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First-time car buyer tips, guide, checklist

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  • Lockdowns due to the COVID-19 pandemic are making first-time car buyers out of many.
  • Whether you’re buying new or used, it’s important to do your research before you commit to anything.
  • Vehicle maintenance is also an important thing to remember.
  • Visit Business Insider’s homepage for more stories.

Thanks to the COVID-19 pandemic, taking public transportation or flying might not seem so safe right now.

For many, the next logical step is to consider car ownership. People who have never owned a car before now suddenly find themselves endeavoring on the daunting task of car buying for the first time ever.

Car dealerships, in response to a drastic decline in foot traffic in their showrooms, have adopted virtual tours and car deliveries to make the process easier for those wishing to stay safe. But the dealership is just a small part of the whole process — there are a number of things that need to happen first before you even set foot in one.

Whether you are looking for a new or used car as your first car, here are some steps you can take to make a smart and informed decision.

1. Establish a budget

Don’t spend more than you have. This seems very obvious, but it’s still worth repeating. Figure out how much money you have to spend, hopefully without altering your life too much. Do you have enough to pay cash upfront? Or do you need a loan?

If you need a loan, car-buying expert Tom McParland, who owns a service called Automatch Consulting that helps people buy cars, suggests using an easily Google-able tool called the “car loan calculator.”

“You can start with your payment, estimated APR and loan term and it will give you your spending limit,” says McParland. “Don’t forget to factor in for tax, fees, etc. Any trade or down payment you have will increase the budget accordingly.”

2. Buy it before you need it

Another thing to keep in mind as you approach car buying is to buy the car before you need it. Basically, if you are faced with a situation where you can’t get to work because you don’t have a car, it means you likely won’t have as much time to devote to careful research and financing options.

Stay ahead of that. If you anticipate you’ll need a car soon, it’s better to get it sooner rather than later.

3. Consider your timing

There are certain times of the year when you can potentially score a better deal. McParland says, “Late summer [and] fall are usually when dealers try to clear out older inventory in anticipation with new models. And often between Thanksgiving and Christmas, there are good deals.” 

4. Know what type of car you want

You, being a citizen of this world, have certainly observed that there are many types of cars to choose from. 

What sort of car fits your needs? Do you want something compact because you live in a city? Or do you want something bigger to fit all your cargo and family members? Do you live somewhere with inclement weather? 

These are all things to think about when considering a car.

Furthermore, ask yourself if you want to go down the new-car or used-car route. 

New cars, of course, mean that you’ll get stuff like a factory warranty and you can avoid situations where you have to worry about past owners. But new cars also tend to be more expensive and have not taken a depreciation hit yet. If you buy new, you’ll take the depreciation hit. 

Used cars can be cheaper, but they require a bit more individual looking-over before you can pull the trigger. More on that later.

But for now, also know that if you’re thinking about a used car, consider a good Certified Pre-Owned deal — a used car that’s been through some kind of pre-sale inspection — but be sure to ask to see the specifics of that inspection and anything that might have been repaired, advises Cars.com.

The other used-car route to think about is the used-rental-car route. Business Insider has detailed how to buy a used rental car here. They’re not always as scary as you might think!

5. Research your car(s)

Once you’ve narrowed your search down to one car — or a few — it’s time to read reviews. 

There are several places to read up on a car review, Business Insider included. See if you can find any long-term car reviews. Typically, automakers loan cars to journalists for only a week at a time, so while you’ll get pretty good driving impressions and material takeaways from shorter reviews, most won’t have insight into what it’s like to actually live with the car for a long period of time.

For things like safety ratings, go on either the National Highway Traffic Safety Administration‘s or Insurance Institute for Highway Safety‘s website for safety information and ratings. NHTSA also has a database of recalls you can look into.

For economy information, simply search for the year, make, and model on the US Department of Energy’s website, the official government source for fuel economy information.

Finally, read the forums. Almost every single model of car has dedicated car forums: online communities where owners gather to discuss repairs, issues, or swap stories. Looking through the forums, you can see if owners found things that were commonly defective across all their cars, or listen to their complaints. 

