HOUSTON — When driving on the busy streets of Houston, it’s important to have a reliable car or the means to buy one.
“If interest rates go up, you’re going to buy less cars,” said Dr. Adriana Fernandez, a finance professor at Texas Southern University.
“People that are just struggling with money or income at the time, make sure the car you are purchasing is in the budget,” said James Cyphers, general finance manager with My Dealer.
With inflation impacting everything from the cost of groceries, gas, housing, and car buying, it’s crucial you shop smart.
“What happens when interest rates are low? You buy more big-ticket items, things where you need to get credit, so cars,” Fernandez said.
When rates are high, you buy less. Fernandez said, just last year, loan rates to buy a car were as low as 2 to 3%. Now, not so much.
“The loan rate for a new vehicle in the third quarter of this year is 7% and for a used vehicle it’s 11%. It’s crazy,” Fernandez said.
People still need a way to get around, and if you’re in need of a car whether used or new, there are a few things to consider.
“First and foremost, do your own research. The internet is there for a reason,” Cyphers said. “Use it and abuse it to the utmost importance for the vehicle that you want.”
Cyphers told KHOU 11 News when buying a car, debt-to-income ratio must be compared.
“We don’t want to put someone in a position to fail. That’s not why we’re here,” Cyphers said.
So, if you have more cash in hand, but a low credit score, an in-house financing option may be better.
“We also have other financers as well with Low Bell and West Lake and everything,” Cyphers said. “These are subprime credit lenders. They help with lower-income families. They help with lower credit scores and everything.”
Where people fall short is on the maintenance side, he said.
“They have the down payment. They have the credit score to get into the vehicle. But the first time these repairs come up they usually don’t have $500 to $1000 saved up,” Cyphers said.
So, they offer a loyalty program that provides free oil changes for the life of the loan, including brake checks, tire rotations, and a discount on labor. My Dealer also has an extended warranty program for three months from the time of purchase.
Now, if your credit score is good, but your income is on the lower end, Cyphers suggests you go through your bank to have the car financed.
“They are going to reward you for the score that you have. They’ll usually give you a lower down payment and a monthly that makes sense for you,” Cyphers said.
The price of everyday needs skyrocketed, due to inflation, so no matter where you buy your next car, economic experts advise you make sure the rate is fixed.
“There are different types of payment plans. Some of them are really deceiving. My recommendation is to understand the conditions they give you.
Finally, don’t forget to ask for those car facts.