7 Keys to Car-Buying Success

For most people, buying a car is a big financial decision with many moving parts. But with the right financial prep, you can set yourself up for success. From down payments to test drives, we’ll help you get a handle on each important step so you can cruise off the lot feeling confident.

1. Price it out

Setting a realistic budget for your car purchase is an absolute must, but the key is to set it before you start your search. When creating a budget, don’t forget to include other important up-front and ongoing car-related costs: taxes, title transfer fees, vehicle registration, insurance, maintenance, gas, etc. As a general rule, your loan payment shouldn’t be more than 10% of your total take home pay per month. You may also need vehicle repair coverage for minor and major repairs, as well as GAP protection, which  covers the difference between your car’s actual cash value covered by insurance and the amount you still owe on your loan. Once you have a monthly payment amount that feels comfortable, plug your numbers into an auto loan calculator to get a better idea of how much car you can afford.

2. Get preapproved

If you don’t have enough cash to cover the entire cost of a vehicle, you’ll need to get an auto loan. It’s always a good idea to get preapproved before you start car shopping. Getting preapproved will go more smoothly if you take steps toward a healthier credit score, know what kind of car you want, and how much you’re willing to pay. You also should be ready to provide your Social Security number, income and information about outstanding debts. Once you’re preapproved, make sure you mention that at the dealer. It could help you negotiate a better deal!

3. Make a down payment

Making a down payment on your auto loan isn’t always required, but it can save you significant money in the long run. When estimating how much you can put down, a good number to shoot for is about 10% the total value of the vehicle. And the more you can afford, the better. Generally, for every $500 you put down, your monthly payment decreases around $10 per month.

4. Shop smart

Now that you have all of the numbers you need, it’s time to start your search. To make sure you set your sights on the right car, do some research in advance. With UW Credit Union, you can browse local inventory by visiting our Auto Research Center.

When it comes to new vs. used, that decision is entirely up to you. New cars often boast the best tech, gas mileage and more, but they can depreciate in value once you drive out of the lot. Used cars often hold their value longer, which can make them a better investment overall.

5. Know your worth

Car values are constantly shifting, so once you’ve chosen a make and model that fits your budget, do your research so you know exactly how much it’s worth. Compare models that are a year younger and older, compare prices at different dealerships, and get an idea of how much mileage you should expect based on the year of the car. If you’re buying used, consider asking your mechanic to inspect the vehicle for issues. If a seller won’t agree to that, there’s probably a good reason, so you might want to look elsewhere.

6. Go for a spin

Seeing a car online and on the lot is one thing, but getting behind the wheel is the true test of whether or not it’s a good fit. Make a list of the dealerships you’d like to visit and cars you’d like to drive and try to test drive all of them. Have the salesperson go over all of the different features of each, and don’t be afraid to ask questions. When the test drive is over, have them quote you prices of every car you drive. That way, you’ll see if there are any major price differences between dealerships. Plus, you can be up-front about negotiations when the time comes.

7. Seal the deal

Now that you are empowered with all of this knowledge and information, it’s time to seal the deal! Whether you’re buying used or new, you should always be prepared to negotiate the price—remember, you’re in the driver’s seat. If you can, have the salesperson make the first offer. Their offer may be lower than the sticker price, and you can then use that as your new base price to negotiate from. Once you agree on a number, have them walk you through each detail on the contract, and go slow. This is a big decision, so make sure you understand every single line before you sign. That way, when you finally do, you can feel confident that you owned every step of the car-buying process.

Have more car-buying questions? 

Want to learn more about auto loans? Our loan officers would love to chat about your personal car-buying journey! Get in touch and they’ll help get you on the right track.