6. Get your finances in order

If you are thinking about getting a loan, it’s important to know your credit score. 

US News recommends obtaining a pre-approved loan before you even set foot in a car dealer as a way to negotiate later: “By applying to at least one local bank, credit union, online bank, or online lender, you can get an offer that a dealer will have to meet or beat to get your business. Without an offer in hand, the seller will have no incentive to cut you a deal.”

On top of that, loans come with a bunch of stuff you’ll need to learn. US News has this separate guide that walks you through all the vocabulary

Also, as cars and trucks have gotten more expensive in recent years, lenders have been increasing the length of their loans. Now, you can find 72 and 84-month car loans, which is a terrible idea! Don’t fall for those.

Those interest rates are typically higher and you might very well end up owing more money than the car is worth. And when the warranty runs out, you’ll have to worry about expensive repairs while still making payments. 

Cars are depreciating assets. Keep that in mind. Hardly any car is going to appreciate in value as time goes on. 

7. Have a place to park it

The ideal situation is one where you have a driveway or a garage space for the car. But if you don’t, will you have to purchase a space to use? A permit? Or will you street park? Are you familiar with the local parking laws around your home? 

It’s a good idea to square all this away before you bring home a new car.

8. Research the dealership

Not all dealerships are created equal. Some offer better services than others. Some have better inventory than others. In general, it’s better to check out a dealer’s inventory before showing up just to browse. Call and confirm the specific model you are looking at is available.

Also confirm that test drives are offered. This is arguably the most important part of the whole process, which we’ll get into in just a second.

On avoiding bad dealerships, McParland says, “Read reviews on dealerships and especially be careful about places that specialize in selling cars to folks with bad credit. Be sure to understand your contract and be clear about the numbers before you sign.”

He goes on, “The internet is key here. Sometimes you can find a better deal or a better value by casting a net outside of your region. Always get quotes in writing via email before you go to the dealership.”

9. The test drive

The big moment! The one you’ve been waiting for! This is where you can finally meet the car you’ve been reading about and turning over in your head. Test drives are the place where you can physically evaluate the car that you’ll be potentially spending a lot of money on and time with. 

As mentioned above, make sure to ask for a test drive — and one of good length at that, if you can swing it. See if you can try the car out on both local roads and highways. Places where you’d typically spend a lot of time in your car. 

Also know that a test drive doesn’t just evaluate how a car drives, but also how it fits with you. Before even leaving the lot, take some time to sit in the car, move the seat to your driving position, and see if you are comfortable. Can you see out of the windows easily? Can you fit all of your stuff in it? Does your family fit comfortably in it? Sometimes a car can seem perfect on paper and then the whole idea falls apart as soon as you get into the driver’s seat.

When it comes to a used car, this evaluation is even more important, because you are also looking out for potential wear and tear. Make sure the electronics work, check the condition of the body, see what condition the tires are in. Obtain a vehicle history report and maybe even ask an independent mechanic to examine it. It’s a small price to pay to potentially avoid a big mechanical issue in the future.

And once you go for that test drive, listen for any irregular noises and be on the lookout for any abnormal vibrations coming from either the wheels or the steering wheel. That could indicate a mechanical problem or issues with the wheels or tires. 

10. Negotiate

Now, it’s time to negotiate. 

“Remember, the margin for negotiation on used cars is very different than new,” says McParland. “Used cars might have a few hundred bucks worth of wiggle and often dealers will have a ‘no haggle’ price, [but] this doesn’t always mean they are ripping you off. With the online marketplace, often dealers need to price their cars to sell quickly.”

If you notice an issue with the used car but it’s not a dealbreaker, maybe use this as a reason for the seller to bring the price down a bit. If you’ve shopped around and know of another seller that’s offering a competitive price, perhaps it’s worth mentioning that, too.

And if you’re paying cash upfront, you probably have quite a bit more negotiating power. Cash is king, after all.

At the end of all of it, though, be ready to walk away if the deal doesn’t suit you.

11. Understand that cars need to be maintained

Admittedly, this isn’t a car-buying-specific tip, but it’s a bit of advice every car owner ought to know: maintain your car! 

