This is going to sound dreadfully naive, but I’m coming here very specifically because you guys have always given me wonderful advice in the past, and, generally, I’ve learned a lot about finances from all of you.
I want to buy a car this year. That’s where things get tricky, so let me give you some tl;dr back-story.
I’m pretty much in the dark on all things related to financing a car. I know very little about how buying a car is supposed to work, how you’re supposed to pay for it (for example, I’ve always been under the impression that you make monthly payments directly to the dealership; however, my boyfriend, with whom I live, has debunked this), and who to speak with to begin the process of buying a car.
The range that I’m looking for is between $7,000 and $18,000, depending on whether it is new or used. I would prefer new.
1. I am twenty years old and I have, of course, had to build my credit from the ground up.
2. I am currently over-drafted with my bank due to a stupid mistake I made (I let my grandparents borrow $30 and I forgot to deduct it from my register, and I purchased 13 other small items between the time I overdrafted and the time I realized it had happened, leaving my account very much in the negative. However, this is being worked on and is not really a problem).
3. I do not live with my grandparents, but they raised me. They were not very good at budgeting and financing, live on a fixed income, would not be able to cosign for me (although my boyfriend could and would), and I help them out financially. At least half of my income each month goes to them.
4. My credit score is not bad. It continues to rise, but it’s obviously not the best right now.
So what I’m asking for is this:
1. What financial and mental preparations do I need to make to begin this process?
2. What are the pros and cons of getting a bank loan? I am not sure I could do this because of my overdraft with the bank. I plan on switching financial institutions as soon as my account is in the clear.
3. What are the perks and cons of joining a credit union? I understand that this is one way to pay off a car. I am interested in joining for other reasons. How does one choose a credit union to join?
4. Any tips for a first time buyer are MORE than welcome.
Obviously, I don’t expect anyone to answer all of these questions, but any information you can give me would be most excellent!
ETA: I can’t possibly respond to all of these comments, so I’d like to thank all of you for your time and effort. You’ve provided great information. I’m going to make a few clarifications in the comments about my original information later after work. Thank you so much!
That was a coincidental rhyme, for the record. But it sounded kind’f groovy, didn’t it?
The Situational Clarification:
- Being raised in a family that was practically a financial black hole, I understand the need to be as thorough as possible. (Thank you so much for helping me on my little journey, by the way. I appreciate it more than you know!) This is why I plan on researching this subject and taking appropriate action when I feel the time is right. 50% of this is based on research, 30% of this is monetarily dictated, 15% of this is based on opportunity, and 5% is based on external factors that could arise between now and then (“then,” naturally, is up to debate).
- The over-drafting situation will be taken care of soon. I’m normally not so irresponsible with keeping track of my money. I can’t say it’s a one time thing, but I’m not a repeat offender by any means. I am in debt because of it, but I do still have a flow of income as it’s being paid off weekly in small increments. I have learned that I need to put more faith in what my register says than what my online banking statement says, and therefore I need to make updating my register the top priority here.
The General Information Part:
- What everyone has said about new vs. used makes a lot of sense to me. Based on the information I’ve received, here is my game plan:
1. Do as much research as I can.
2. Once I’ve amassed enough research and money to feel comfortable with a decision, I will begin browsing for a used car (preferably a Honda, as I’m rather keen on all Honda models old and new, save SUVs) to buy from someone privately.
3. I will use the online resources as provided by everyone here to check the car’s worth, further deprecation rate (don’t think that’s a legitimate term, but, eh), and history.
4. Before a car is decided upon, I will hire a mechanic to check it out. I do have a few trustworthy mechanics that I can turn to for this.
5. If buying privately, cash up front. If buying privately does not seem to be an option, I will continue to do more research on credit unions.
You have all been immensely helpful. Thank you so much. Also, thank you for the lack of judgment. I appreciate that a lot as well.
