED TO KNOW BEFORE BUYING A CAR

Review Your Credit Report

In recent years, leasing a vehicle has become a more popular option for people all across the country. While leasing definitely carries its share of advantages, not all of these deals are created equally.

Familiarize yourself with any leasing jargon, and take some time to meet with a CHROME Rep to explore all of your financing options to find a deal best fits with your finances.

Acquisition Fee: A charge for processing a lease. Capitalization Cost: The total price of the vehicle, which the lessor uses to calculate the amount that the customer will be paying.

Closed-End Lease: A lease that fixes the vehicle’s residual value initially, stating it in the contract.

Depreciation: The amount by which a vehicle loses its value over a specified period of time, which is the difference between its original price and its residual value later.

Disposition Fee: An amount to be paid at the end of the lease term, to cover costs of preparing the returned vehicle for sale.

Excess Mileage Charge: A per-mile amount charged if you drive the vehicle more than the stated maximum, which is typically 12,000 to 15,000 miles per year.

Residual Value: A prediction of what a vehicle is likely to be worth as it ages, usually expressed as a percentage of its original price.

Security Deposit: A deposit, usually refundable, required before the lease contract takes effect.

Buying or Leasing3

30%

2004 2014

25%

20%

15%

10%

5%

Auto Leasing on the Rise

Percentage of car salesthat were leased

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EVERYTHING YOU NEED TO KNOW BEFORE BUYING A CAR

No matter what type of vehicle you are shopping for, having a pre-approved auto loan before starting your search can help you make a deal you can be proud of.

Take some time to work through your finances alongside a trusted lender, exploring all of your options to find a deal that best fits your budget while giving you confidence before you start searching for your next car.

Boosting Your Buyer Confidence through Pre-Approval4

Why Get Pre-Approved for a Car Loan?

Pre-approval might seem like an extra step in the car buying process. But there are good reasons to take a little extra time to get a pre-approved car loan:

It makes it easier to stick to your budget. A pre-approval notice will let you know exactly how much you can spend. Keep in mind that you will need to account for taxes and other fees.

It allows you to compare interest rates. There’s no guarantee that you’ll get the best rate by getting pre-approved, but at least you’ll have a baseline to compare with the rates that dealerships offer you.

It makes negotiating simpler. Once you’re pre-approved, you can shop for the car as if you had a check in your pocket. This helps you keep focused on the actual selling price of the car, rather than keeping track of the interest rate, down payment, loan term and trade-in.

It saves time and hassle in the finance and insurance office. Car buyers dread the finance and insurance office because of the time it takes and the sales pitches the F&I manager makes. Some of the delay is unavoidable. There is a lot of paperwork involved in the purchase of a vehicle. But if you have been pre-approved, the time — theoretically — should be cut in half.

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EVERYTHING YOU NEED TO KNOW BEFORE BUYING A CAR

Before heading into the car buying process, many of us have an idea of the type of car we are looking for. With a picture of your perfect car in mind and some basic homework up front, you will have all the tools you need to help you negotiate the best deal on your next vehicle. After your budget is in place, it’s time to narrow down your choices. Take some time to envision your ideal car, making a list of the makes and models that closely align with both your budget and your lifestyle.

Boosting Your Buyer Confidence through Pre-ApprovalStep 2: Research

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EVERYTHING YOU NEED TO KNOW BEFORE BUYING A CAR

Questions to Ask Yourself Before Choosing Your Next Car

Take Your Search Online

1

2

Questions to Ask

1. Who will be driving?

2. How will the car be used?

3. How many passengers?

4. What is your driving style? City stop and go’s or long country roads?

5. Daily Commuter or Weekend Family Car?

6. Is MPG a concern?

7. How much cargo capacity do you need?

AutoTrader, NADA, Kelley Blue Book, Edmunds are just some of the many great resources to turn to when researching and comparing cars to one another.

Even if you already have a specific car in mind, looking at some of the comparable vehicles in the same class can be a valuable negotiating tool and help you avoid overlooking an even better choice for your needs.

