By Jose Luis Aparicio Jr.
So, you’re a licensed driver in California and you make enough money to afford a monthly car payment. Congratulations! The open road waits.
Your first step is to research online to help you find cars that our within your budget and that satisfy your vehicle needs. Once you get to a dealer your salesman will ask you descriptive questions to help “land” on a vehicle. This simply means finding a car that fits your needs.
- Common Questions
- Are you looking for a new or used vehicle?
- Do you prefer light or dark colors?
- Do you want cloth or leather interior?
- What monthly payment are you looking for?
Ok so, you and your salesman just spent two hours looking for the car you wanted. It is now time to financing.
When you finance a car, you are borrowing money from a bank and entering a contract to repay it over time, usually based on monthly payments.
In order to receive your finance options you are going to need fill out a credit application. Your credit score, which you should check before even coming to the dealer, will be a factor in determining your finance options.
Websites CreditKarma and FreeAnnualCreditReport.com are reliable ways to get a look at your current credit score. A credit score ranges from 300-900 depending on what credit reporting agency the dealer you visit uses. In the United States the credit scoring system you will hear about the most is the FICO score.
Finance Terms You Need Know
- Annual Percentage Rate = A.P.R. (interest rate of the loan)
- Term = Length of the loan
Know that the sticker price never includes taxes and dealer fees. The sales tax varies by county, but the dealer fee should cost between $200-800.
A very common question car dealerships hear from first time buyers is do I need a down payment? The answer is probably, yes.
A down payment is the amount of money you give at the time of the purchase.
A trade in is another form of down payment that is available to consumers.
There is this misconception that dealers ask for a down payment so they can increase their profits. This is false, a down payment is used to decrease the amount you finance through a bank and all the money goes directly to the purchase of your vehicle. Banks also consider down payment a sign of commitment on your end. A good down payment is a first time car buyer’s best friend and also a tool used by people with bad credit.
Remember that your monthly payment does not include car insurance. The price of your insurance is based on your driving record, the type of car you drive, and how much coverage you want.
The state of California requires a determined monetary amount of coverage and that information can be found on the DMV website.
Don’t forget to bring proof of insurance!
The dealer will not let you drive the car home unless you have proof of insurance.
Leasing Vs. Financing
We already discussed buying (financing) a car, but there is another option called leasing.
When you lease a car you are essentially borrowing the car with a set of rules and regulations. When you lease a car you are only allowed to drive a certain amount of miles per year. You are allowed to choose your annual mileage limit which is anywhere between 10,000 and 19,500 miles a year. If you go over the limited mileage, you will be charged the preset fee per mile. It is also important to know that you are not allowed to alter the vehicle in any way when you decide to lease. The benefit of a lease is that you get to drive a new car with a lower monthly payment then if you were to buy it upfront. It is also good to know that mostly all lease contracts have the option to buy out the vehicle at the end of the lease.
“If the customer is looking for a killer deal on a new car, the best time to buy is on Memorial Day weekend,” said Baig Mirza a sales manager at AutoNation Ford Valenica. “I recommend people come in at the end of the month, because we work off commission and the manager’s are more likely to give you a crazy deal at the end of the month then at the beginning,” said Fadi Hilo a finance manager at AutoNation Ford Valencia.
At the AutoNation Ford Valencia dealership located on Creekside Road, the customer can expect a peerless customer service experience.
AutoNation is now the largest auto retailer in the world. In the Santa Clarita Valley alone AutoNation owns the Chevrolet, Honda, BMW, Dodge, Jeep, Chrysler, Mini Cooper, and Ford dealerships.
AutoNation stores are a great option for first time car buyers, because they offer a fair market value based pricing model. AutoNation hires a third party company that finds out what a car is selling for in a certain area and they offer that price upfront.
Most dealerships will start the negotiation at a sticker price which is higher than the average selling price, in order to gain more profit. The salesman at other non-AutoNation dealerships get paid strictly off commission, so the more you pay for the car the more the salesman pockets for himself.
At AutoNation owned dealerships the salesman is paid a flat rate per car.
“AutoNation invites all first time buyers to our store, we just want a chance to earn your business,” Baig Mirza.