Car Buying 101: Part 1

Filed in car buying, Loans by on May 24, 2013 3 Comments

car-buying

If you’re looking to buy a car with financing (and who isn’t?), then consider this post Car Buying 101.

I recently dipped my hoof (toe for you) into the used car market and came away a happy pig customer. In this two post series, I graciously share with you my personal experience, as well as my keen intellect and impressive car shopping acumen. It is near certain that no better words on this subject have ever been penned.

I’ll take you through the entire process; from getting a loan, to finding a vehicle, to getting the tags (in the state of Maryland). This is incredibly insightful and useful info, so pay attention!

STEP 1: Financing

I had a pretty good idea of what car I wanted but my first move was to get financing, since I didn’t know exactly how much car I could afford (Ok, that was actually my second move. I did check out a few car sites first to see what was out there and get an idea of prices).

I applied for a loan with my credit union (Helpful Tip #1: Credit unions are notorious for having great car loan rates). The online application took 7 minutes (It will probably take you closer to 9). I requested the loan amount based on what I wanted my monthly payment to be – which I figured out using this handy-dandy loan payment calculator.

Cha-ching! Got my pre-approval (via email) within a couple hours. It included the total loan amount, the interest rate, and a bunch of boring loan mumbo-jumbo. It also had my FICO credit score (which is ALWAYS good to know – consider that Helpful Tip #2).

The email also included details on what to do when I find a car.  The credit union gives me a blank check – called an Auto Check – valid up to the pre-approved loan amount, for me to take to the dealer and fill in with the final price. Easy peasy.

STEP 2: Car

I found several promising cars on a few dealer websites but, know this: good used cars sell FAST! And (here comes Tip #3) on the Carfax vehicle history report “fleet vehicle” means rental car. Car rental companies will sell their cars after a year or two of use/abuse and these cars often end up on dealers’ lots – so beware.

Still with me? Good.

So, frustrated with the dealer route, I turned to Craigslist – and there I found the ride that would be mine. Now I’m dealing with a private seller instead of a used car salesman.

Buying from a private seller is not as easy as buying from a dealer, but most private sellers probably aren’t looking to make a profit when they sell their car, so what you give up in convenience you’ll likely gain in price/value.

I had done my research on the car’s value, given the year, mileage and options, so I was ready to negotiate. And since most people are not comfortable negotiating money, it was a quick discussion. Smart Green Pig – 1, Private Car Seller – 0.

Switching from a dealer purchase to private party purchase however required more effort, as well as shifting financing gears (that’s a good pun). What’s the diff, you ask? Among other things, the buyer has to do a lot of the leg and paperwork that a dealer usually does. I had to:

  • Get the car inspected and obtain an inspection certificate
  • Get a notarized bill of sale from the seller
  • Get a signed copy (front and back) of the title from the seller
  • Obtain proof that the seller didn’t owe anything on the car, such as a release of lien or payoff letter (That was a royal pain in the bacon!)

And make sure you’ve got the accurate mileage recorded on all these documents. It’s important.

I had to get all this stuff to my credit union before they’d issue a check for me to give the seller. All lenders will require this info because they don’t want to finance a vehicle that someone else can lay claim to. That would be stupid.

And what about my old jalopy? Yep. Sold it to Carmax. Suckers!

 

Read on –  Car Buying 101: Part 2

 

Flickr image courtesy of Andrew L. SPP

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About the Author ()

Melvin is the Smart Green Pig. "Smart" as in intelligent. Some would say "Super Intelligent" or perhaps "Genius". But also "Smart" as in surly and sarcastic, so watch your Ps and Qs! By the way, Melvin gets paid (quite handsomely) by SECU, so even though he's completely unbiased, some might think otherwise. Just sayin' (disclosin').

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  1. Car Buying 101 – part 2 | June 3, 2013
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