Are You Really Ready To Buy A Car?

How to tell if you're really ready to buy a car

 You may want to buy a car, but are you truly ready to make the leap?

If the thought of financing a car makes your heart race and your palms sweat, you have good reason to feel that way: buying a car is one of the most significant purchases you’ll ever make.

Whether you’re new to the whole car ownership/adulting thing or if you’ve been around awhile, it helps to know the key benchmarks that help determine if you’re truly ready for the leap into car ownership.

Calculate your debt to income (DTI) ratio: Lenders rely on this figure when determining the level of risk involved in extending a loan. You can calculate your DTI ratio here. The lower your DTI ratio, the better your loan terms and interest rate will be.

Here is a breakdown of the DTI ratio ranges that most lending institutions and dealers rely on in deciding whether or not to grant a loan or extend any other offer of credit:

  • 36% DTI ratio is ideal. You stand a better chance of getting the best loan amount, term, and interest rate for you.
  • 37-42% DTI: Borderline high. You may end up with a higher interest rate or a  lower loan amount.
  • 43-49% DTI: High risk of default. Very few lenders would grant a loan to someone in this range. Expect to be saddled with a double-digit interest rate, and/or a high downpayment requirement if you’re granted a loan at all. Not worth it.
  • >50% DTI: This is the “nope” zone for any lender.

Credit counts, too

Check your credit report: Another factor in determining overall creditworthiness is your credit profile and your credit scores. The three credit bureaus (TransUnion, Equifax, and Experian) will offer a free credit report to consumers through their websites.

In some cases, you’ll run into membership fees for extras such as credit monitoring, but unless you’ve been a victim of identity theft, come for the free credit report and stay for the FICO score (available at cost). Your credit score is one of the determining factors for a car loan.

Review your credit report and confirm that all of the information is correct, including the monthly payments on any active debt such as student loans. If you have any recent past due payments, collections, or public records, your chances of getting a decent car loan are slim.

If you notice any errors on your credit report, follow the procedure offered by the credit  agency website. Expect to wait anywhere from 30-90 days for resolution depending on the nature of the error.

Insurance matters

If your DTI ratio is good and if your credit is even better, get insurance quotes on the cars you’re interested in buying.You’ll avoid sticker shock and can factor the payments into your budget.

For example, I was floored to find it would cost me more to insure an 8 year-old Toyota Camry than it would to insure a 4 year-old Hyundai Elantra, mostly due to risk of theft in my community.

Insurance laws vary by state, so make sure you’re covered before taking your car off the lot. Investopedia has a great explanation of car insurance policies if this is an entirely new area for you.

Buying a car is a significant step whether you’re a first-time car buyer or an established car owner re-entering the market. By understanding the key components of buying a car, you’ll know whether or not you’re truly ready to take the leap into car financing and ownership.

 

 

Close, But No Car…Again

I was at a neighbor’s house the other day, tossing a Frisbee with her 9 year-old grandson. Each time one of us accidentally hurled the disc into a wall or other obstacle, the other would yell, “UGH, WHAT?! DENIED!” following by gusts of laughter. It was all good-natured ribbing as boys are wont to do.

Nothing like play at full volume to shake off a busy workday and car-shopping nerves.

Close, but no car…again

lol-denied1

I have a feeling the local credit union underwriters did the same thing with my auto loan request because “UGH…WHAT?! DENIED!” This time no gusts of laughter followed. Only ass-kicking disappointment.

“There’s nothing wrong at all with your credit score–in fact, it’s excellent–the problem is you don’t meet our credit guidelines. There’s no long-term credit useage,” the underwriter told me over the phone.

Duh. Go through a blast furnace of a recession and those credit cards get stashed away with a quickness.  I started using them again once I landed my day job last January. I pay the balance in full each month and on time.

“What really came into play, though, was your debt-to-income ratio. It’s outside of our guidelines. In other words, you don’t earn enough to take on that kind of debt.”

Savage.

