Of course you’re aware that the holiday season is upon us. But are you aware that car-buying season is upon us, too? In recent years, December has been near the top when it comes to monthly car sales. As usual, our focus is on keeping your financial house in order. With that in mind, here are five car-buying tips with a Thanksgiving spin:
Don’t let your eyes get bigger than your stomach. We’re not talking about food, but the amount of car you can afford. It’s easy to get caught up in new-car excitement and drive off with something that doesn’t fit into your budget. As a matter of fact, the dealerships almost count on it. To decrease your chances of indigestion, try to keep transportation costs to 10 percent or less of your monthly budget.
Set the table. Preparation is key to both a good meal and a good car-buying experience. First, check your credit report at www.annualcreditreport.com at least six months to a year in advance. If you’re financing, this will give you some time to work on raising your credit score. A lower interest rate results in lower costs. Get approved for a car loan before you hit the dealer and take that negotiating tactic off their table. And do your research. Use online resources to understand the rebates, special financing deals and fair pricing for the vehicle you’re interested in.
Turn down the noise. Just as your holiday dinner is usually more enjoyable if you turn down the volume on your TV, the car-buying experience will be less stressful if you eliminate the sales “noise” coming from the dealership. You’re interested in the price of the car, not the monthly payment. Forgo the extras like special paint preparation, and if you’re interested in an extended warranty, shop around. USAA offers plans for purchase or comparison. Finally, make the right call if there’s a rebate or special financing available. You might be able to get comparable financing through your own bank or credit union and use the rebate to knock down the price.
Don’t forget the dessert. If you’re like us and calorie-count your way through the holiday season, you certainly can’t forget the pumpkin pie (it adds to your total). By the same token, as you evaluate potential car purchases, make sure you consider all the costs of ownership. Taxes, insurance and gas use need to fit into your budget.
Get comfortable. Finally, the best way to make your next car purchase a financial win is to make sure you see it in your driveway on future Thanksgivings. Get comfortable with your new car, then drive it until the wheels fall off.
June Lantz Walbert and J.J. Montanaro are certified financial planners for USAA, The American Legion’s preferred provider of financial services. Submit questions for them online. www.legion.org/focusonfinances
This material is for informational purposes. Consider your own financial circumstances carefully before making a decision and consult with your tax, legal or estate planning professional.USAA means United Services Automobile Association and its insurance, banking, investment and other companies. Banks Member FDIC. Investments provided by USAA Investment Management Company and USAA Financial Advisors Inc., both registered broker dealers. USAA Financial Planning Services® refers to financial planning services and financial advice provided by USAA Financial Planning Services Insurance Agency, Inc. (known as USAA Financial Insurance Agency in California), a registered investment adviser and insurance agency and its wholly owned subsidiary, USAA Financial Advisors, Inc., a registered broker dealer. Certified Financial Planner Board of Standards, Inc. owns the certification marks CFP® and Certified Financial Planner TM in the United States, which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.