There's a lot more to buying a car then going to a dealership, taking a test drive, and signing some papers. Even if you're looking to buy a used car from an individual seller, there are a lot of things to think about. You need to figure out which type of car is best for you based on your budget and your needs. You also may want to learn a little bit about financing, car insurance, and safety features. Keep reading to learn about five important things you should know before you buy a car:
Financing A Vehicle
Most people don't have enough cash to purchase a car outright, so they need to apply for a loan. The two most common types of loans are dealership financing and direct lending. Dealership financing refers to a loan you receive directly from the dealership. Direct lending refers to a car loan from a bank or other similar type of lender. In some cases, you'll get a better deal if you get your car loan straight from the dealer you're buying the car from. This is one area where you shouldn't make a hasty decision because your financial reputation is at stake. Learn about the different types of car loans so you can determine the right one for you. The Federal Trade Commission has a great explanation of the different types of loans to help you decide.
Leasing A New Vehicle
When you lease a vehicle, you are essentially paying for a long-term rental. At the end of the lease period, you don't own the vehicle. This is unlike buying a car with a loan, because when you're done paying off the loan you own the vehicle. The benefit of leasing a vehicle is that the monthly payments are usually less than car loan payments. Also, when the lease is up you have several options, including the ability to start a new lease contract with a brand new vehicle, or purchase the vehicle. What often catches people off guard when they lease an automobile is that there is usually a maximum allowable mileage amount. If you drive the leased vehicle over that mileage you'll have to pay a fee equal to around 10 to 25 cents per mile. There are also contract considerations for wear and tear on the vehicle, some of which you may be financially responsible for. The bottom line is that you need to carefully read the lease contract before you sign it.
The Title
The title to the vehicle is the most important piece of paper you'll receive because it proves ownership. If you have a car loan, the bank will hold the title until you pay the loan off. If you lease a vehicle, the dealership will retain the title. If you're purchasing a used car from an individual seller, make sure you also get the title with the car. Verify that the title shows the individual you're purchasing the car from as the owner. If not, then that car could be stolen or be sold without the owner approving of the sale. Verify the title with your local Department of Motor Vehicles to ensure it's authenticity prior to buying the car, or within the first 30 days of purchasing the vehicle. This way, if anything look suspicious you can return the car and get your money back.
Safety Features
The National Safety Council has reported that there are about 12 million vehicular accidents a year in the United States. Because of this, car manufacturers are constantly improving safety features in automobiles, and testing them extensively before making them available to the public. Before you buy a car, it's important that you are aware of its safety features. You can contact The National Highway Traffic Safety Administration to find out if the vehicle you want to purchase has been recalled for safety issues.
Auto Insurance
Most drivers in the United States are required to carry auto insurance, though insurance requirements vary by state. Before you are able to drive off in your new car you'll have to contact your independent insurance agency and obtain insurance. Your insurance agency will then mail a binder, which is a copy of your insurance policy, to the lender as proof of insurance.
These are five very important things you should know about prior to buying a car. Since purchasing a car is a big responsibility, it's up to you to make sure you're doing it legally and safely. You could find yourself in trouble with the law if you don't have the title to the car you bought, or if you don't have the right amount of insurance coverage. If you have any questions about purchasing a new car, an insurance agency such as Crowel Agency, Inc. can answer your questions and help you find the best deal for your lifestyle.
Share20 June 2014
I still remember the first time I had to chose an insurance policy; I was 17 years old and had just saved up enough money to afford my very first car. I was so excited to begin driving, but overwhelmed with all of the different auto insurance options. My father helped me chose a full-coverage policy that would cover the cost of my car if it were to become damaged in an accident. When I inevitably caused a small fender-bender as a new driver, my insurance company paid for my car repairs, so it sure was the best policy for me! Now that I am older and have learned a lot about home insurance and other types of insurance, I thought I would make a blog to help others who need insurance advice, like what my dad gave me. I hope I can help you make wise insurance decisions!