Your car isn’t some magical machine that will run perfectly forever and ever and you don’t ever need to think about it once you buy it. They also need maintenance and service. If you can get a warranty for the first few years, that’s ideal, but after that, you need to be on top of keeping it maintained.

Consumer Reports has a great guide on how to maintain your car, which you can read here, but it includes checking the oil, tire pressure, brakes, battery, and tire tread. Don’t ignore any weird noises if they develop, and definitely don’t ignore the check engine light. This can protect you from costly repairs in the future. 

Washing your car helps, too. The paint is what protects the body from rust, so it’s a good idea to keep the paint nice, especially if you live in a place where the roads get salted often during the winter. Opt for undercarriage spray during these months, as salt can accumulate there and cause problems.

A well-maintained car will last longer and you’ll get more out of it. And it’s safer.

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Indigo Platinum Mastercard Review | NextAdvisor with TIME

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We want to help you make more informed decisions. Some links on this page — clearly marked — may take you to a partner website and may result in us earning a referral commission. For more information, see How We Make Money.

Indigo® Platinum Mastercard®

Indigo® Platinum Mastercard®

  • Intro bonus: No current offer
  • Annual fee: $0 – $99
  • Regular APR: 24.90%
  • Recommended credit score: 300-670 (Bad to Fair)

The Indigo Platinum Mastercard can help you build a better credit score (if you practice good credit habits) with monthly reporting to the three credit bureaus. Unlike many other options for building credit, this is an unsecured credit card, so it doesn’t require a cash deposit as collateral. But you may incur an annual fee, depending on your creditworthiness when you apply.

At a Glance

  • Monthly payment reporting to the three credit bureaus for people with limited credit history or poor credit
  • Annual fee of $0, $59, or $75 the first year, depending on your creditworthiness ($75 version charges a $99 annual fee after the first year)
  • Unsecured credit card with no security deposit required
  • Standard variable APR of 24.9% 

Pros

  • Available to individuals with no credit history or low credit scores

  • Unsecured credit card

  • Annual fee could be as low as $0 depending on your creditworthiness

  • Monthly payments report to all three credit bureaus

Cons

  • No rewards

  • Annual fees vary depending on creditworthiness, and you won’t know your fee until you apply

  • High variable APR

  • $300 credit limit

Additional Card Details

The Indigo Platinum Mastercard is geared toward people with “less than perfect credit” or minimal credit histories. Like other credit-building card options, it doesn’t offer a lot of perks.

You will get a few benefits, like online account access and reporting to all three credit bureaus (Equifax, Experian, and TransUnion). You can also choose from multiple card designs for no extra charge.

Prequalification is another benefit of the Indigo Platinum Mastercard. Prequalifying is a great way to gauge your approval odds and the terms of your offer without filling out a full application and undergoing a credit check, which can temporarily hurt your credit score. If you do choose to apply after pre-qualifying, you’ll still be subject to credit approval with a hard credit inquiry.

Should You Get this Card?

Many credit cards available to people with bad credit scores are secured credit cards that require a cash deposit as collateral. The Indigo Platinum Mastercard offers an alternative to secured cards for building better credit, but has its own drawbacks.

For one, your credit limit is capped at $300. If you’re approved for a version of this card with an annual fee, it’ll be automatically applied, which means your starting limit could be as low as $225. 

The annual fee itself is another drawback. The amount you’re charged will depend on your creditworthiness when you apply. If your approval comes with an annual fee, that $59 or $99 ($75 the first year) charge can quickly add up over time. Consider other cards with no annual fee (and even no annual fee secured credit cards) that may make better long-term options for building a healthier credit profile.

How to Use the Indigo Platinum Mastercard

Because the Indigo Platinum Mastercard doesn’t offer any rewards and your credit limit is just $300, you should use this credit card for the sole purpose of improving your credit score. Only make purchases you can afford to pay off when your statement is due, and pay your bill on time to avoid up to $40 in late fees and a penalty APR up to 29.9%. 

