Many of you know that when I say “Sylvia”, it is in reference to my lovably long lasting, yet perpetually finicky car that I have had since high school. Being the first born, it was my mom’s old car that was passed down to me when I turned 16, and I drove that sleek 1997 beige beauty all over into adulthood. She transported me to late night drama rehearsals in high school, drove me and my “date” to my first “date” the summer I got my first “kiss”, and it got me to and from my part-time college gigs and internships. One of my fondest memories involving my car was a little over four years ago, when I said “I love you” for the first time to my boyfriend inside that very car. It was after work, I was looking sufficiently geeky cool chic in my Blockbuster polo and khakis. It was just after midnight, it was his birthday, and he was driving. Something about that particular memory has stood the test of time with Sylvia, and I will always smile when I think about that memory.
This winter has been just a tad too harsh on the poor old girl, and it’s time to let her go to that beautiful heated underground parking structure in the sky. Which means, it’s time for me to get hopelessly (and frustratingly) attached to another vehicular inanimate object.
Let’s just say, the past few days have been an extreme whirl wind, and I’ve learned a lot about the process when it comes to purchasing a car. Per usual, gifs will help narrate.
1) Do your research.
I am constantly astounded by people who just don’t do their research. When I worked in video rental, I had a couple bring Pirates (not the Disney flick…) up to the counter to rent. They had no idea that it was….not the Disney movie. Honest mistake, but if they had just inspected the DVD cover art or noticed that Johnny Depp was not listed on the back cover, they would have realized that it was not the Disney movie Pirates of the Caribbean. Again, when I worked in sales at a bridal shop, again, people would get upset that we didn’t carry a designer that they liked, even though if they had checked out our website or had merely called and asked us-they would have found that out in less than 30 seconds.
It is the exact same with cars. Do. Your. Research. Is good gas mileage important to you? High tech functionality? Used or New? What is your budget? Don’t go into it blindly. Before I walked into the dealership the other day, I had probably spent the past year reading consumer reports, asking people for their opinions, comparing different brands and styles, and, more recently, paying attention to what I liked and didn’t like when I drove a car. It’s probably why I was able to make a decision so quickly-because I had put in hours upon hours of work behind the scenes.
2) DO YOUR RESEARCH.
I will admit, this is one area I didn’t research that well and wish I had before going into that dealership. Financing. I thought it would be like applying for a student loan (which was surprisingly easy and I don’t think I needed a co-signer way back when I had to apply for those). It wasn’t. I thought I’d be golden with a pretty good credit score and my charming face.
It’s not enough, no matter how cute you are.
What can help: Getting pre-approved, saving up for a good down payment if you can, researching guidelines and regulations for different banks and what they require when offering auto loans (for example, some banks won’t offer a loan if a car is over 75,000 miles, and over seven years old!), and shop around for the best deal. Then factor in your credit score and budget and what you want. Rinse and repeat.
3) Fun fact: Aging will make your credit better
Going off of financing, I learned a lot about credit and what makes good credit versus what makes bad credit, and what banks and credit unions look at when deciding if they should “loan” you money so you can get your pretty sweet new pair of wheels.
Most importantly, is paying your bills on time. This makes up a major portion of your credit score, and this is probably the saving grace as to why things worked out the way they did. I’m very religious when it comes to making student loan payments, and keeping my credit card debt down. Plus, it’s just a great habit to get into. Don’t spend money you don’t have (or won’t have). You like getting your pay check on time, right? It’s the same deal with the bank. Plus, if you pay on time, you don’t pay more due to late fees or interest-meaning, the banks don’t make money on you for letting them lend you money. Finally, missing bill payments can severely damage your score, and it can take up to SEVEN YEARS for it to go back up to a healthy score. Right now, that might not matter, but in a few years you could be trying to buy a house and that will bite you in the butt. Chomp, chomp.
Second, when it comes to your credit score, is the different types of credit you have. This was fun for me to learn. I already am starting to build a great credit history, but despite having a credit card that I make good with regarding payments and student loans I am also making good payments on, credit lenders like to see lots of different accounts making up your credit history. Why a car loan, while it seems would tank (no pun intended…) my score because it is putting me further in debt, actually will help improve my score over time because it will show lenders that not only can I make good on repayment, but I can also handle it in different capacities. Like, when you proved to your parents you could get good grades and be in the spring musical, they were okay with you taking on a part-time job and borrowing the family car. Same thing. But…with strangers and bigger increments of money.
