Maribel Aber joins us to discuss all the hidden aspects of the first time car purchase.
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Buying Your First Car
Audra Lowe: When you think about getting your first car, the color, the model and all the cool features immediately come to mind, right? But before you get in to driver’s seat you got to think about how you're going to pay for this major investment. Here to give us the basics of car financing is Better’s financing career expert Maribel Aber. Good to have to back.
Maribel Aber: Great to be back.
Audra Lowe: And usually we’re talking savings and investments, we’ll switch around this time. Especially for young car buyers, they just don’t really realize how much of an investment this is, how many extra cost are going into this right?
Maribel Aber: It’s a big thing, I mean think about as a major investment. It’s probably one of the first financial investments these kids are going to make or first time car buyers’ right? So it’s really good to do the homework. You need to do the basics, hanker down and just really understand what's the process, what you should be thinking because you want to be able to buy what you want when you want to buy it, right?
Audra Lowe: Exactly.
Maribel Aber: So we’re going to talk about some tips.
Audra Lowe: So what's the first thing that people should do and pay attention to especially when you're trying to wheel in someone who’s getting their first car, you're excited you're not thinking about details usually, right?
Maribel Aber: You're not and this is going to blow you, you should be thinking about your financial health. Very sexy right. You should because believe it or not if you haven’t looked at your credit report lately, you haven’t looked at your credit score that’s what the lenders are going to look at.
So you want to pull that information. They're going to look to review have you paid your bills on time. Do you have high credit card balances and your credit score is actually going to be determinant factor on what kind of loan rate you can get? So you should probably know more about that than the lender. And when you check your credit score and all that information, that doesn’t impact your credit score.
So if you wait until you go there then that’s—
Audra Lowe: That’s when you have a problem.
Maribel Aber: Yes.
Audra Lowe: Okay. Some people have good credits, some people have bad credit. Regardless of what it is, you still have to pay attention to the cost and if your credit is not so good you obviously is going to have higher cost than someone who has better credit.
Maribel Aber: Right and you should be thinking about all of the cost not just the sticker tax because a lot of the time it’s like “hey I see myself driving my car”. But you got to think about down payment and with the down payment a lot of experts will actually say 20% is where they want you to be and the reason for that is because of depreciation. You don’t want the car to be worthless when you drive off the lot.
And think about from title, registration, fees, parking, maintenance, you got to think about it and don’t forget about taxes personal and property tax.
Audra Lowe: Okay. A lot of people still don’t realize even after you get to that point, all the cost. Or they're shocked at this particular time, so they might look at leasing a car. That used to be like everyone’s best option, is it still a good option?
Maribel Aber: Well I think people who use it like companies or people who want a new car all the time, but what finance experts will say is buy the car. And the biggest benefit for buying the car obviously is you're going to own it, and that you won't have these car payments that you'll have to take care of, so generally speaking buying and if you can with cash that’s always the best.
Audra Lowe: And if you're going to lease, let there be a reason for you leasing. What about buying used versus new for someone that’s saying I'm just in the market for a car and I don’t know which one I want to get, what's your take on that?
Maribel Aber: Total personal decision but three things about: will it hold up in value, is it easy to maintain, and is it going to serve the function that you needed to serve. So when you're thinking about a new car, the goal sort of source of information is the Kelly Blue Book, www.kbb.com.
And if you're thinking about like a used car then think more about not just going to be less money but think about the health of the car. I mean I think everybody has heard of carfacts.com, look at the vehicle’s history report.
And the last thing is you could look at a pre-owned model, I like to call pre-owned, with an extended warranty to cover the maintenance. I actually personally own one and it’s been a very good investment so some options.
Audra Lowe: Just have to do your homework beforehand right?
Maribel Aber: Absolutely.
Audra Lowe: Alright, good to have you back Maribel, thank you so much. And if you guys have questions for Maribel, you can always email her at email@example.com. We’ll be right back.