Buying your first car is an exciting milestone in life! However, the process can also feel overwhelming for first-time buyers. With endless options, features, prices and more to consider, it’s difficult to know where to begin. Don’t worry, we’ve got you covered. Here are 10 essential tips for making your first car buying experience smooth sailing.
10 Tips for First Time Car Buyers
Set Your Budget
The very first thing to figure out is how much you can afford to spend. Experts recommend your auto loan payment should not exceed 20% of your take-home pay. Make sure to factor in not just the car price, but also taxes, registration, insurance, fuel and maintenance costs. Be realistic and don’t overextend your budget.
Borrowing capacity varies by lenders. Get pre-approval for a car loan so you know the maximum price you can borrow. This gives you negotiating power at the dealership. Also look into alternate finance options like car leasing.
Do Your Homework
Don’t just walk into a dealership unprepared. Do thorough research online to create a shortlist of potential cars. Check out forums and reviews about models that interest you. Compare prices, fuel efficiency, safety ratings, maintenance costs and insurance rates.
Create a checklist of must-have features in your priority order. Think about how you’ll use the vehicle like commute, road trips, or family hauling. This homework will help you zero in on the ideal cars and negotiate better.
Should You Buy New or Used?
This depends on your budget and needs. New cars offer the latest tech and safety features. You get a factory warranty and lower maintenance costs initially. However, new cars depreciate quickly in the first few years.
Buying used cars can get you more cars for your money. A 3-5 year old well-maintained used car makes a great first vehicle. When buying used, have a mechanic inspect the car thoroughly before purchase.
Don’t commit to the first dealer or car you see. Shop around online and in-person. Compare quotes from multiple dealers on the same make and model. Negotiate to get the best price.
Consider buying from private sellers too. They typically sell for less than a dealership. However, make sure to get a safety certification and history report for private party purchases.
Get Pre-Approved for Car Financing
If you need a loan for your first car, get pre-approved before you start shopping. This will show you what rates and terms you qualify for. Then you can negotiate financing at the dealership from a position of strength. Local banks and credit unions usually offer the best auto loan rates.
Compare all the loan options carefully before choosing one. Calculate the total costs over the loan tenure including interest and fees. Avoid stretched out 7-year loans that end up costing far more.
Test Drive is a Must
Do not buy a car without test driving it first, even if you are buying online. Test drive the exact car you plan on buying if possible. Evaluate ride comfort, driving feel, visibility, controls, and equipment. Bring someone experienced along for the test drive if you’re a new driver.
Test drive at different times like rush hour traffic or night. Also assess the car’s speed, steering, braking and handling on highways as well as local roads. Don’t ignore your intuition. If a car doesn’t feel right, move on.
Negotiate the Price
Do not pay the sticker price or first quoted price. Negotiate to get the lowest price possible. Be ready to walk away if you can’t agree on a fair price. Be aware of the dealer’s profit margin on the car and aim to pay below invoice price.
Mention any competitive offers you have from other dealers. Ask about unadvertised rebates, incentives and holdbacks that can lower the price. Time your purchase well by buying at month-end when dealers have quotas to meet.
Understand the Paperwork
Buying a car involves signing a pile of paperwork. Make sure you understand what you are signing. Read all documents carefully before signing. Get clarity on the sale price, addons, fees, trade-in value, financing terms, insurance coverage etc.
Ask for written copies of any verbal promises like free servicing. Don’t feel pressured to sign dense legal documents on the spot. Review them at home first if needed. Consider having your mechanic or lawyer review the purchase agreement too.
Check Insurance Rates
Before you buy, get quotes from providers on comprehensive insurance for the vehicles you’re considering. Call multiple insurers and compare rates. Some cars have significantly higher premiums. Make sure you can afford the recurring insurance costs for your chosen vehicle.
Aim for maximum coverage like collision and comprehensive if your budget allows. This fully protects your asset. Only raise your deductibles if you want to lower premiums. For total peace of mind, also add gap coverage in case the car gets totaled.
Understand On-going Costs
The purchase price is just one piece of the puzzle. There are many on-going ownership costs. Apart from insurance and fuel, you need regular maintenance like oil changes and tire rotation. Replacement tires, batteries, brakes and repairs add up over time.
Registration renewal, taxes, parking costs are also expenditures to account for. Crunch the numbers for projected monthly and yearly costs to ensure your first car is affordable long term. Don’t forget to budget for accessories like winter tires, roof racks, stereo etc. too.