What is the difference between a lease and a loan and which is best for me?
With a lease, you make monthly payments for the use of the vehicle for a pre-determined term. When the term is up you turn the vehicle in. Leases are usually short term and have mileage limitations. With a loan, you have a longer term and no mileage limits. You own the vehicle at the end of the term. The typical lease term is 2-3 years. The typical loan term is 5-6 years.
Should I trade my car in or sell it outright?
You may be able to get more if you sell outright, but you lose the tax credit and have to go through the hassle and cost of advertising, showing the car, and possibly waiting for your customer to obtain funds. This could take months or even over a year depending on the vehicle and market, and you may be making payments at the same time. Trading-in is usually more convenient and your bank that is financing the purchase may require it.
What if I currently have a loan on my trade?
If the value of your trade is less than the loan, the difference will carry over to your new loan if the bank will approve it. They may ask for money down if that difference is too great. If you sell outright, you still need to satisfy that loan so you may have to come up with money out of pocket.
How do I get financing?
You can arrange your own financing at your bank or lending institution of your choice or you can allow the dealer to arrange financing for you. Most often the dealer can find financing more quickly and can usually match or beat the rate of your bank. The dealer doesn't finance the car, they simply arrange the financing for you. The dealer does not control your rate, but can help you find the bank that will provide you with the best rate.
How do I know if I'm getting a good deal on a car?
If the car suits your needs and fits your budget it is a good deal!
How do I choose the right car and dealership for me?
When deciding what car to buy you should consider how you will use the vehicle and what features you need and want for your lifestyle. Everyone is different; for some, safety is important while other care more about speed and horsepower. The internet or your dealer can tell you what cars fit your parameters. You should feel comfortable purchasing and servicing your vehicle. If you don't like how you are being treated, walk away. You should be treated politely and with respect. Bonus points if your salesperson introduces you to the Service Department!
Do I need to have money down?
You may want to put money down to help lower your monthly payment or offset negative equity. If your credit is good you may not need to put money down. If your credit is not up to par, the bank may require a down payment.
Does a warranty matter?
New vehicles come with a manufacturer's warranty. Some pre-owned vehicles may have remaining factory warranties that transfer. Depending on the vehicle make, there may be a transfer fee or other provisions. There are extended warranties and service contracts available for purchase at your dealership. Having warranty can save you money during the ownership of your vehicle. If you typically keep your vehicle for many years, the potential for paying for costly repairs in the long term increases. If you monthly budget is tight you may want to consider adding a warranty to your purchase so you don't have to come up with money out of pocket for repairs if something happens at an inopportune time.
What about insurance?
Banks and leading institutions require you to carry insurance on the car you purchase to protect their investment. If you do not have a loan on your vehicle you must follow the State requirements. If you do not have insurance when you purchase the vehicle, most dealerships can help you obtain insurance before you leave.
Should I buy new or used?
Whether you should buy new or used is entirely a matter of preference. Both new and pre-owned automobiles depreciate, so you can't escape this factor. You can add warranties to most pre-owned vehicles to protect your investment. With a new car, you aren't "purchasing" anyone else's potential problems; you can break-in the car in the way you choose.
Should I buy a domestic or an import?
You should buy the car you like the best. Make sure it fits your needs and you are happy with the warranty and the dealership. Also, check reliability ratings and consumer reports. Most imports hold their value better than domestics. Most import companies have factories here in the US and most domestic companies assemble their cars in Mexico or Canada.
Do I need 4 wheel drive?
Many people who live in Wisconsin think they need 4 wheel drive because it snows. You may find that your front wheel drive car or SUV performs just fine on winter roads. Most 4 wheel drive is for driving off-road. There is also performance enhancing all wheel drive for handling in some cars. Four wheel drive is often only necessary in the most extreme conditions and many people who thought they needed 4 wheel drive have found that they have had no problems with their front wheel drive vehicles.
Do I need a co-signer?
The bank will determine whether you need a co-signer based on many factors including: income, credit score, auto history, and the amount you are asking to borrow. The dealership can usually tell you if you will need a co-signer when they pull your credit.
What if my credit isn't the greatest?
If your credit isn't great you may still be able to get a car loan through Prestige's exclusive Auto Source Network.
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