Steering Toward the Right Car

When shopping for your first wheels, evaluate all costs for a car, including gas, maintenance and insurance.
When shopping for your first wheels, evaluate all costs for a car, including gas, maintenance and insurance. (By Preston Keres -- The Washington Post)

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By January W. Payne
Washington Post Staff Writer
Friday, April 7, 2006

So you're ready for your first job. How do you plan to get there? Many new graduates buy their first car just as they enter the working world.

Some people, like 2004 George Mason University graduate Sarah Godlewski, 24, get lucky. She found a 2001 Volkswagen Jetta through a flier posted on a bulletin board on campus during her last semester of school.

The Arlington resident purchased the Jetta outright by saving up her earnings from a part-time job while living off students loans that semester.

"I decided that, weighing my options, student loan debt is good compared to a car loan," she said. Buying the Jetta was probably one of the best moves she made, she added, noting that she got a great deal: She paid $8,000 for the car -- about $4,000 less than it was worth at the time.

By avoiding a car loan, Godlewski was able to skirt the oh-so-intimidating financing process that can haunt even the most car-savvy adult. The car-shopping experience can be daunting, but it's doable if you prepare ahead of time.

So, to aid you as you shop, here are five basic steps to getting a set of wheels.

· Know your pocketbook. "Look for what you can afford," advised Mark Perleberg, lead automotive expert for the National Automobile Dealers Association (NADA). Consider how much money you expect to earn at your first job, and then subtract your housing costs, car insurance, utilities and other monthly bills. Then figure out how much of what's left you want to put toward a car payment. Keep this figure in mind as you do your online research. Shop around.

One important factor to understand is the cost of car insurance -- it varies by location and the type of car you own or lease. Location matters, Perleberg said. "If you live in an area where they have a high rate of car theft or accidents or traffic," your car insurance rates will be higher. Same goes for if you own a more expensive or high-horsepower car.

· Know your credit score. Pull your credit report well ahead of time. That way you can dispute incorrect information or add explanations for extenuating circumstances that may have caused you to fall behind on bills. Knowing your credit score avoids the embarrassment of being surprised at a dealership. Some buyers may need to consider a co-signer if their credit history makes it difficult to get approved on their own.

The three major credit bureaus are Equifax ( http://www.equifax.com/ ), Experian ( http://www.experian.com/ ) and TransUnion ( http://www.transunion.com/ ). You're entitled to one free report from each bureau annually (see http://https://www.annualcreditreport.com/cra/index.jsp ); an additional charge applies if you want your credit score.

Once you have your credit background in hand, shop around for car loans to find the best rate. Many people accept dealership financing, but you also have the option of coming in the door with your own financing; credit unions, for example, often offer competitive rates. Or consider doing a search online to find reputable banks that offer competitive car loan rates, but be wary of applying for every offer since each vendor you apply to must pull your credit.

· Do your homework. When car shopping, you can never know enough about the vehicle you're interested in, Perleberg said. Is it reliable? Safe? Has it sold well in the past? Any recalls?


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© 2006 The Washington Post Company

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