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EVERYTHING YOU NEED TO KNOW BEFORE BUYING A CAR

Questions to Ask Yourself Before Choosing Your Next Car

Take Your Search Online

Odds are that you are not going be able to get everything you want from your new car, but learning how and what accessories and add-ons to compromise can help you stay atop of the purchasing process allowing your needs to outweigh your wants in terms of driving your decision-making. Using the checklist below is a good place to get started separating your must-haves from the features you may be able to live without.

Wants Versus Needs3

Features Need Want

Fuel Efficiency / Hybrid / EcoFriendly

All Wheel Drive / 4WD

Turn-By-Turn Navigation

Road-side Assistance

Advanced Cargo Capacity

Towing Capabilities

Bluetooth Connectivity

Anti-Lock Brakes

Entertainment Packages

Lumbar Support

Cooled/Heated Seating

High Crash Test Ratings

In-Car Wi-Fi

Capacitive Touch Controls

Steering Wheel Controls

Blind Spot Detection Camera

Performance Tires

Power Seating

Keyless Entry Systems

Cruise Control

Child Proof Locks

Child-Sensing Airbags

Security System

Stow Away Seating

Easy Accessibility Options

Sun/Moon Roof

Rear-view Backup Camera

EVERYTHING YOU NEED TO KNOW BEFORE BUYING A CAR

79%

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In 2014, 79 percent of all car purchases began online, forcing dealerships to adapt their sales tactics as multiple trips to area dealerships are replaced with online searches.

Many dealerships offer exclusive special offers through their websites. On top of that, many auto manufacturers offer cash rebates or discounts outside the dealership offers, allowing you to add another tool to your auto financing process. If you are trading-in an older vehicle, make sure to take the time to appraise your car’s trade-in value before heading to the dealership to make sure you get your money’s worth.

Know What Special Offers and Rebates are Out There4

Percentage of car purchases that began online

How Are Trade-In Values Determined?

How to Maximize Your Trade-In Value?

1. Make Necessary Repairs From major engine problems to minor maintenance issues or cosmetic, paint or upholstery defects.

2. Keep It Clean Appearances count, and if the first thing a buyer or dealer sees is a filthy car, he won’t even bother looking under the hood to see what’s inside.

3. Keep Detailed Records Websites like Carfax.com will have your vehicle’s history on file based on its VIN number. Take it to the next step by saving your maintenance and repair receipts.

4. Get It Appraised Kelley Blue Book or NADA guides can only estimate what your car is worth. Contact a professional appraiser for a full inspection and true valuation of your vehicle.

5. Don’t Settle One of the best ways to increase the trade-in value of your vehicle is to shop your car around to several places and people for the best offer you can get.

Make & Model Type of Transmission

Color, Technology Mileage& Modifications

EVERYTHING YOU NEED TO KNOW BEFORE BUYING A CAR

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Know What Special Offers and Rebates are Out There

Now that you’ve got all of your materials collected, it’s time to put those tools to good use and plan your visit to a few local auto dealerships. When planning your visit, take your time and walk-in with confidence knowing that the best deal is not far from your reach. Remember to keep your cards close, and that you have everything you need to make the best purchasing decision possible.

Step 3: Heading to the Dealership

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The initial test drive will give you invaluable insight into any new vehicle – from the way the car handles and drives to passenger comfort and cargo space. Before getting behind the wheel take some time to familiarize yourself with the vehicle. Make note of all the little things that may be a cause of concern.

No matter if you’re buying a new or used car, be sure to test drive on roads you are familiar with that are similar to how you would use the car every day. Even if you have your heart set on a certain make or model, test drive some comparable cars back-to-back to ensure you are making the right decision for your driving style.

Tips for Your Test Drive1

What to Check for During Your Test Drive

1. Before you start your drive, evaluate these specific points:

Is it comfortable? Is it easy to get in and out of the car without stooping or banging your head? Is there enough head-, hip- and legroom? Is the driving position comfortable? Do you sit too low or high in the car? Can you tilt or telescope the steering wheel for a better fit? Is it easily adjustable? Is there a lumbar support adjustment? Are the gauges and controls easy to read and use? How is the visibility? Does your body type match the pedal positions? If not, are the pedals adjustable?