Pro Tip

Building a great credit score, whether you’re starting from no credit history or repairing damaged credit, requires a foundation of good credit habits your credit card can help establish — such as timely payments, low credit utilization, and paying off your balances in full each month.

The Indigo Platinum Mastercard’s low credit limit means you’ll need to be extra careful with your spending to improve your credit score. Using more than 30% of your available credit can hurt your credit utilization rate — one of the most influential factors in your credit score. With a credit limit of $300, that means you should keep your charges below $90.

The goal of a card like Indigo Platinum Mastercard is to, over time, improve your credit score enough to qualify for a better credit card. Use this card to establish and maintain the healthy credit habits (like timely payments in full, low utilization, and consistently paying down balances) that will improve your credit long-term, and help you qualify for a card that’s better suited for your spending habits in the future.

Indigo Platinum Mastercard Compared to Other Cards

Indigo® Platinum Mastercard®

Indigo® Platinum Mastercard®

  • Intro bonus:

    No current offer

  • Annual fee:

    $0 – $99

  • Regular APR:

    24.90%

  • Recommended credit:

    300-670 (Bad to Fair)

  • Learn moreexterna link icon at our partner’s secure site
Citi® Secured Mastercard®

Citi® Secured Mastercard®

  • Intro bonus:

    No current offer

  • Annual fee:

    $0

  • Regular APR:

    22.49% (Variable)

  • Recommended credit:

    (No Credit History)

  • Learn moreexterna link icon at our partner’s secure site
Capital One QuicksilverOne Cash Rewards Credit Card

Capital One QuicksilverOne Cash Rewards Credit Card

  • Intro bonus:

    No current offer

  • Annual fee:

    $39

  • Regular APR:

    26.99% (Variable)

  • Recommended credit:

    (No Credit History)

  • Learn moreexterna link icon at our partner’s secure site

Bottom Line

EDITORIAL INDEPENDENCE

As with all of our credit card reviews, our analysis is not influenced by any partnerships or advertising relationships.

If your credit score isn’t great and you want to start building the credit foundation to move in the right direction, the Indigo Platinum Mastercard can help by reporting your usage to the three credit bureaus — if you practice good habits that will reflect positively on your report. But you may also take on a pricey annual fee and risk high utilization due to the card’s low credit limit. Before applying, consider other cards for bad credit and secured credit cards with no annual fee that may better serve your credit-building goals.

Frequently Asked Questions

The Indigo Platinum Mastercard is a decent option for consumers with poor credit who don’t want to put down a security deposit on a secured credit card. Check your prequalification terms, and compare other options for people with fair credit or bad credit before applying.

The credit limit for the Indigo Platinum Mastercard is $300. If you get approved for a version with an annual fee, your annual fee will be deducted from your credit limit.

The Indigo Platinum Mastercard is an unsecured credit card, so you do not have to put down a cash deposit as collateral.

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Akron community supports council recommendations on police reform

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Doug Livingston
 
| Akron Beacon Journal

Critics on either side of the police reform debate see promise in what Akron City Council has done.

The union representing officers “can work with” the eight recommendations in council’s 22-page report on Reimagining Public Safety, which was released publicly this week.

The head of the Akron NAACP is applauding the time and consideration council committed to do “something that definitely needed done.”

And the Rev. Greg Harrison, a retired Akron detective a regular critic of local lawmakers who fail to understand the inner working of the city’s police force, praised council members for allowing officers to educate them on policing in Akron before putting together “substantial” and “solid” recommendations.

“I am very surprised, because really I did not think that the council was going to come up with such substantial recommendations,” said Harrison. “I am surprised, but I’m happy. I think the recommendations, if implemented, put us light years ahead of what any task force can come up with.”

Eleven of the 13 City Council members present Monday afternoon unanimously supported a resolution adopting the recommendations. But that’s all they are, at this point: recommendations to work with the next police chief, the mayor and community partners to craft legislation after collecting public input.

And some of these recommendations have been recommended before.

