Financing a first car

Editor's note: This is the third story in a three-part series dealing with purchasing a car. This story focuses on financing and leasing.

By JOEL MYERS
Collegian Staff Writer

Purchasing a vehicle can be a difficult financial feat for most car buyers, and virtually inconceivable for many college students. Careful planning, however, can make leasing or buying a new car possible.

"(Buying a car) can be a very confusing landscape, so a lot of groundwork should be laid," said Gene Stocker, owner of Stocker Chevrolet Inc., 701 Benner Pike. Through advancements in financing, loans and leasing, even young prospective car buyers may be able to afford a vehicle compatible with their budgets.

When looking for a loan, car buyers should shop around for as many options as possible, according to the Microsoft Carpoint World Wide Web site (www.carpoint.msn.com). Typically customers should research loans from automotive dealerships, credit unions, commercial banks and finance companies, but for the most part, car loans are very similar, according to the Web site.

Despite the lengthy process of researching loans, dealerships can often check rates quickly and get a loan approved during a customer's first visit.

When a car loan application is received, a credit report and the cost of the vehicle often determine the loan, said Bernadine DeSante, First Union financial specialist. Because most college students or recent college graduates usually do not have an established income or savings, the credit report is important to the loan process.

If a customer does not have a lengthy credit history or income, leasing may be a good way to take home a new vehicle, said Barry Creany, senior deputy attorney general at the Bureau of Consumer Protection. He added leasing can be thought of as paying to use a new car.

Lease payments cover the cost of a vehicle's depreciation during the length of the lease rather than payment for the cost of the vehicle, according to Carpoint's Web site. The person leasing the vehicle is expected to maintain the car during the lease.

After the lease term is satisfied, the customer usually has the option to purchase the car, Creany said. Leasing may have a lower monthly payment, but if a consumer's intent is to purchase a car after leasing, leasing may be more expensive.

Once a customer has decided to buy or lease a vehicle, some special offers may exist to lower the cost of the vehicle without regard to financing. Some dealerships offer a first-time buyer's rebate, for which first-time new-car buyers may be able to qualify, Stocker said.

Many manufacturers offer recent-college-graduate rebates to aid those who want to purchase a new vehicle. Most dealers require proof of intent to graduate or a recent diploma and a written job offer for eligibility.

"You've got to ask if any of these (discounts) apply," Stocker said. "It is to the advantage of the dealership to create a good selling environment to promote a long-term relationship."

• Feb. 3: Buying used without research can create risky car purchase
• Feb. 2: Shopping for wheels