You are finally prepared to trade in that hand-me-down car your parents gave you (that has seen much better days) and grab your own four-wheeled automobile. But where do you start? It doesn’t matter who you are, your first-time car buying experience can be filled with uncertainty and misunderstanding. To help unclutter some confusion, we have come up with six steps on what to do when buying your first car.
The following steps will help you determine how much “car” you can afford, research to find the car that meets your criteria, secure financing, and ultimately purchase your first car, while hopefully saving you some “moolah” in between.
1. Figure out what you can afford.
The first thing to do, even before car searching, is to establish a realistic budget. Take into account warranties, maintenance, and even gas. You may think that the new Audi A3 is trendy and perfect, but the premium gas it requires may hurt your wallet.
2. Establish your needs.
Think about it, do you really need that convertible? If you have a family (or foresee a family in the near future) you may need a car with more room. Do you just need a car to get you from point A to point B? Do you need a car that drives better in inclement weather? These are all factors you should consider.
3. Identify your wants...and then prioritize them.
Your first car will most likely not be your only car in your lifetime. It is not the be-all and end-all. You may not need all of the bells and whistles in a car, especially when working within a strict budget. If you can’t afford it, forego it. However, you don’t want buyers’ remorse after entering into a 4-5 year auto loan. So if you need those heated seats and sunroof, see how much more per month it will cost and perhaps sacrifice a few happy hours or dinners out with friends.
4. Do your research.
There are plenty of websites where you can start your car search. This way you can research any car in the comfort and convenience of your own home instead of visiting dealerships. Also take a look at the current inventory in dealerships. Some common web buying websites are: Cars.com, Autotrader.com, and Edmunds.com. After you’ve narrowed it down to look and feel, price, and size, you can schedule a test drive at a dealership.
5. Determine the proper purchase price.
It is important to make sure you are knowledgeable about how much a car should cost before you walk into the dealership. Do your due diligence, research prices, and see what dealer fees can be waived. Remember, knowledge is power and never be afraid to negotiate. Not into negotiating? Check into the True Car price of the car you want. True Car is a tool that allows a buyer to find information about what the car they want is actually worth. Select dealerships offer True Car, no-haggle pricing for similar cars they have in their inventory. Also be sure to ask about any discounts a dealership may have for military, new grad, etc.
6. Secure financing.
The last thing you want to do is fall in love with a car that you’re not sure you can secure affordable financing for. Although dealerships offer financing options, you may want to shop around at banks for interest rates/programs to get a better idea of what your personal financial situation and credit report allows you to afford. First-time car buyers often have a limited credit history and may require a co-signer in order to avoid a high interest rate.
The above above advice could seem daunting to a first time car buyer, but thanks to lower automobile interest rates and online research tools, purchasing a car has never been easier. There is a wide variety of options at different price points to accommodate the majority of people’s needs. Sit back, relax, and enjoy the ride.
If you found this article useful, be sure to check out these related articles:
The Ultimate Question: Buy or Lease?
Is It Good Debt or Bad Debt?
Establishing Credit for Beginners