Tips to avoid those potholes when car shopping

At this time of year, many Mainers hose the road salt off their cars and find out they no longer like what’s underneath. Thus begins the spring ritual of shopping for a set of “wheels.”

Whether buying new or used, your first car or the next in a long line of cherished chariots, you need to do your homework before shopping. An automobile is the second-largest investment most people make, but the process often produces more anxiety than a first date.

Before you hit the lots, consider your driving habits and needs. Do research at home. Information about models, options and prices is readily available in newspapers and on the Internet.

Every major car company has a Web site and the Internet contains a wealth of information about “previously owned” vehicles (keyword: used cars).

Libraries and bookstores have publications that compare models, options and costs and offer frequency of repair records, safety test results and mileage comparisons as well as do’s and don’ts of buying a used vehicle.

Once you narrow your choices, research frequency of repair and maintenance costs in auto or consumer magazines and online. The U.S. Department of Transportation (auto safety hot line 1-800-424-9393 or online) is a good source for recall information.

Next, take a realistic look at your budget. If you are paying cash, establish a maximum price you will pay. If you finance or lease, the total cost of the vehicle increases because you’re paying for the cost of credit, including interest and other loan costs. Determine how much of a down payment you can make and decide on a maximum monthly payment you can afford. If you have a vehicle to trade in, see what the dealer will offer but also determine what you could get for selling the car yourself and using that cash as a down payment. Carefully consider the length and terms of the loan and the annual percentage rate. Keep in mind that annual percentage rates usually are higher and loan periods generally shorter on used vehicles.

Dealers and lenders offer a variety of terms and payment schedules. Shop around, compare offers and negotiate the best deal. Be cautious about advertisements offering financing to first-time buyers or people with bad credit.

These offers often require a large down payment and a high APR. If you agree to financing that carries a high APR, it may be a big risk. If you decide to sell the vehicle before the loan expires, the amount you receive from the sale may be far less than the amount you need to pay off the loan. If the vehicle is repossessed or declared a total loss because of an accident, you may be obligated to pay a considerable amount to repay the loan even after proceeds from the sale of the vehicle or the insurance payment have been deducted.

Make sure you understand all elements of the loan or lease agreement before you sign any documents. At least know the following:

. the exact price you are paying for the vehicle;

. the amount you are financing;

. the finance charge (the dollar amount the credit will cost you);

. the APR (a measure of the cost of credit, expressed as a yearly rate);

. the number and amount of payments;

. the total sale price (the sum of the monthly payments plus the down payment).

If you feel overwhelmed, find a knowledgeable friend or relative who will accompany you or discuss options with your family bank or credit union representative. This may be embarrassing, but it is a wise person who admits he or she doesn’t know it all.

Consumer Forum is a collaboration of the Bangor Daily News and Northeast COMBAT/The Maine Center for the Public Interest, Maine’s membership-funded nonprofit consumer organization. For help or to request individual or business membership information write: Consumer Forum, Bangor Daily News, PO Box 1329, Bangor 04402-1329.