I’ve been without a car for a year and a half. I’m impatient as hell. Blame it on the health crisis I had three years ago: spend any length of time in the back of an ambulance followed by an inpatient stay in the hospital, and it will change your perspective and sense of time.  It sure did for me.

I feel a sense of urgency to do the things I’ve wanted to do once I had a car. I’ve had it with life standing still.  Life can and will change in a second. Seriously, if the Fates can flip me the middle finger once, they can do it again. At least they can let me have a fucking car this time around before the other shoe drops. Kidding! Sort of.

Odd girl out

I’m definitely an anomaly in my rapidly gentrifying community. People around here now think nothing of dropping $20-30 grand in cash on a car for Princess or Junior as a birthday gift. My next door neighbor bought a 2016 Prius for cash because he was “curious about what all the talk was about.”

(Dude, I could have saved you the money. It’s the strangest-looking car I’ve ever seen, and I’m not sure if that means I like it  or if it means I hate it).

I’ll admit, this recent setback is a blow to my ego. As a Generation X-er, the benchmarks for adulthood included supporting ourselves, having our own place, and buying a car on our own. I feel like I’ve somehow failed at one key aspect of this adult thing.

I called the car’s sellers, a well-heeled couple who lived nearby and explained the deal was a no-go. I’m sure the fact that someone got declined for a small car loan blew their minds, as they paid cash for the Camry when it was a year old.

I’ll be re-grouping in the coming days. Time–and a new car–waits for no one.

Weekly Round-up

In which I source great content so I won’t have to write a post.

I can’t think of a better thing to do than test-drive cars I can’t afford. Ten minutes of pure escapism so wonderful I ignore the yammering salesperson next to me. Seems that a woman in VA had the same idea, except she was a little too eager to peel out of the dealership and took a few extra cars with her. Brings a whole new meaning to “I flip cars as a hobby.” (H/T Autoblog)

A Chevy dealer in Peltier, TX had 48 wheels and tires swiped from their cars this week. Nothing worse than showing up for work and seeing half your inventory up on blocks. Try explaining that shit to management. (H/T Jalopnik)

Trucksonblocks

Photo: Detective Gary King, East Texas Auto Theft Task Force

On the flip side, some lighter fare…

First up, what does your car color say about you? Mine essentially said “I’m broke as hell.” Oh, wait.That was the condition of the paint, not the color itself. If anything, feast your eyes on the excellent cars pics in the article. A little eye candy never hurt anyone.

Rumor has it that any color of BMW says, “I’m an asshole who doesn’t use their blinker,” but your didn’t hear that from me.

Bored at work? Need something to pass the time while on break, lunch or in the fifth meeting of the week? Check out this excellent Tumblr. The older the car, the more amazing it is to see their auto bud.

Holy crap…who would do that to a car?! According to reddit’s Shitty Car Mods forum, a lot of people. Comic relief during a tough week, or a tragic commentary on misplaced priorities. Your call.

Why

H/T litzergl (reddit)

And finally…

MazdaSmile

 

Avoid This Parking Lot Hustle

A chump and their change are soon parted. Don’t be a chump. Avoid this parking lot hustle.

Avoid the parking lot hustle of low-cost bumper repairs.

Your car has been sporting a bruised or busted bumper for a few months now, but who has time to fix it? Or maybe you don’t want the insurance company expense, especially if the busted fender was of your doing.

Still, that bruised and busted bumper haunts you every time you see your car. After all, you don’t want to end up with a beater.

You’re walking into work or school one morning when it happens. An earnest and clean-cut guy approaches you and offers to fix your fender for cash. His services include paint-matching, bumper repair, and even taking care of any small dents.

Sweet.  He’ll work  on your car while you’re at work or in class, and you can’t beat the price. You know if you go through a body shop, you could be without a car for a week or longer.

Who needs that crap when you have a job or three and need your car to get you to and from?

Besides, it’s only a couple of hundred bucks vs. a couple thousand a body shop would charge. What’s the harm anyway?

Don’t fall for it. Not for a minute.

One of the most popular parking lot hustles involves shady folks who pose as auto body repair techs eager to separate a gullible person from their hard-earned cash. Nobody wants to be caught driving a beater, and these crooks play on that fear.

