Before Buying A Vehicle: The Right Steps To Steer The Process

Editor Jeff Fortson is conducting a live car-buying clinic.

Women influence more than 85 percent of car purchases and this group purchase close to 50 percent of all new vehicles based on industry data. In fact, in Essence Magazine March’s 2014 collector’s issue, featuring Oprah on the cover, Jeff Fortson, editor of this site, put together an extensive car-buying guide. You can access the online edition, clicking on essence.com/digitalaccess for a 30-day no obligation free subscription.

Marc Bland, who is a multicultural research guru for IHS, revealed to Jeff Fortson that in 2013 black women purchased 49 percent of new vehicles in their household. This group new vehicle purchases is at a higher rate than any other women demographic. No pun intended, however, automotive executives and marketing gurus realize women and minorities are the key to driving more sales to the street. 

Within the past decade or so, there have been a lot of studies supporting what many of us knew is that women and minorities continue to pay more for a vehicle regardless of income, educational attainment and/or gender. A study conducted in the Chicago area in the 90s revealed African American males were paying more than every other group that made automotive purchases.

Moreover, a January 2014 study by The Center of Responsible Lending in North Carolina revealed how African American and Latino consumers continue to pay higher rates on dealer-financed loans even when, attempting to negotiate.

With that said, how do you know if you’re really receiving a fair deal? There are several issues to consider before you even step onto a car lot! 

Are you a payment buyer? Let’s assume you have $300 a month allocated for a car payment. This could mean the difference in driving a $15,000 Toyota Corolla vs. a $30,000 Jaguar X-Type, when they were available years ago. The Toyota was financed whereas the Jaguar was leased. You get the point. 

Leasing vs. Purchasing will depend on your lifestyle, values and budget. Most people agree to a lease because it allows them to drive something more expensive than our budget really allows us to had we financed the vehicle.
  
According to the New York Times Bestseller, The Millionaire Next Door, a number of millionaires purchase pre-owned vehicles. In light of September 11, 2001, the lower interest rates have caused many to rethink that school of thought. Does it make financial sense to purchase a pre-owned vehicle without a warranty at a higher interest rate as opposed to a new vehicle with a warranty at 0 percent interest and in some cases a rebate? Work out the numbers on the car payment on our car calculator.

As you can see, car buying is a big decision. However, many of us walk by faith without doing our homework. For instance, many of us assume by investing in a prestigious nameplate such, the quality is great.  However, the industry guru, J.D. Power and Associates Initial (and Three-Year) Quality Study doesn’t always support that theory. In fact, unlike in the early 80’s, today’s Hyundai’s and GM made vehicles quality are considerably better.
  
Also, before you drive on a dealer’s lot, check your credit score.  A 1999 documented study conducted by Freddie Mac, Clark–Atlanta University, and several other HBCU’s indicates 47 percent, 34 percent and 27 percent of African Americans, Hispanics and Whites respectively have credit challenges. Due to the current economic climate, one can only assume those numbers have propelled upward.  If you know how to work your deal, a low credit score doesn’t necessarily mean you’ll receive the higher interest rates, just as a high credit score isn’t necessarily indicative of a lower interest rate. The interest rate is in many cases more important than pricing especially on a limited product.

Get pre-approved, before making a purchase. Check out my article from Black Enterprise magazine in the toolbox, which is located on the right, "Who Should Provide Your Financing?"

Moreover, develop a budget and stick to it, research the vehicle you want, examine insurance rates, fuel costs and check maintenance costs. If you are considering a hybrid, electric vehicle or an expensive luxury vehicle like a Mercedes-Benz or Audi, you better also consider the long-term ownership cost, after the warranty expires. 

There are a number of retail chains offering non-negotiable pricing like CarMax. Our recommendation is that you shop them online or in-person. Then, search other stores in the area who are willing to beat their price. The entire car-buying process is all about shopping around, negotiating and using all of the necessary tools available on the internet, before finalizing on a car deal.

Foremost, consider working with dealers and/or individuals that are reinvesting in your community. The National Automotive Minority Automobile Dealer Association connects customers with women and minority-owned dealers in your area. With the proper planning and preparation, you can spend less time asking God to help you make those payments every month!

If you're interested in a live and in-person informative, engaging and a historical perspective of the car-buying process, talking about the industry trends and how to drive home an excellent deal,send an email to speak@jeffcars.com to book him for your next event.