FEDERAL DEPOSIT INSURANCE CORPORATION 

February 22, 2019 

consumer news PHOTO: GETTY IMAGES 

Considering Buying a New Vehicle? Know This! 

Put yourself in the 

driver’s seat with 

these great tips 

Many experts consider January and 

February a good time to make a vehicle 

purchase because consumers have access 

to the newest models and prices tend to 

be lower than later in the year. Tere are 

other ways to save on this important 

purchase, such as improving your credit 

score for better interest rates, saving for 

a larger down 

payment, buying 

a less expensive 

car than planned, 

and getting fewer 

add-ons, features, 

or options on a 

vehicle. If you’re 

thinking about 

buying a new car, 

before you head 

out to a dealership, 

review these tips 

and resources to 

determine if this 

is the right time 

for you. 

How much should I spend? 

Creating a budget is one of the best ways 

to show what funds are available and what 

is needed to make a car purchase. Te cost 

of the vehicle is just one part; there are 

additional upfront costs to consider like 

taxes, title fees, and dealer fees. Ten there 

are costs to protect your new purchase 

and keep it in working order, such as 

insurance, gas, tires, annual registration 

fees, maintenance, and even parking. It is 

a lot to consider, and seeing all of the costs 

together will give you a better picture of 

what is required. 

A personal budget is a great tool to capture 

expenses and help determine how much to 

spend. Budget templates are available in a 

variety of formats for smartphones, tablets, 

and computers, and ofen look something 

like this: 
For more information on budgeting, visit: 

https://www.consumer.gov/content/makebudget-worksheet 

https://www.consumer.gov/sites/www. 

consumer.gov/files/pdf-1020-makebudget-worksheet_form.pdf 

Credit scores and loan costs 

It’s a good idea to shop for loans to get the 

best interest rate and terms. Your credit 

score also helps determine what kind of 

auto loans and interest rates are available 

to you. A higher credit score typically 

gives you a better interest rate on your 

loan. To learn more about improving your 

credit score, go to: https://www.fdic.gov/ 

consumers/consumer/news/cnsum15/ 

creditscores.html. 

Be sure to review your credit report and 

dispute any errors that you may fnd to 

ensure your credit score is accurate. 

For more information about obtaining 

a free copy of your credit report, visit: 

https://www.fdic.gov/consumers/ 

assistance/protection/creditreport.html 

Loan Preapproval 

Getting preapproved for a loan by multiple 

lenders allows them to compete for your 

business. This puts you in a stronger 

negotiating position with your lenders 

and can help lower your total loan cost. 

Be sure to compare the fnancing ofered 

through the dealership with the rate and 

terms of any preapproval you received 

from other lenders, and then choose 

the option that best fits your budget. 

Regulation Z, which implements the 

Truth in Lending Act, requires banks 

to provide consumers with certain 

information about a loan before you 

decide to move forward with it. Banks 

should provide an itemization of the costs 

to be financed, annual percentage rate 

(APR), payment schedule, total number of 

payments, late payment information and 

fees, and security interest information. 

Co-signers 

Consider whether or not you need a cosigner for your auto loan. A co-signer is a 

person, such as a parent, family member, 

or friend who is contractually obligated to 

pay back the loan if you can’t. If your credit 

history is limited, needs improvement, 

or you have a low credit score (or no 

credit score), a co-signer with good or 

excellent credit could signifcantly lower 

your interest rate. Te lender relies on the 

co-signer’s credit history and score when 

deciding whether or not to make the loan. 

You and the potential co-signer should 

think carefully about this option. If you 

do not repay your loan, you and your cosigner will be responsible for repayment. 

Te co-signer will be responsible for the 

loan even though he or she has no right 

to possession of the vehicle. In addition, 

any late payments made on the loan would 

afect both your credit history and scores 

and your co-signer’s credit history 

and scores. 

Add-ons 

Some common add-ons are service 

contracts or warranties, Guaranteed Auto 

Protection (GAP) Insurance, and Credit 

Insurance. Often there are optional 

physical features for the vehicle, such as 

alarm systems, window tinting, tire and 

wheel protection, and other products 

offered by the auto dealer. It’s a good 

idea to think about optional add-ons 

ahead of time, so that you are prepared 

and know what you want on the day you 

fnance your vehicle. If you buy them, it 

will increase the total cost of your loan. 

Shopping around for any add-ons that you 

decide you want can also save you money. 

Buying a new car can be exciting, just 

make sure you are well informed on the 

costs and fnancing and have a plan in 

place before you start shopping. 

For more help or information, go to www.fdic.gov or 

call the FDIC toll-free at 1-877-ASK-FDIC (1-877-275-3342). 

Please send your story ideas or comments to Consumer Affairs 

at consumeraffairsmailbox@fdic.gov