Guide To Buying Your First Car
Buying your first car is a rite of passage, but it can also be a stressful experience. First-time car buyers face a lot of uncertainty not only in the process of purchasing a vehicle but also when it comes to financing options.
Whether you’re a high school student in the market for an affordable used sedan, a recent grad ready to take out your first auto loan, or a newly hired professional who can no longer rely on public transportation, this guide will help you navigate the process of buying your first car like a pro.
Determine Your Budget
The first step in buying your first car is to figure out your budget. Many shoppers overestimate how much car they can afford, which can leave you with uncomfortably high monthly payments.
Ideally, your payments should be no more than 15% of your monthly take-home pay. Paying at least 20% of the car’s purchase price as a down payment is also a smart move because it lowers your monthly payments overall. To avoid added interest, try to limit the length of your auto loan to 48 months or less.
Be sure to use a payment calculator to get an accurate estimate of your monthly payments based on loan term, interest rate, and down payment. Doing so will help give you a solid starting point in terms of vehicle price.
Evaluate Your Needs and Wants
Next, figure out what kind of vehicle you need. Sure, there’s probably a whole list of wants you’d like to throw in there, but you need to be realistic and practical first. Your needs might include having a car that:
- Gets decent gas mileage during your commute.
- Has enough cargo space for hauling your stuff to college.
- Will last at least five years.
- Has a reliable navigation system.
- Offers affordable monthly payments.
It’s also important to consider where you live and how you’ll primarily use your new car. For instance, if you live in a region that experiences harsh winters, you’ll need an all-wheel drive. If you’re in a milder mountainous region, all-wheel drive would probably be nice, but not as necessary.
Once you’ve determined your list of needs, you can move on to wants. These are features you would prefer to have in a new car but that aren’t as essential. Wants include features such as:
- Satellite radio or an upgraded sound system.
- A specific exterior or interior color scheme.
- Dual-zone climate control.
- Remote engine start.
- Leather upholstery.
Having a clearer picture of what you need and want in a new car helps with researching your options and negotiating with the dealer.
Shop Around for a Vehicle
It doesn’t matter whether you’ll be buying a new or preowned vehicle; you’ll need to shop around either way. Online listings make it easy to view current inventory and narrow down your options based on make, model, and features.
Take advantage of vehicle history reports if you’re considering a preowned car. Most dealerships offer these reports for free if you ask for one. Reviewing a car’s history report can help you uncover any previous accidents, repair issues, or other problems that can help you further narrow down your vehicle options.
When shopping around, be sure to consider the dealership you’ll be buying your new car from. Some dealerships may offer extra warranties or perks you can’t get anywhere else, such as complimentary car washes or discounted oil changes. You might also want to go with a dealership located close to your home or work so you can take advantage of its service center.
Shop Around for Financing
First-time car buyers tend to accept the dealer’s financing options, but it’s a good idea to shop around first. Depending on your credit, you might be surprised to learn that you can pre-qualify for a loan with different lenders, including your own bank or credit union.
Even if the dealership ultimately offers the best deal, it’s always best to compare financing terms from various lenders so you can get the lowest possible interest rate, which allows you to pay less for the car overall. As long as you apply for financing with each lender within a 14-day period, multiple prequalification inquiries won’t affect your credit score.
Once pre-approved for a loan, you can bring your lender statement along with you when shopping for your new car.
If you decide to go with the dealership’s financing, the good news is that everything is handled on-site, usually the same day you pick out a vehicle. You can also apply for dealer financing onlineto save time.
Test Drive the Vehicle
Never purchase a vehicle without taking it for a test drive. A proper test drive should last at least 30 to 40 minutes and allow you to drive on both the highway and side roads to get a feel for how the car handles various road conditions.
During the test drive, be sure to check the headroom and legroom, the climate control system, the navigation system, the radio, and the controls for the lights, turn signals, and wipers. Listen to the brakes and engine when stopping, and also get a feel for how the car handles twists and turns. If possible, try merging into traffic on the highway and practice parking when you return to the dealership.
Don’t Be Afraid To Negotiate
You’ve done your research, gotten pre-qualified for a loan, compared models, and chosen your favorite. The only thing standing between you and your new car is the purchase price. Instead of agreeing on the full asking price, spend some time negotiating.
Haggling may be a lost art in the modern era, but it’s alive and well on car lots. Start by asking what’s the best they can do. If the salesperson won’t budge, it’s okay to walk away. In fact, walking away from the deal when the salesperson has already invested a lot of time trying to convince you to buy could help knock off a few hundred bucks.
With a little preparation, you’ll be purchasing a vehicle like a pro. Have additional questions? Visit Hiley Hyundai West of Fort Worth today.