Buying your first car is exciting, but it can also be nerve-wracking. A vehicle is a major purchase, and the responsibility of paying for it and maintaining it can be a lot to someone who’s never done it before.
Before you buy your first vehicle, read these tips, and put them into practice throughout your search.
#1 Budget Is Everything
Owning and maintaining a car can be expensive, to say the least. If you can’t keep up with car payments, you can wind up in debt and even lose your car.
The first step before buying a car is to calculate how much you can afford a month. This should take into consideration gas prices, car maintenance and repairs, and insurance.
Next, find out what kind of auto loans you can get. Use a car payment calculator to find the true monthly cost of your car and go from there.
#2 Shop Used for First Car
If you’re on a budget, one of the best first cars to buy is one that’s used. Cars are a depreciable asset, meaning they drop in value the minute you drive away in one. That decline continues as the car gets older and puts on more kilometers.
Instead of losing money the minute you buy a car, take advantage of the savings, and buy used.
#3 Dealership or Private Sale?
When you buy used, you can purchase either from a dealership or as part of a private sale, i.e., when you buy a car directly from another individual. There is a degree of risk when you buy directly from an individual because they aren’t protected by the same regulations, but you can often get a lower sticker price.
If you know what paperwork to ask for to get a complete history of the vehicle, you can significantly reduce your risks. The documentation may have different terms depending on where you live.
#4 Get a Quote for Insurance for your First Car
Ask around for insurance. New drivers may have to pay higher rates than experienced drivers. You’ll need to get insurance when you buy the vehicle. Many dealerships will help you organize car insurance, or you can do your own research and compare rates. Make sure you get quotes before you calculate your monthly budget.
#5 Apply for a Loan
Next, there’s financing. If you’re buying a cheap enough used car, you might be able to buy the vehicle outright with cash.
Otherwise, you’ll have to either lease or finance the vehicle. Financing means you take out a loan on top of a down payment. You own the car, but you still have a loan to repay.
When you lease, you pay to use the car as it depreciates. Some car leases will also require a down payment, and there can be penalties for breaking your lease.
#6 Test Drive your First Car
The one thing you need to do before you drive away in a vehicle is take it for a test drive. See how it feels, whether you’re comfortable behind the wheel or if there are any performance issues that instantly stand out.
#7 Check Your Credit Score
Finally, check your credit score. If you have a low credit score, you may have trouble getting a good rate on financing. Fortunately, many dealerships will still provide car loans for those with low scores or no credit histories, which many young people lack.
Drive away in your first car the smart way. Use these seven tips as you shop for your first set of wheels.