The first — to give the city’s independent police auditor enough staff and resources to do his job — has been sought by the community since the position was created in the early 2000s. It was a priority in a 2011 report by the Police Executive Research Forum, an independent firm of law enforcement experts who dived into policing in Akron when leaders kicked around the idea of reforms more than a decade ago.

“I want to applaud them for taking the time to do what they did,” Judith Hill, president of the Akron NAACP said after looking over the recommendations. “I think it was important and it was something that definitely needed to be done.

“And I know this is the beginning of a process,” she continued, “but I don’t see anything that sets aside funding to support changes.”

Some recommendations, like crisis intervention training to all officers, identify limited funding as a barrier.

On that, Fraternal Order of Police Lodge No. 7 President Clay Cozart agrees with some of the loudest advocates for change.

“It’s going to require more officers. It’s going to require more training. And it’s going to require more funding, and that’s probably the most difficult issue to tackle,” Cozart said.

He added that he found it “disingenuous” that council, though reaching out to him Sunday, waited until 10 minutes before the recommendations went public on Monday to share them with him.

General approval of the eight recommendations, which can be viewed at https://bit.ly/3piHNyc, was not without some concern. The Beacon Journal sought but received no comment from Police Cheif Ken Ball, who is retiring in February, or Maj. Michael Caprez. 

Cozart said ramping up foot and bike patrols is fine, as long as an officer in danger isn’t left high and dry because backup is walking to get there.

Harrison paused when he got to language about hiring. Candidates are screened and questioned on their bad credit reports and drug offenses, which could be minor and nonviolent. This interview process, which involves a lie detector test, determines whether they get hired.

“They have absolute control of recommending or not recommending them,” Harrison said of sergeants doing the background investigations of potential cadets. “When they say it’s an honesty issue, that’s a judgement call. And when you’re talking about implicit biases, a lot of those biases come into play.”

Hill said she and members of her community have a strong interest in some citizen oversight committee. Council, instead, recommended strengthening the police auditor’s position, which Hill said she was something sought “across the board” in the community.

Now, she said, lawmakers need to find ways, in conjunction with the mayor and Akron police and community partners, to fund these recommendations and benchmark progress by collecting data today “to see how changes are affecting policies and procedure” after implementation.

“I was pleased to see all of the progress our city is making both in structure and inclusive thinking to better benefit Akron citizens and help our police department both reflect and serve the community more effectively,” added Bree Chambers, president of Akron Minority Council. The group of youth-led social justice advocates handed the mayor and council a list of police reforms in July, including a “great many” of that are “outlined or alluded to” in council’s recommendations.

As council works to legislate the recommendations, University of Akron Sociology and Anthropology Department Chair Rebecca Erickson has been asked to host virtual town hall meetings with residents in every city ward. Faculty and students will facilitate the conversations generated by the recommendations. Erickson said police officers will join the discussion by the end of the spring semester as a community survey solicits broader feedback.

Council President Margo Sommerville said that since council announced the special committee on Reimagining Public Safety in July, the public has asked when they would get the chance to speak on the topic of policing and community relations.

“Maybe there’s something that we missed that needs to be addressed,” Sommerville said. “So, we want to give the public that opportunity to do that. We’re really excited about this partnership and collaboration with the University of Akron because that too is something that we have not tapped into enough.”

Prior to approving the recommendations, council members thanked police officers and command staff who educated the special committee’s four working groups. It was enlightening, they said.

“We are probably far more advanced than many police agencies in terms of incorporating social services in to the police work that we do,” said Councilwoman Linda Omobien, the director of clinical services at Community Support Services.

“The Akron Police Department liaisons showed that this is an institution that has led the way on many of these issues, like on Crisis Intervention Team training. At the same time, they really showed that they want to keep moving forward,” said Councilman Shammas Malik, who was regarded by colleagues on council as critical to the success of a fact-finding, deliberative process that spanned five months and 22 meetings.

“It would not have been possible if not for him,” Sommerville said.

Malik credited Sommerville’s leadership as the driving force in “something that council hasn’t done before.”

“When we talk about building equitable policing, when we talk about improving community trust with law enforcement, here are ideas that I think we can all get behind,” Malik said. “Getting community input through the University of Akron is going to be important.”

