From Insurance to Financing

A lot goes into the decision making when buying a car. Will you get a used or new car? How much car can you afford?  Will you purchase from a dealership or an individual? How should you finance the purchase? How much will insurance cost you? Here are some basics to consider before buying.

Car Insurance
First, there are some insurance terms you should know. We’ve broken them down into plain English to help you understand.
 

• Comprehensive: Covers damage to your car caused by things other than a collision, such as theft, natural disasters, or animal strikes.
• Liability: Covers OTHER people and THEIR property when you are at fault.
• Collision: Covers YOU and YOUR property when you are at fault.

Rates for car insurance can vary greatly, so you’ll want to shop around, and you may need to break-up with your insurance provider every few years to score a better rate from one of their competitors. You should absolutely negotiate with insurance providers to get the best deal possible. Some factors that influence how much you pay include:

• The type of car you drive
• Your driving record
• Where you drive
• Even your gender and age (young males tend to have the highest rates)

Car Financing
Other than paying for college, the purchase of a car is often the first major financial decision a young person makes. Both come with big price tags that often require loans, so it’s important you understand financing options.

Few people can buy a brand new car with cash. Most people finance the purchase, meaning they make a down payment, borrow money for the rest, then pay it back over time with interest. Interest and down payment are just a few of the terms you’ll want to understand prior to financing your purchase. Do some reading online and learn the language of lending so you can get a good deal and not be blindsided when discussing the financing arrangement.

Just like with car insurance, you should shop around for the best loans. Having good credit will help you secure a lower interest rate. You may choose to refinance after a few years if your credit improves with age and experience. We recommend you read the Credit Scores & Reports section of our website.

You can get loans directly from the dealer selling you a car, but it’s not always the best option. Be sure to explore other options before automatically accepting the financing plan offered by the dealership. Comparing dealership interest rates with other financing options will help ensure that you are receiving the best option.
 

Other Expenses

There’s more to owning a car than paying for the vehicle itself. You have to pay for gas, maintenance, repairs, and an annual registration.

Vehicle Registration and Title
A title is proof that you own a vehicle. If you have trouble getting the title, you can turn to the Secretary of State’s Auto Dealer Services Division for help. You need a title to get your vehicle registered and obtain a license plate. In Indiana, vehicle registration is completed through the Bureau of Motor Vehicles. Registration costs vary, depending on the type and age of your vehicle.

Maintenance and Repairs
Repairs are inevitable, but the best way to avoid the high costs of major repairs is to be diligent with vehicle maintenance. Problems are typically cheaper to fix if caught early. Regular maintenance also helps extend your vehicle’s life and retain more of its value. The owner’s guide likely has a schedule of recommended maintenance. If your vehicle is under warranty, you may want to get work done at a dealership. Don’t forget to keep good records! You should document all the vehicle’s maintenance and repairs, including dates, mileage, and costs. These records could come in handy when you’re ready to sell the vehicle.

Emission Fees and Gas
Some states and counties require annual emissions testing and smog checks to reduce air pollution. Depending on your vehicle’s emissions in those states, there may be fees involved with driving it. In Indiana, certain vehicles registered in Lake and Porter counties are required to undergo emissions tests and tampering inspections every two years. You can learn more about emissions testing in Indiana by visiting the BMV website.

Gas is another consideration when deciding which vehicle to buy. There are alternative fuel engines, such as hybrid, electric, and diesel-powered vehicles. For gasoline powered engines, be aware that some makes and models require higher grade fuel. You also want to check a vehicle’s “fuel economy.” How many miles does it get per gallon? This will help you plan for expenses after the car has been purchased.
 

Helpful Resources

Auto Loan Payoff Calculator
How Much Car Can You Afford?
Indiana Bureau of Motor Vehicles
Indiana Secretary of State, Auto Dealer Services Division