Monday, May 14, 2012

7 Steps to Buying your First Car

Buying a car is often our first big expenditure and our first foray into the world of credit. Buying a car is not all about numbers, dollars, and cents; it is an emotional experience. It is that dream of rolling down the open road with the window down and our elbow resting on the door while we cruise along going somewhere in our car. That dream of buying a car is important, but equally important is the work that gets us to that point.  Your first car purchase is a major financial transaction and should not be taken lightly.

For many, a vehicle means freedom. But, it also means economic empowerment as it gives you increased job opportunities and increased earning potential. You will also have an improved quality of life. Some crosstown buses can take hours to reach their destination. With your personal car, you will have more quality time with your friends and family. Since you will be making a regular monthly payment on the loan, your car ownership is also an opportunity to improve your overall credit picture.

  1. Your first step in the transaction is to know how much of a car you can afford. Refer to your budget to see how much disposable income you have available after paying your rent and monthly bills. That is what you have available for a car payment and insurance.

  1. Do you know the condition of your credit? What's your FICO Score? First, get your free credit report at This website is managed by the three credit bureaus and the Federal Trade Commission. You can access and printout your report from all three bureaus for free once a year. Yes, NO CHARGE.

  1. As for your FICO Score, you can access that at is not free ($14.95 a month), but it will be the most accurate representation of your score that is available. If you cancel before the end of the ten day free trial, you will not be charged.
    1. Do you need a co-signer? Need to learn more about it? Check out our Co-Signer Blog from a couple of weeks ago.

  1. What have you saved for a down payment? The down payment is part of your purchase price. It determines the amount you will be financing. A significant down payment can decrease the monthly payment amount. The down payment also plays a role in determining your interest rate.   Often lenders will give you a better rate based upon larger down payments. A large down payment tells your lender that you have “skin in the game.” They will be more comfortable lending to you and providing a favorable rate if you have a personal investment in the vehicle they are financing. We offer the “You Name It!” savings account that is designed just for this sort of purpose.

  1. Once you are financially up to date, you can start researching the car you want to own.  What do you need? Good gas mileage? Sporty? Four Wheel Drive? Do you need a wagon or SUV for your family? Or is it going to be basic transportation? This is where you need to study and learn what the best and most affordable car is in your price range. Here are three excellent websites I am using to research my next vehicle purchase. Each of these has extensive information on the technical issues and the fair market prices of the car you may be purchasing.
    1. Credit Union Dealer Network
    2. No. American Dealer's Association Guide
    3. Edmunds Automotive

  1. Now we need to shop for vehicle financing. Credit Unions, banks, finance companies, and auto dealers all offer auto and truck financing. I am partial to credit union financing because I like lower rates, faster approvals, faster loan processing, and, a big reason I like them, discounted extended warranties for my car. I put a lot of miles on my vehicle. By financing my car through the credit union, I can buy the extended warranty at a huge discount over the warranty the dealer will sell. Once you have selected your lender, you should get pre-approved for a car loan. Then there is no doubt about how much car you can afford and it makes your purchase negotiation much easier!

  1. Now it's time to go to the dealership or private party and negotiate your best deal. The best negotiating tip I can give you is to stick to your budget. Dealers will try to egg you into a slightly higher payment for some options, “The premium stereo will only cost you another $15 per payment. Are you going to let $15 keep you from having the best stereo?” REMEMBER: $15 per month on a 36 month loan means you will pay the dealer $540 for that stereo. Stick to your budget and don't let the dealer try to sell you on the payment amount.

  • Meriwest Credit Union offers a full array of tools to help with your auto purchase decision. We have loan calculators, vehicle research, interest rates, and even a link to tell you the value of your trade-in.

Many of our members tell us that building their budget and getting their financing is the easy part of buying a car. It is negotiating the price of the car that seems to be the hardest part of the process. One option I have used in the past is an Auto Broker. An Auto Broker can find the car you want and often negotiate a good price for you as they bring large volumes of business to the dealership. But Auto Brokers charge for their services; sometimes well over $500 for high end vehicles. An option that some credit unions have for their members is an auto buying service or, as we call it, a Personal Auto Shopping Service or P.A.S.S.  It is an Auto Broker who works for your credit union and works for you for no charge! It's as if you have a friend in the car business.

If you are interested in our Personal Auto Shopping Service, please contact Bill Fultz at 408-365-6321. Bill has 25 years in the car business. Let Bill use his connections and expertise to get you the best deal.

Auto Sale at Meriwest Credit Union – Main Office

May 19th - 9AM to 5PM
May 20th - 10AM to 6PM
5615 Chesbro Ave, San Jose CA 95123

Get special dealer pricing and financing deals.

To get pre-approved for financing, call Meriwest Credit Union at 877-MERIWEST or online at Meriwest Credit Union Auto Loans.   

Upcoming event: Identity Theft
May 16th @ Meriwest Credit Union
Chesbro Ave. Main Office-Please RSVP with Greg Meyer at

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