When you’re ready to buy a car for the first time, it’s important to be prepared before you head to the dealership. Some first-time car buyers make the mistake of simply going to a dealership and buying the first car they think is right for them. Use the following guide to learn what steps you should take when buying your first car to ensure it’s the right one for you.
How Much Car Can You Afford?
Before you go to a dealership, it’s important to know how much you can afford to spend on the car. This will narrow the selection of cars to look for and make the decision process easier. Determine if you want to pay for the car outright or if you’ll need to get a loan to pay for the car. If you need a loan, there are many companies that can help you get the perfect loan to suit your needs. You will be able to get pre-approval for the loan so that you can ensure you’re able to afford the monthly payments before you agree to purchase the car.
Determine What Type of Car Is Right for You
Once you know how much you can afford to spend on a car, you need to determine what you need in a vehicle. What about gas mileage? If you commute to work on a daily basis, a car with great gas mileage is ideal. If you’re someone who wants to minimize your carbon footprint, a hybrid vehicle may be the best option. It’s important to take safety ratings, reliability, and the overall cost of the vehicle into account before making a final choice.
Test Drive a Few Vehicles
Once you’ve narrowed down the vehicles that suit your needs, go to a dealership that offers the make and model you desire and take a test drive. It’s important to drive each make of car that you’re considering so that you can determine which handles the best, has enough interior room for you, and which one you feel the most comfortable driving. There are times where a car can look great and feel comfortable to sit in, but isn’t favorable to drive in for various reasons.
Consider Insurance Costs for the Car
Before you make an auto purchase, contact your auto insurance company and find out how much it’ll cost to insure the car. Be sure that you’ll be able to pay for the car payment, as well as the insurance costs for the car each month without breaking the bank! Insurance costs vary from vehicle to vehicle, so be sure to get a quote for the exact make and model of car you plan to buy.
Once you buy the car and get insurance on it, you need to be sure to properly maintain it. If you purchase a car in brand new condition, the dealership should provide you with a maintenance schedule so that you can keep up with the regular maintenance needs of the vehicle. Keep in mind that if there’s a warranty on the vehicle, maintenance is required if you want to keep the warranty valid. Be sure to talk to the dealer about any warranty or maintenance requirements for the car, before buying it.
Photo Credit: Ian Sane
I don’t normally buy new cars. I’ve had used cars my whole life. But at age 45 I have no debt and finally have enough discretionary spending budget available to go ahead and do so now. Thanks for the tips.
Good tips, especially about test driving.
But then go home. Call several dealerships in the area that sell that brand, ask to speak to the sales manager. He can cut out the salesman’s level of commission. Tell him you want this model with whatever options, you are going to buy it this week, and you are getting quotes from all the dealers in the area. You will call back in an hour for their best, no dickering, no nonsense price.
You will be amazed at the differences in price. Last new car we bought (2011), it was several thousand dollars highest to lowest.
Then, arrange for your own financing before you go to buy. I find credit unions generally have the best rates. Talk with one, get it set up so all you have to do is call from the dealer’s lot.
IF you are paying cash, DO NOT reveal that information until you get a price locked down….you’ll see why on down my reply. Simply say “well, I deal with XYZ Credit Union/bank/etc and they have pretty good new car rates….(and also my savings account I plan to use to purchase this car…..heh, heh…)”
When you get into the dealer’s finance office, let the guy know you already have financing set up. Sometimes they will beat that rate…..some deal with banks and will ‘buy down’ the interest rate a little to get you to use their bank and keep the financing in house. IF it’s better than what you arranged, go with it.
Now GET READY….THIS is where many buyers get taken to the cleaners..and how they plan to make back that buy down. They will type up the finance papers….the payment will often include two things that are EXTREMELY profitable to dealers.
The first is credit life insurance on the loan. Over priced life insurance that only pays off the amount of the loan in case you die. IF you need life insurance, go buy cheap term life insurance…you’ll get far more coverage (or pay far less), and your beneficiary can decide to pay off the car if they want, or just let the bank come get it.
The second is an extended warranty. New cars come with years of warranty…..something breaks, make the dealer fix it. Extended warranties are overpriced (because about 1/2 the purchase price goes back to the dealer), often questionable coverage, and so on. IF you want one ( I never buy them…you’re better off with a good emergency fund to pay for the rare out of warranty beakage), purchase it toward the end of your factory warranty AFTER shopping price/coverage.
Turning both those down will really upset the finance guy…..I had one pound his fist on the desk and ask “WELL WHY NOT ?” when I turned down the extended warranty. I explained the car had a 3 year warranty, and they were gonna fix stuff during that time. I’m a pretty decent mechanic, I’ll handle stuff after that, and how about JUST LET ME WORRY ABOUT ME ?
They see their profit….which believe it or not, is often more than the profit they made selling the car, flying out the window…..plus that interest rate buy down they already committed to…..ahahahhaaaa…. It’s almost fun to buy a car !
Mike Ballew says
Good article! I don’t know about you but I hate buying new cars. You feel like a lamb being led to slaughter when you walk in the dealership and all the wolves pounce on you. Then all the games during negotiations…the last time I bought a new car they literally called me back on my phone as I was about to drive off the lot. I guess that’s taking it to the limit!
Great article! I remember how confused I was when I was buying my first car. It’s an amazing experience — especially if you’re buying it with your own hard earned money.
I am thinking of buying my first car as I would like more freedom to get around and would love to stop taking the bus to the grocery store. Thank you so much for these tips! I want to make sure I can get a car that will last me a long time even though I don’t have great credit. I’m now really motivated to look and see what my options are.