6 Things to Do Before You Buy Your Next Car

1. Figure Out What You Need

It’s not always about what you want, but what you need. If it’s your first car, you may only need something that will get you from point A to point B and around town – and won’t need to spend a huge chunk of change.

2. Acknowledge What’s Practical

This is about tempering expectations. Before you buy, be realistic about your situation. Is your family growing? You may want to think about a larger vehicle like an SUV or mini van.

3. Check Into Your Credit

Do you know where you stand with your financial reputation? You’ll get better loan terms and be in a better position to negotiate if you have good credit. Look at your credit report to see if there are errors that could drag you down. Also, have a look at your consumer credit scores from free sites like Credit Karma and Credit Sesame. While they aren’t “official,” they can give you a good idea of where you stand.

4. Know Your Budget

You can use car loan calculators to figure out monthly payments versus total loan amounts ahead of time. Know your budget, and be prepared to stand firm. Once you get to the dealer, there’s a good chance they will try to nudge you a bit by focusing on a monthly payment and convincing you to get a 60-month or 72-month loan. Figure out a total price you want to pay for the car, and stick to that.

5. Research the Options

Do your homework.  Look into cost and vehicle reliability. Figure out what works best for you in terms of safety, fuel economy, and so on. Consider Certified Pre-Owned or a lease return if you’d like a newer “used” car. These are lower cost, but still come with warranties and other perks.

6. Look for Incentives and Sales

Look for deals like year-end clearance events and manufacturer incentives. Check to see what’s available before you get out there, then use that information to negotiate the best terms.

For more advice on buying a car – check out our guidebook: Buying a car in 5 easy steps and video. If you live, work, worship, volunteer, or attend school in Monmouth or Ocean Counties in New Jersey – we can help you finance your next vehicle.* Learn more and get started here!

*APR = Annual Percentage Rate. Not all applicants will qualify, subject to credit approval. Additional terms & conditions may apply. Actual rate may vary based on credit worthiness and term. A First Financial membership is required to obtain a First Financial auto loan and is available to anyone who lives, works, worships, volunteers or attends school in Monmouth or Ocean Counties. See credit union for details. A $5 deposit in a base savings account is required for credit union membership prior to opening any other account/loan. Federally insured by NCUA.

Article Source: Miranda Marquit for Moneyning.com 

8 Things to Know Before Leasing a Car

Should I lease? What is leasing anyway? Here’s what you need to know.

1. Leasing Is Paying For What You Use

Let’s imagine that a particular car costs $30,000 new and that it has an estimated value of $21,000 after three years of use. The amount of depreciation incurred is $9,000. Divide this amount by the number of months in the lease (in this case, 36 months) and you get your monthly lease payment: $250.

Now, there are also finance charges and taxes to include, but in essence, leasing is paying for the depreciation that occurs over time from your use of the vehicle. At the end of the lease, simply return the car or buy it outright by paying the remaining value of the car (in this example, $21,000).

2. Some Cars Lease Better Than Others

Cars of the same price and type can cost vastly different amounts of money to lease.

These variations mostly boil down to the details of each manufacturer’s lease program. Every month, automakers release new lease programs that establish the following:

  • Residual value: The car’s estimated value at the end of the lease.
  • Money factor: The interest rate expressed in a different way.
  • Cash incentives: If available, these lower the final selling price of the car.

3. Leases Can Be Negotiated

Advertised “lease specials” create the impression that lease prices are set by the manufacturer—as if they were promotional menu items from McDonald’s.

In truth, individual dealers determine the selling price of a car, who then apply the manufacturer’s lease program to arrive at the actual cost. A manufacturer’s lease special simply assumes a particular selling price that they expect dealers to honor. The selling price can most certainly be negotiated.

4. Watch Out For Marked Up Rates and Fees

Aside from setting the sales price, dealers can also mark up the money factor. This may result in hundreds or thousands of extra dollars paid over the course of a lease. Leasehackr.com posts the official money factor for hundreds of vehicles, so you can check if you’re being charged too much.

With a lease, you’ll also pay an acquisition fee and often a disposition fee. These are legit fees, but some dealers mark them up as well. In exchange for paying these fees, you benefit from certain inherent advantages of leasing—explained below.

5. Someone Else Takes On The Risk Of Depreciation

When an automaker sets the residual value of a particular model, they often overestimate the car’s actual lease-end value.

For example, Leasehackr leased a 2013 Mercedes-Benz E350 BlueTEC, which had a residual value of $44,036 after two years of use. In actuality, the car was worth about $34,000 on the open market when it came time to return the car.

By leasing, Leasehackr avoided $10,000 in depreciation that we would have otherwise incurred if purchased instead. This amounts to over $400 per month saved!

Some automakers are spot-on with their estimates. Others intentionally inflate their residual values to make their leases cheaper. And sometimes they just get it wrong. Regardless, when you lease, someone else takes on the risk and uncertainty of depreciation.

6. You Can Cash Out On Any Lease Equity You Have

Sometimes, the opposite scenario happens: your car is worth more at lease-end than its official residual value. This might occur if your car becomes highly desirable in the used car market.

With many automakers, you can actually arrange a third-party, such as CarMax or Beepi, to buy out the car. If CarMax offers you, say, $23,000 for the car, but the residual value is $21,000, then they will write you a check for the difference ($2,000).

7. You Only Pay Sales Tax On The Cost Of The Lease

When you purchase a car, you pay an amount of sales tax based on the selling price of the car. This can amount to thousands of dollars that you never get back, even if you end up selling the car a few years later.

In most states you pay sales tax only on the cost of the lease. These tax savings more than make up for the acquisition fee required on a lease.

8. Never Put A Down Payment On A Lease

If your car is ever totaled or stolen, you can always walk away from a lease without penalty (thanks to GAP insurance). However, you won’t always get your down payment back— so don’t pay one to begin with.

A down payment obscures the cost of the lease and makes it more difficult to compare deals. Any car can be leased for $199 per month if there’s a sufficient down payment.

Article Source: https://leasehackr.com/blog/2015/9/19/8-things-you-should-know-before-leasing-a-new-car