Purchasing a vehicle is a major investment for most Americans. 
  Sadly many people do not treat it that way. They see some nice looking cars 
sitting on a car lot and just decide to pull in and look. Often times 
before they realize exactly what has happened they have test driven a 
car that looks nice and smells new and then they are told they are 
approved for a loan and can trade in their old car and drive the new car 
home today. That sounds great, right? Maybe or maybe not. After the new 
car smell wears off and the first payment is due, many people wish they 
had made a different decision. The regrets include: the monthly payment 
or the interest rate on the loan is too high, the vehicle is really not 
the size or type their family needs, it uses too much gas, the insurance 
costs too much, they paid too much for it, etc.

Here a few steps to follow before making any major purchase.

1. Create a personal or family budget so you know exactly how much you 
can comfortable pay each month. Then use a loan calculator to determine 
the total amount of money you can borrow and still meet your auto 
payment budget. Loan calculators are easily found on the internet, most 
all credit unions and banks have these on their websites.

2. Go to your local credit union or bank and ask to get a pre-approved 
for an auto loan. Even if you do not know the exact vehicle you plan to 
purchase, your loan officer can tell you how much you are approved to 
borrow, how long you can borrow it, what interest rate you qualify for 
and how much if any down payment you need.

3. Do some research and decide on two or three specific vehicle models 
that fit your needs, wants and budget requirements. Again, the internet 
is a great way to research vehicles. Do not forget to check the vehicle 
dependability ratings on sites like Consumer Reports.

4. Call your insurance company and find out the cost of insurance on the 
vehicles you are considering. Insurance can vary widely from vehicle to 
vehicle. Make sure the insurance cost fits your budget and ask your 
insurance agent about vehicle ratings used by the insurance company.

5. Now that you know the type of vehicle you want to purchase and how 
much you can spend, you can go shopping. Many people use the internet to 
locate specific vehicles and compare prices between car lots. This saves 
a lot of time and is something you can do 24/7 from your home computer. 
Most all car lots have nice websites with pictures and descriptions of 
all the vehicles on the lot.

6. Narrow your choices down to a few vehicles you are interested in and 
then go inspect and test drive. If you like a vehicle, ask the dealer 
for a Car Fax or other similar report to verify that the vehicle does 
not have any problems related to collisions, floods, etc. Most dealers 
make these available for little or no cost to a buyer. If they refuse to 
give you a report, use caution. You may be looking at a lemon.

7. When you are ready to make a deal, call you loan officer at the 
credit union or bank and have them look up the value of the vehicle you 
want to purchase. When you know how much the vehicle is worth and how 
much you can spend, you are ready to negotiate a sale price. Never 
negotiate the monthly payment amount or the value of your trade in. That 
comes later. Decide on a reasonable price on the vehicle you want to 
purchase (but be reasonable and remember, car dealers do have to make a 
profit to stay in business).

8. If you have a vehicle to trade, now you can negotiate the value of 
it. Again be prepared and know what it is actually worth. Your loan 
officer at the credit union can help you with this also. Typically you 
are hoping to get the Trade-in Value of your vehicle if it is in good 
shape. If you still owe money on your trade, take this into 
consideration during the negotiation.

9. If you are preapproved through your credit union or bank, you do not 
need to discuss financing with the dealer. Just contact your loan 
officer and have them tell you what they need from the dealer to 
complete the process.

The key to making a good choice when purchasing a vehicle is to be 
prepared before you ever step foot on the car lot. A little time and 
research before the sale may save you thousands of dollars down the road.