The Basics of Buying a Car

scholarship_interviewDeciding which car to buy is a larger decision than choosing a brand and model. You must also decide between buying and leasing, and if you decide to buy, you have a choice between a new and a used car. Choosing between buying and leasing depends, among other things, on your financial situation and whether you keep your cars for a long time. If you decide to buy, you will either buy a new or a used car. Again, this decision depends on your finances, whether you would receive any rebates or cost breaks with a new car, and other factors.

When you buy a used car, you’ll want to research the vehicle identification number (VIN) to see how many times the car has changed hands, whether it’s been sent to the junkyard, and whether the odometer reading is true. In addition, you should hire a mechanic to inspect the car.

When choosing a model, think about your lifestyle and how you will use the car. If you have children or other frequent passengers, a four-door sedan might be a better choice than a pick-up truck; however, if you do a lot of landscaping, a truck or SUV might be the better option. Don’t forget to consider seasons. Does it snow where you live? You’ll want to purchase a car that can handle your weather.

How do I get a loan to buy a car?

Most banks and credit unions offer loans that you can use to buy a car, and some auto dealers help you finance your car purchase as well. Due to its organization and structure, a credit union will probably offer you a lower interest rate than a commercial bank. Getting a pre-approved loan before you start car shopping or negotiating a price can give you an edge in negotiations, and it can also help you stay within your price range.

What does automobile insurance cover?

Automobile insurance breaks down into six types of coverage:

  1. Bodily-injury liability – covers medical treatment, rehabilitation, and funeral costs for you, passengers, other drivers, their passengers, and any pedestrians.
  2. Property-damage liability – covers repair or replacement of others’ cars and property.
  3. Uninsured- and underinsured-motorist coverage – covers medical treatment, rehabilitation, and funeral costs in the event that you are hit by an uninsured or underinsured driver.
  4. Personal-injury protection – covers medical expenses for you and household members whether or not you are at fault for an accident.
  5. Collision – covers repairs or replacement of your car after an accident.
  6. Comprehensive – covers stolen cars and contents, fire and water damage, vandalism, and other damages to your vehicle.

Most states have certain mandatory types or levels of insurance, and if you lease or buy a car using a loan, the lender might have certain insurance requirements.

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