Buying Your First Car: 10 Tips for a Smooth Transaction
If you’re a little nervous about buying your first car, you’re not alone! The process of choosing the right car and getting a loan can be a bit daunting, especially if it’s your first time. These ten tips will answer all your biggest questions and help ensure a smooth transaction.
1. Start by Setting a Budget
Before you even start looking at cars, you need to figure out how much you can afford to spend. The best way to figure how much money you can afford for your new car is to create a budget that includes all of your monthly expenses, from rent and food to recreation and health insurance. Now, tally in your estimated fuel costs, car insurance, and maintenance. The amount that’s left over can be used for your monthly car payment.
2. Define Your Needs
Everyone has a dream car, but that convertible or sports car you’ve been eyeing might not be the best choice for your first car. What you really need is a car that will meet your day to day needs. Would a pickup or minivan be more practical for your job? How about a compact four-door? Don’t forget that sports cars are more expensive to insure, and pickups go through a lot of gas. Consider where you’ll be parking, too. Parking a pickup in the city could get quite expensive.
3. Prioritize Your Wants and Needs
It’s ok to have some wants, too, so a make a list of everything you want in your new car. Then, sit down and prioritize your needs and wants. Once you know what’s really important to you, the process of choosing a car will be much easier.
4. Research, Research, Research
Spend some time online researching the cars you’re interested in. Gas mileage is important, but take a look at average monthly maintenance and safety ratings too. If you know or see someone who has the same type of car your interested in, ask them how they like it. Gather as much information as you can before you even go into the dealership. Knowing your facts will help ensure that a fast-talking salesman doesn’t get the best of you.
5. Find a Reputable Dealer
Research the dealership just like you did the car. Spend a little time looking at reviews online and ask friends and relatives for recommendations. Consider sticking to a dealership that’s close to home so you can take some time to think about your decision before you make a purchase.
6. Always Go for a Test Drive
Even after you do all of your research, the test drive is still the most crucial part of selecting a car. There are so many variables that can make the vehicle comfortable or uncomfortable… everything from the layout of the dash to the wheel adjustment and the seat height to visibility needs to be experienced first-hand. Try to drive the car in a variety of conditions and speeds and spend at least half an hour behind the wheel. If the sales guy doesn’t want to give you 30 minutes, make an appointment when he has more time, or go to a different dealership. If you don’t know a lot about cars, you should also have the vehicle inspected by an independent mechanic.
7. Determine a Fair Purchase Price and Make an Offer
Up to this point, you’re still in the research phase. Now that you’ve narrowed down your choices and you know what you can afford, you need to figure out what a fair price is for the car you want. Many people use the Kelley Blue Book to determine how much a car is worth, but a credit union can also be an excellent resource. Once you’ve decided on a fair price, give yourself a little wiggle room and make an offer.
8. Weigh Your Financing Options
Although most dealerships will have finance reps that work with individual banks to get you a loan, you might be able to secure a better deal if you get your financing approved in advance. Speak with your personal credit union or bank ahead of time to see what kind of interest rate and financing they can offer you. You can still go with the dealer’s option later if it turns out to be a better choice but having funding in advance ensures that the dealer isn’t holding all the cards.
9. Getting Financed When You Don’t Have Credit History
Many first-time car buyers don’t have an established credit history. If this is true in your situation, you might have the best luck getting financed if you go to the bank where you have your checking and savings accounts. They will know you better than anyone else and can usually offer you the best rates.
10. Make a Down Payment
A down payment isn’t always required when you purchase a car, even for a first-time car buyer. However, making one can be very beneficial, mainly because you won’t have to borrow as much money. That means your monthly payment will be lower. According to experts at Bank of America, for every $1,000 you can apply as a down payment on your car, your monthly payment will be about $20 lower.
All this advice probably doesn’t make car buying sound like much fun, but it really can be. Spend some time in the research phase and really enjoy the process. After all, you only get to buy your first car once!