Tuesday, May 21, 2024

Buying Car in America: What You Need to Know as First Time Buyer

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Unless you live close to your workplace or public transport, owning a car is more like a necessity than a luxury to many American households. Filipinos and other immigrants face the same situation, as living close to their place of work can be an expensive piece of the decision.

Thus, buying a car is often one of the first orders of business when settling down in the United States. You may have owned a car in the Philippines and also drove from home to work, but as you may be aware, there’s a big difference in car ownership between the two countries. Without diving deep into the distinctions, here are some key considerations for first-time car buyers in the United States.

Table of Contents

Your budget and type of car

Determine how much you can afford to spend on a car, taking into account not just the purchase price but also ongoing costs such as insurance, maintenance, and fuel. A quick summary of the pros and cons of traditional gasoline vs electric cars:

Petrol cars

Pros:

  1. Widely available fueling infrastructure.
  2. Longer driving range compared to electric cars.
  3. Established technology and lower upfront costs.
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Cons:

  1. Higher emissions, lead to air pollution and negative impact on health and the environment.
  2. Higher fuel costs compared to electric cars over time.
  3. Depletion of non-renewable resources (petrol).

Electric cars

Pros:

  1. Zero emissions, reducing the impact on the environment and public health.
  2. Lower operating costs compared to petrol cars.
  3. Access to government incentives and subsidies.

Cons:

  1. Limited driving range compared to petrol cars.
  2. Higher upfront costs for purchase.
  3. Less widespread fueling infrastructure compared to petrol cars.
  4. Potential for range anxiety (fear of running out of charge).

Research the type of car suitable for your needs

Research the different types of cars available and determine which ones best meet your needs in terms of size, performance, fuel efficiency, and features.

Family

  • Space: Look for a car that has enough room for all family members and their luggage. Consider a minivan, SUV, or station wagon.
  • Safety: Look for a car with high safety ratings, airbags, and child safety features such as child seat anchors.
  • Reliability: Choose a car with a good reputation for reliability and low maintenance costs.

Single user

  • Commute: If you have a long daily commute, consider an electric car for lower operating costs and the potential to save time with HOV lane access.
  • Budget: Consider a smaller, more fuel-efficient car that fits your budget and is cost-effective to own and operate.
  • Lifestyle: If you enjoy driving and want a sportier car, consider a compact or sports car.

Families with elderly drivers

  • Comfort: Look for a car with a comfortable and supportive seat, good visibility, and easy-to-use controls.
  • Safety: Consider a car with features such as adaptive cruise control, blind-spot monitoring, and a rearview camera.
  • Size: Look for a car that is easy to get in and out of and has enough space to store mobility aids if needed.

Outdoors and adventure-seeking owners

  • Space: Look for a car with ample cargo space to carry outdoor gear.
  • Durability: Consider a car that is durable and has good ground clearance for off-roading.
  • Towing: If you plan to tow a trailer or boat, look for a car with good towing capabilities.

What to do during test drive

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Take several cars for a test drive to get a sense of how they handle and ensure you’re comfortable with the controls and driving experience.

When test-driving a car in the United States, it is important to:

  • Research the car: Before taking a test drive, do some research on the car model you are interested in and make a list of what you would like to evaluate during the drive.
  • Schedule the test drive: Contact the dealership or seller to schedule a test drive. Be prepared to provide a valid driver’s license.
  • Check the car’s condition: Before starting the engine, inspect the exterior and interior of the car for any damages or issues. Take note of any issues you find.
  • Evaluate performance: During the test drive, pay attention to the car’s performance, handling, acceleration, braking, and overall comfort.
  • Test driving environment: Drive the car on different road types (highway, city, etc.) especially close to your expected daily commute to get a sense of how it performs in different environments.
  • Ask questions: Ask the salesperson or the seller any questions you have about the car’s features, maintenance history, and warranty.
  • Take your time: Don’t feel pressured to decide immediately. Take your time to evaluate the car and think about your decision.
  • Bring a mechanic: If you’re unsure about the car’s condition, consider bringing a trusted mechanic to inspect the car before you buy it.

Check car history if buying pre-owned vehicles

If you are buying a pre-owned or used (popularly known as second-hand among Filipinos) car, make sure you understand the history of the car you’re interested in, including its ownership history, accident history, and maintenance records.

  1. Research the car: Research the make, model, and year of the car to get a better understanding of its features and any known issues.
  2. Check the exterior: Inspect the exterior of the car for any damages, rust, or signs of collision repair. Check the tires, wheels, and brakes for wear.
  3. Check the interior: Inspect the interior of the car for any signs of wear or damage. Check the seats, dashboard, and controls for functionality.
  4. Test drive: Take the car for a test drive to evaluate its performance, handling, and overall feel. Pay attention to any unusual noises or vibrations.
  5. Check under the hood: Check the engine, transmission, and all fluid levels. Look for any signs of leaks or damages.
  6. Check the history report: Get a Vehicle History Report to check for any accident history, salvage history, or flood damage.
  7. Get an inspection by a mechanic: Consider having a trusted mechanic inspect the car to check for any potential issues or hidden problems.
  8. Negotiate the price: Based on the condition of the car, negotiate the price with the seller. Keep in mind that a lower price may reflect necessary repairs.