2. Once you are driving, evaluate these specific points:

Acceleration and passing acceleration: Does the car downshift quickly and smoothly? Engine and road noise: How does the car sound when you strongly accelerate? Is there a lot of noise from the tires? Hill-climbing power: Does the vehicle downshift quickly? Braking: How is the pedal feel? Do the brakes “grab” suddenly? Steering and handling: Is the vehicle responsive? Can you feel the road through the steering wheel? Suspension: Is it stiff or soft? Does the vehicle ride comfortably on a rough road? Usability: Can you reach all the controls easily?

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Tips for Your Test Drive

One of your most important assets on your side when negotiating your purchasing price is the power to walk away. Using your budget and your pre-approved loan, set a spending ceiling for your purchase and don’t budge until that price is either met or beat. Almost everything about your purchase at the dealership is negotiable, as manufacturers offer dealer incentives if certain sales levels are reached, reducing a dealership’s true cost or purchasing a vehicle from the manufacturer and leaving a lot of room for profit with extra dealership add-ons and fees. Knowing the invoice price (or dealer cost) on whatever car you purchase can help you determine just how far an auto dealer is willing to go to lower your cost.

Negotiating the Deal2

Smart Shopper Negotiating Tips:

1. Have your own financing, but keep this information close to you until your price point is met. Having options on your side during the financing process can help you drive away with the best deal, whether through your credit union auto loan or dealership financing.

2. Set emotions and excitement aside and shop smart, using the tools and knowledge you’ve collected throughout the process to your advantage.

3. Let the salesperson make the first offer and negotiate to the right price point from there, using your research and knowledge as tools along the way.

4. Always counter with your lowest possible offer based on your own research of the invoice price.

5. Have quotes & offers from other area dealerships ready to add some leverage to your deal. Save time of going to multiple dealerships by visiting dealership websites and have print outs on hand.

6. Avoid negotiating in terms of monthly payments, focusing all of your efforts on the total purchase price

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Once the final purchasing price is set, it’s time to tackle the fees associated with purchasing a new car. Title & licensing fees, sales tax, and a destination fee are usually set in stone by your area DMV or the auto manufacturer. Other fees, however, can often be negotiated or eliminated altogether. Before closing the deal take some time to review these fees, keeping a close lookout for any dealer fees such as dealership preparation or marketing fees that are extra dealership add-ons to help them recoup some profit.

Closing the Deal3

Fees Associated with Buying A New Car

1. Unavoidable Fees Documentation fee or conveyance charge A charge of $150-$300 for processing documents that establish your title and registration is reasonable. Guaranteed Auto Protection (GAP) insurance Covers the difference between your payments over the life of the lease and the residual value of the vehicle in case it is stolen or totaled in an accident. Title and registration Let the dealership handle the formalities of establishing you as the new owner of the vehicle and obtaining temporary tags. Typically between 1 percent and 3 percent of the vehicle’s cost—plus a documentation fee. Sales tax Some states calculate tax on the full price of the car, but most figure tax on the difference between the price of the new car and the trade-in, if appropriate. Destination charge A standard charge that covers shipment of the vehicle.

2. Possible Fees Advertising charge Increasingly common, regional dealer cooperatives assess fees to support promotional efforts. If this charge shows up only at the closing, contest it. Extended warranty Extra coverage for major repairs that may be needed after the manufacturer’s warranty expires. Additional dealer markup Sometimes added to hot-selling models for additional profit.

3. Fees to Avoid Dealer preparation fee Most manufacturers pay dealers to remove the coatings and coverings that protect the vehicle during shipment and to clean up the car for you. There is no justification for you to pay the dealer again for this service. Credit life insurance Your survivors will be able to pay off the vehicle if you die. Disability insurance Covers your car payments if you are unable to work because accident. Pinstriping Rustproofing/undercoating VIN etching Fabric protection Paint sealant Security/anti-theft system

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Closing the Deal

Now that you have all the tools it takes to start shopping smarter for your next vehicle, it’s time to schedule an appointment with your local CHROME store. At CHROME, our team can help guide you each step of the way through the process, providing you with everything you need to get you and your new car on the road in no time at all. Book your appointment today by visiting CHROME’s Schedule Page.

Conclusion

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Phone: (724) 228-2030Email: info@chromefcu.org

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