Councilman Russ Neal said the process council started in September to better understand policing is a model for understanding and legislating solutions to other complex problems like housing high utility costs in the city. Neal asked council to consider more staff to help them dive deeply into other issues.

Along with involvement, Cozart said the union supports legislation that is grounded by facts. The process led to “more enlightenment and education on both sides,” he said.

“Change has to occur,” Hill said. “And it’s going to be a win-win for everyone once we get through the process.”

Reach reporter Doug Livingston at [email protected] or 330-996-3792.

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How Are Car Loans Amortized?

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Auto loans use simple interest, which means the balance of your auto loan determines your interest charges. An amortization schedule outlines how your interest and principal are paid in a simple interest loan. Here’s how simple interest works, and how you can save money when you finance a vehicle.

Auto Loan and Simple Interest

A loan that amortizes means that the principal is reduced over time, and requires monthly (or regular) payments. Your monthly payments are applied to both the principal of the loan and your interest charges that accrue. Most car loans use a simple interest formula. This means that your interest charges accrue daily based on the balance of your principal. The less you owe, the less you pay in interest charges.

The benefit of a simple interest formula is that with each on-time payment, you’re reducing your interest charges because you’re lowering your principal balance. This also means you’re charged less interest each time your payment rolls around.

To see how much interest you’re charged per payment, you can look up an amortization schedule and enter your auto loan terms. Here’s a quick example:

Auto loan terms:

$20,000 car loan / 60-month loan term / 10% interest rate / $424.94 monthly payment

  • First payment of $424.94:
    • Interest $167 / Principal $258 = Balance $19,742
  • Second payment $424.94:
    • Interest $165 / Principal $260 = Balance $19,481
  • Third payment $424.94:
    • Interest $162 / Principal $263 = Balance $19,219

As you can see, with each monthly payment you lower how much you pay in interest charges. Since there’s less interest accrued, more of your monthly payment is applied to your principal every month.

Planning Your Next Car Loan

How Are Auto Loans Amortized?Now that you know how auto loan amortization goes, you can plan your next car loan with confidence. It’s important to set yourself up for success and choose loan terms that benefit you.

While you may have some say in your loan terms, your credit score is a major player in qualifying for vehicle financing and determining your interest rate. With a low credit score, you’re more likely to qualify for a higher interest rate. If this is the case, then it’s typically more beneficial for you to choose a shorter loan term and/or a more affordable vehicle.

Opting for an expensive vehicle with a long loan term and a high interest rate puts you at risk for negative equity. Negative equity is when you owe more on the car than it’s worth. A higher interest rate can mean more of your monthly payment is applied to interest each month, and less to your principal – which can make it hard to lower your loan balance quickly.

If you’re a bad credit borrower and you’re concerned about paying excessive interest charges, it’s wise to choose a used vehicle. They’re usually more affordable, and you’re more likely to qualify for a loan on a lower sticker price.

Another way to reduce interest charges is by putting more money down on the loan. Saving a large down payment can take time, but lowering your loan amount means fewer interest charges can accrue.

If you have poor credit, a down payment requirement is customary. A good savings goal is at least $1,000 or 10% of the vehicle’s selling price. Most subprime lenders require at least that, and you can always put more down. The more cash you bring to the table, the fewer interest charges accrue over the course of your loan.

Take the Leap Into Vehicle Financing

Being prepared for an auto loan is a great first step in financing a vehicle. However, with a lower credit score, it can be difficult to find a lender that can assist you. There are lenders willing to help borrowers with credit challenges, though: subprime lenders.

These lenders look at more than your credit reports. Instead of just relying on your credit history, they examine your income, overall stability, and require a down payment. They’re signed up with special finance dealerships and we want to help you get in touch with one.

Here at Auto Credit Express, we’ve created a network of dealers that are signed up with subprime lenders, and we’ve been helping borrowers find lending resources for over 20 years. Get started today by completing our free auto loan request form. Using our network, we’ll look for a dealership in your local area that has bad credit options. Take the leap into vehicle financing with us today, with no cost and no obligation!

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