Explore different financing options

Consider whether you want to buy the car outright or finance it, and research the different financing options available, including loans, leases, and dealer financing.

There are several financing options available for car buying in the United States. Here are some of the most common options:

  1. Auto loan from a bank or credit union: You can get a loan from a bank or credit union to pay for your car. You’ll need to have good credit to qualify for a low-interest rate.
  2. Leasing: With a lease, you pay a monthly payment to use the car for a specified period of time, typically 2-3 years. At the end of the lease, you return the car to the dealership.
  3. Dealer financing: Many dealerships offer in-house financing options. These loans may have higher interest rates, so it’s important to compare offers from multiple lenders before accepting.
  4. Personal loan: You can also take out a personal loan from a bank, credit union, or online lender to pay for a car. Personal loans typically have higher interest rates than auto loans, but may be easier to obtain if you have a less-than-perfect credit score.
  5. Pay cash: If you have the funds available, paying for a car in cash is an option. This can save you money on interest and fees, and may also give you more negotiating power when purchasing a car.

It’s important to compare the different financing options available to you and choose the one that works best for your budget and financial situation. Be sure to review the terms and conditions of any loan or lease agreement before signing, and to only borrow what you can comfortably repay.

Negotiate the price

Be prepared to negotiate the price of the car with the sales team at a car dealership or private seller, and have a clear idea of what you’re willing to pay.

Negotiating the price of a car can be a challenging process, but by following some key strategies, you can increase your chances of getting a fair deal. Here are some tips for negotiating the price when buying a car:

  1. Do your research: Research the make, model, and year of the car to determine its fair market value. Use websites such as Kelley Blue Book, NADA, and Edmunds to compare prices and get an idea of what you should expect to pay.
  2. Get pre-approved financing: Having pre-approved financing can give you more leverage when negotiating the price of the car, as you will know how much you can afford to spend.
  3. Make a reasonable offer: Start with a reasonable offer that is lower than the asking price, but still within the fair market value range you have researched.
  4. Be firm but flexible: Be firm in your negotiation, but also be open to compromises. Be willing to make trade-offs on financing, warranties, or other items to reach a deal.
  5. Be aware of dealer incentives: Be aware of any incentives or promotions the dealership may be offering, as these can impact the price of the car.
  6. Be prepared to walk away: If the seller is not willing to meet your needs or if you feel the price is too high, be prepared to walk away from the deal. You may be able to find a better deal elsewhere.

By being prepared, knowledgeable, and confident, you can successfully negotiate the price of a car and get a fair deal. Remember, the goal is to reach a mutually beneficial agreement between both parties.

Examine warranty and car insurance coverage

Make sure you understand the warranty and insurance options available for the car you’re interested in, and how much they will cost. Some of the largest car insurance companies in the United States are the following:

  • State Farm
  • GEICO
  • Progressive
  • Allstate
  • USAA
  • Liberty Mutual
  • Farmers Insurance
  • Travelers
  • Nationwide

Usually, the most common types of car insurance coverage include the following:

  1. Liability insurance: Covers damages and injuries you cause to others while driving. Required by law in most states.
  2. Collision insurance: Covers damages to your vehicle in case of an accident, regardless of who is at fault.
  3. Comprehensive insurance: Covers damages to your vehicle caused by non-collision events such as theft, fire, and natural disasters.
  4. Uninsured/underinsured motorist insurance: Covers damages and injuries you suffer from an accident caused by an uninsured or underinsured driver.
  5. Medical payments insurance: Covers medical expenses for you and your passengers in case of an accident.
  6. Personal injury protection (PIP) insurance: Covers medical expenses, lost wages, and other costs for you and your passengers in case of an accident.
  7. Gap insurance: This covers the difference between the actual cash value of your car and the amount you owe on the car loan if your car is totaled in an accident.

The exact coverage you choose will depend on factors such as your state’s insurance requirements, your budget, and the type of vehicle you drive. It is important to carefully review and understand your insurance policy to ensure that you have adequate coverage.

Prepare to submit DMV requirements

Once you have bought a car, check the Department of Motor Vehicles requirements for registering and titling the car in your state, including the necessary documentation and fees.

To register a new car in the United States, you typically need to meet the following requirements set by the Department of Motor Vehicles (DMV):

  1. Proof of ownership: Provide proof of ownership, such as a bill of sale or a manufacturer’s certificate of origin.
  2. Identification: Present a valid driver’s license or other government-issued ID.
  3. Insurance: Provide proof of liability insurance coverage, as it is required by law in most states.
  4. Emissions testing: Some states require emissions testing for new cars before registration.
  5. Payment of fees: Pay any applicable registration fees, taxes, and title fees.
  6. Vehicle identification number (VIN) verification: Provide a VIN verification if the DMV requests it.
  7. Smog check: In some states, a smog check may be required for new cars.

Conclusion

The main takeaway for first-time car buyers in the United States is to ensure that you do prior research about the car, model, fuel efficiency, price comparison, product recalls, and so on.

Also, having pre-approved financing can give you more leverage when negotiating the price of the car, and help you stay within your budget.

Consider the total cost of ownership when choosing a car, including the cost of insurance, maintenance, and fuel. And lastly, carefully review the terms and conditions of any loan or lease agreement before signing, and only borrow what you can comfortably repay.

 

 

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