Buying your first car is a rite of passage that you’ll remember long after the car is gone. Take these steps to make sure you remember all that went right, and not the bumps in the road.
Setting a Budget
The hardest part of buying a new car is reconciling the car you’ve always dreamed of with the reality of the cost. Cars are expensive in and of themselves, and there are many fees at the time of purchase to consider—not to mention the recurring cost of car insurance, general maintenance, parking, gas, etc.
Once you understand your budget, you can start to look for cars in your price range. If you can’t afford the car you want, keep saving or keep an eye out for an older model year.
Down Payment & Financing
You will need to determine how much cash you can put down when buying your first car, and how much you can afford on a monthly basis if you plan to get a loan. Interest rates favor large down payments and new cars over used cars—but regardless, your budget will be the primary driver in what you can buy.
Auto insurance is especially expensive for new drivers. If you have to pay for that yourself, be sure to get a quote from an insurance company or two before you buy the car.
Look into the possibility of being added to the policy of a current driver in your home—your parents, your spouse, etc. You may find that you’ll get a reduced rate, and your policyholder may even be eligible for bundling discounts.
Buying New Car vs Used Car
One way to get closer to the convertible of your dreams (or other higher-end car) is to take a look at used cars. An older car with low mileage may be hard to find, but can be a great deal.
Another benefit of buying a used car, especially if you are a new driver, is that the car will likely already have a few dings and dents. If you happen to add a couple more as you become a more experienced driver, it will be less upsetting than on a brand new car.
A used car also loses less value. If you bought a used car for $5,000 tomorrow, and a month later you decided you didn’t like it, you could probably sell it for the same price—maybe even more. This is simply not the case with a new car. A new car loses significant value the moment you drive it off the lot. It’s hard to imagine a case where you could sell that car for the same amount you paid, and even harder to imagine selling it for more.
Where to Shop for Your First Car
You have plenty of options when heading out to purchase your first set of wheels:
- Buying from a dealership
- Buying a used car from another private party
- Shopping online.
Regardless of the route you take, it’s a good idea to visit a dealership to test drive the cars you are interested in. Once you narrow down your choice, consider shopping online and getting quotes from multiple dealers to help you figure out the best deal you can negotiate for.
You can also ask to see all the fees they charge at the time of the sale. This will give you an exact figure to work with, and also allow you to compare the different dealerships’ prices. Getting quotes online is also a good way to separate the process of pricing a car from the process of getting a loan or lease.
This technique is a smart move even if you’re buying a car from another private seller—it will give you a ballpark idea of how much a dealer will charge, so you can then figure out how much you’re willing to spend for a used car WITHOUT the protections from a dealership.