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الخميس، 25 أكتوبر 2018

5 Ways to Avoid Common Financial Pitfalls When Shopping for a Car


You’re a responsible driver. You follow the rules of the road. You never let your car insurance lapse. No one would ever catch you texting while driving.

But are you a responsible car buyer?

Analysts at Edmunds, an online automotive resource, dug into more than 842,000 vehicle purchases made between May and September to evaluate which states’ residents displayed the most responsible car-buying behavior.

The analysts evaluated behavior using these four criteria:

  • The average percentage of vehicle trade-ins in which the owner had negative equity (meaning the owner owed more money on the car than what it was worth)
  • The average amount owed when an owner had a negative-equity trade-in
  • The average length of the auto loan
  • The average auto loan interest rate

Edmunds found car buyers in the Northeast to be the most responsible, while buyers in the South could stand to improve their car-buying behaviors.

The states with the most responsible car buyers were Connecticut, Massachusetts, Rhode Island, Michigan and New Jersey. The states with the least responsible car buyers were New Mexico, Arkansas, Alaska, Mississippi and Oklahoma.

Ivan Drury, Edmunds’ senior manager of industry analysis, said in the report that being well-informed and prepared before going to the dealership help buyers make responsible purchases.

Analysts noted that residents in the top five states spent about 55% more time reviewing car shopping calculators before making their purchases when compared with residents in the bottom five states. Specifically, they worked with auto buying calculators at Edmunds.com, which estimate monthly payments and affordability, among other features.

“While there are certain things about shopping for a car that are out of your control, like your budget or needs, being smart about your research is something every consumer can do,” Matt Jones, Edmunds’ senior consumer advice editor, said in the report.

5 Smart Ways to Be a More Responsible Car Shopper

Edmunds shared five things smart shoppers do when buying a new car.

  1. Shop around for auto loans and get preapproved for a loan before visiting a dealership.
  2. Have a down payment of at least 10%, and combine that with GAP insurance or new-car replacement coverage so you won’t be underwater on your loan in the case of a major car crash.

(GAP insurance — guaranteed auto protection insurance — covers the gap between what you owe on your auto loan and what the car is worth after depreciation. New-car replacement coverage will pay for you to replace a totaled car with the same make and model — though there are rules about how old the original car can be and how many miles it can have.)

  1. Avoid car loans longer than 60 months.
  2. Think about the residual value — or the future value of the car — before buying a new vehicle.
  3. Consider getting a lease instead of buying if you don’t plan on keeping the car long.

States With the Most and Least Responsible Car Buyers

If you don’t live in the top or bottom five states, you may be wondering where your state falls in the ranking of most responsible car buyers.

The complete list of states from the most responsible car buyers to the least responsible is:

  1. Connecticut
  2. Massachusetts
  3. Rhode Island
  4. Michigan
  5. New Jersey
  6. Pennsylvania
  7. Wisconsin
  8. New York
  9. Hawaii and Maine (tied)
  10. California and Minnesota (tied)
  11. South Dakota
  12. New Hampshire
  13. Delaware
  14. Virginia
  15. Indiana
  16. Illinois
  17. Iowa
  18. Kansas and Ohio (tied)
  19. Nebraska
  20. North Dakota
  21. Missouri
  22. Vermont
  23. Maryland
  24. Oregon
  25. Washington
  26. Colorado
  27. Montana and Utah (tied)
  28. Tennessee
  29. Kentucky
  30. West Virginia
  31. South Carolina
  32. North Carolina
  33. Idaho
  34. Louisiana
  35. Alabama, Nevada and Wyoming (three-way tie)
  36. Georgia
  37. Texas
  38. Florida
  39. Arizona
  40. Oklahoma
  41. Mississippi
  42. Alaska
  43. Arkansas
  44. New Mexico

How does your state measure up?

Nicole Dow is a senior writer at The Penny Hoarder. She has owned only used cars and has never taken out an auto loan.

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This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.



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