Third, the ratio of debt versus available credit is a biggie, and something I didn’t learn about until recently (or maybe it was covered in my Consumer Education class and since I was 17 and stupid I just didn’t find it relevant and thus chose to stare at that one guy’s head instead…). If you have say, $1,000 of available credit on your credit card-that being your limit-you should never have more than about $300 of credit used. You want to keep about 70% of your credit available at all times, because if you don’t, you will be viewed as high risk and desperate, and that makes lenders nervous. So, if you find yourself hanging out in the 40%-60% range of using credit, but are capable of paying those payments-call your credit card provider and see if you can increase your credit limit. Then continue to be responsible and enjoy seeing your score rise.
Fourth, YOUR AGE FACTORS INTO YOUR CREDIT SCORE. The fact that I am 23 years old, and have a credit history of about three years (which I thought was amazing for someone my age) is currently hurting me. And this is the one thing you have no power over when it comes to your score. Fortunately, it’s not the biggest factor, and if there is one benefit to getting older, it’s that your credit score improves the longer you are alive. So when you fret about turning 30 in a few years, just think-your credit score is thanking those gray hairs and baby wrinkles.
4) Swallow your pride and co-sign…if you can
Because of the reasons above (not having enough credit history or varied credit history) my lovely father had to co-sign. I initially didn’t want him to, partially due to pride, but because he has fantastic credit (great with his payments AND several years older than me), we locked in with a great interest rate in comparison to what I was approved for. It was more than HALF of a decrease, which is saving me easily $2,000-4,000 in interest in the long run. So, if you can and are under the age of 25, consider co-signing when it comes to applying to financing for a new (or new-to-you) vehicle. You get credit for the loan (which will help your score) and you save money on interest.
5) Stick to your budget
I figured out how much I wanted to spend on a car based on how much is left on my student loans and how much I can afford based on my current monthly income. When I went to the dealership, I didn’t tell them the high end of my budget, I told them slightly lower. This is something I learned while working in sales in the wedding industry. You give someone the high point in your budget, and you leave no room for hidden costs, taxes, or fees. Plus the fact that a sales person, even if they truly do want to help you get the best deal out there-works on commission. They need to pay their own bills too, and if you say you can afford $2,000…well you can expect to be shown products that are $2,500 because it is “just a little over budget.” It worked. The car I went with was higher than what I had stated I wanted to spend….but still lower than what I wanted to pay, even with taxes applied.
6) Be realistic
I knew I wasn’t going to drive out with a 2014 BMW convertible (despite the many, many, many attempts my dad tried to convince me…jokingly. I think…). I may have landed my first full time job (which is going FANTASTICALLY, more on that later), but I still have a ways to go before I am safely out of the red when it comes to debt. Plus, since nothing is a sure thing, and if suddenly I am out of work, my monthly payments will still be do-able if I am working full-time on minimum wage (and living at home…but I digress).
I figure in a few years, when I’m not spending the majority of my pay days on bill payments for school, car, and personal debt, than I can maybe consider getting a slightly newer car. But I might not. Considering how much depreciation happens when you drive that shiny car off the lot, I might stick with used cars with great track records for the rest of my life. Or move to London and use the tube. But again, I digress.
7) Finally…go with your gut.
I purchased the first car I test drove. Yeah, I did. Some might think I’m crazy, but to be fair, I have had experience driving quite a few different cars in the past month or so (due to Sylvia being difficult). I got a feel for what I liked and didn’t like when driving, and the second I started driving my new car, it just clicked (pun this time intended.) It felt right, it felt good, and didn’t feel a need to look anymore. I’m a very careful shopper, and when I’m not sure about something, I debate and do more research and debate some more and maybe pace a bit, so when I know, without a doubt, that I want something-I go for it. Plus, I knew what would happen if I didn’t get the car and someone else did-every other car I would drive I would compare to that one car, and I would get more and more frustrated the longer the process took.
I saw it when I worked at the bridal shop, but to me, a car is a much bigger deal than a pretty dress you wear once. A car is going to take me to my job five days a week, it’s going to transport me from here to there, and ultimately, it is going to be the four wheels and a seat that take me on adventures in the next few years. So when you feel in through every ounce of your being, the being who is relentlessly cautious about every other retail purchase, that this car is right-you take that opportunity…and save yourself time, energy, and stress.
Am I an expert now, and do I recommend you ask me for financial advice or car buying wisdom? Heck no! I am still a novice, and am still learning. But hopefully this little rambling will merely encourage you to do your own research, to better help you in your situation.
On that note, I’m going to go relax…and think about Sasha, my new-to-me 2005 silver steed of a car 😀
“Sasha” and Shoe