They watch for people with busted or chipped bumpers, and then they close in.

They may say they’re just starting out in the auto body business and they’ll fix your car for a cheap price as a means of getting started. They may tell you anything.

Maybe they lost their job and are doing auto body work on the side.  A sob story or five…anything to get your cash.

One such hustler had his grandmother in tow, who assured targets that her grandson  was a “good boy.” That good boy was later talking with the cops after a potential victim filed a police report.

Here’s what you do instead:

If you are approached in a parking lot with an offer for auto body work, either say “no” flat out or ask for a business card.

Tell the person thanks, you’ll be in touch; and then Google the crap out of the business listed on the card.

Cross-check them under the Better Business Bureau website. Check Google and Yelp for any reviews.

If nothing checks out, toss the card. No harm done.

If there is no business card in the first place, you just saved yourself from getting played.

If you’re feeling particularly civic-minded, you can file a police report for attempted fraud. Only do this if you have enough information for the police to follow up with.

In short: never take a stranger’s offer of cheap bumper repair.

Your work hard for your money. Don’t be so quick to part with it.

 

 

Real Talk

In which a dyed-in-the-wool car gal muses on an unprecedented run of bad luck and her hopes for getting on the road again.

Next month will mark one year that I’ve been without a car. To some people, this may not seem like news as car ownership has been steadily declining over the past few years. Others may see my see my car-less status as being eco-chic. What could be greener than eschewing a car in favor of alt. transit, right?

Nothing can be further from the truth. I am not willingly without a car. I’m not exaggerating when I say the past year has been brutal, both emotionally and financially.  It started  with an unexpected job loss in January 2015 (and the financial hardship that went with it) and the loss of my beloved Volvo 740 just two months later.

Suck it, first quarter of 2015. 2016, not much better. You’re on notice. Shape up.

My car was not only my sidekick, it was my ticket to social and economic mobility. Job opportunities in my community are scarce, so I used my car to work outside of my locale. I used my car to drive to tutoring and pet-sitting gigs. Multiple income streams and all that.

Discussing things like this isn’t easy, especially in a country that worships bootstrap rhetoric and where falling on hard times is seen as more of a character defect and not as a run of really crappy luck.

Mass Transit Desert

I finally landed a “day job” earlier this month to supplement my freelancing. I’m also now dependent on mass transit to get me to and from work, unsullied and on time. In theory.

I waited dutifully by the neighborhood bus stop on my first day of work. No bus. A quick check of my phone showed I was running late. I looked down the street and saw my friend Tom’s car in the driveway. He opened the door to find a frantic-looking me standing there “HiTomI’mlateformyfirstdayofworkscrewthosebussescanyougivemealiftthankyou!”

I’m damn lucky the new job is right here in town. It would take two hours and two buses each way to work in the next town north of here, just 15 miles away. No wonder ridership on local buses in my area has declined so much.

And so it has been since I started my new gig. It’s hard to not pine for my car owning days. Even the worst day with my old car was better than the current dumpster fire known as mass transit in my county.

Trust me when I say it’s nothing like it is for the merry band of commuters portrayed on the transit agency’s marketing materials. They look so…happy. So on time for work.

They also most likely live in mass transit hubs such as Portland, San Francisco, NY, or Chicago.

I miss having a car. I’m a car gal down to my DNA. I’ve been skimming used car ads in search of a new sidekick. I’m hoping this year will bring not only new adventures, but a car in which to have those adventures and to earn more money.

Screen shot 2016-02-15 at 10.34.16 AM

Dear gods, I’m even looking at used…hybrids.

Something as simple as errands currently require a level of planning reserved for weddings and military missions. Forget about doctor’s appointments, socializing and hobbies.

I am hoping that I can emerge from last year’s run of bad luck (and I thought the recession sucked) and somehow fill my empty carport with a four-wheeled sidekick. Fuel is cheap.  My insurance rates are fantastic due to a clean driving record and eons with the same insurance agency.

Here’s to better days ahead. For all of us.