There are a lot of struggles when it comes to getting a reliable vehicle but hands down the most difficult to understand is the financial aspect. The confusion caused by financing can cause your head to spin and push you into buying a vehicle that is not right for you; or taking on a loan you just can’t handle, thus leading to further issues down the road. Financing a vehicle is an expensive ordeal, so you want to make sure you do everything correctly in order to save yourself some unnecessary financial hardship. In this article we hope to lay down all the basics of automotive financing and even throw in a few handy tips so that you feel more prepared the next time you walk into a dealer. From “what is buy here pay here?” to “what should I expect during the purchasing process”? Here are our buying tips to answer your most pressing financial questions!
The Buying Process
The vehicle buying process may seem complicated while you are in the chaos of it all, but honestly, it is very straightforward. You start by researching models based on your personal needs such as design, performance, or features your lifestyle requires. You then move on to searching for the best financing option for you. You will then shop around and see who is willing to offer the best deal and begin negotiations. After you are satisfied with the negotiation agreement at one of the sellers, you will double check everything before signing, and calculate the final cost of all items including the vehicle payments, insurance, fuel cost, license plate fees, and general maintenance. So all in all, you can be done in just six easy steps if you do everything carefully:
- Research models
- Find financing
- Shop around
- Double check everything
- Determine final cost
Ways to Buy
Clearly, if you are willing to spend the money, you can always feel free get a brand new car with all the latest features that keep you safe and comfortable. That new car smell is always an appealing draw, and you rest assured that it will last you plenty of years. A new car is certainly nice and always tempting, but it is not the only option out there, especially for drivers who need to save some cash. New cars won’t be ideal for those shopping on a budget.
Not all vehicles will be brand new and made for you; often times it is best to invest in a used vehicle to save on the up front investment. Buying used will save you a lot of cash in both the initial payment, monthly payments, and insurance. Additionally, there is a much slower rate of value depreciation on a used vehicle. There is also the fact that sometimes the car that is perfect for you may not be in production that year so a used car lot will give you a larger selection of vehicles from all years. Another bonus many do not consider with used cars is that any major faults have already been identified and should be shown as resolved as long as they have a valid vehicle history, such as through CARFAX. Some may be worried about investing in a lemon, but honestly, as long as you test drive it, check the history online, and get the seller to agree to have it professionally inspected, your risk of that is extremely low. Overall used cars are a very viable and affordable option.
Certified pre-owned (CPO) vehicles are the perfect mix of used and new. CPO vehicles are used cars that are newer and have been put through a series of test by the manufacturer or dealership in order to assure that it is still in peak condition in looks and performance. You will want to make sure you know which of these two certified the vehicle though because the testing for one can be very different from the testing of the other. Either way, this is a great way to go if you want something that is good as new but still offers a nice price cut. You also will have a lot less to worry about when it comes to making sure if this is a reliable used vehicle as many will come with some form of warranty.
Leasing is for those that desire nothing less than the best, but may not exactly have the money for it at the time. If you get easily bored of your vehicles, don’t drive a lot of miles, take great care of your vehicles, and find the process of figuring out what to do with a vehicle after you are done with it a pain, then leasing could be for you. Leasing an vehicle is basically the act of renting it for a limited period of time as agreed upon on the leasing contract. At the end of this contract the vehicle will be returned to the dealer. It is important to know that leasing is not for saving money in the long run, but for living the best you can at the moment.
Buy Here Pay Here
You may have stumbled across this saying or very similar ones on your journey to get a new automotive. Buy Here Pay Here (BHPH) is a financing system that allows you to gain easy financing, with hardly any credit necessary, right from the dealership you buy the vehicle from. Many automotive dealerships believe that a person shouldn’t suffer without a vehicle just because of their past mistakes, which is why BHPH was put into place. BHPH is a convenient solution to help those who have an unfortunate credit history, can’t afford a massive down payment, and want the buying process to be a one-stop shopping experience. No one has time for all the messy details, so BHPH skips right to the point and gets you that automotive as soon as possible. Here is what Buy Here Pay Here stands for:
- One-stop convenience
- No credit worries
- Low down payment
- No loan limits
- Try to keep your loan terms as short as possible by putting up as much as you can up front
- Even with the convenience of BHPH, you should still try to put down at least 20% of the payment
- Know your budget well and follow it no matter what tempting offers come your way
- All ownership costs will need to be factored in before signing anything
- Also look for and ask about public or hidden promotions and discounts
- If trading in, be sure to negotiate the trade-in value separately from the price of your new car
- Searching for the auto loan is just as essential as searching for the best car, do your research and know the facts inside and out before even stepping into a dealership
Financing an automotive properly is clearly no walk in the park, but in the end, if you do it right, it will have been worth all the effort. A personal vehicle is no light investment, and you must be sure you are ready to handle whatever financial burden you agree to take on as a part of your loan. No one wants to be a victim of automotive financial theft or confusion, and that is why it is best to learn everything you can step by step and take your time. Know what you can afford, know what is fair, and most of all never falter from what you know; this is all you will truly need to know about automotive financing.