When it comes time to buy your first car, you’ll probably start feeling a mixture of excitement and trepidation. On the one hand, you’re getting your first car. But on the other hand, it’s a pretty serious investment which will have long-lasting consequences, good or bad.
How do you make the right choice? More importantly, what steps do you need to take as a first-time car buyer?
Keep reading for our quick guide on everything you need to know about the car buying process.
1. Get Your Finances in Order
One of the biggest mistakes people make when making large investments is overextending themselves financially. Did you know that nearly four in five American workers live paycheck to paycheck? This is partly due to financing homes, cars, and other big-ticket items that they can’t necessarily afford.
While taking out a loan for a car isn’t a bad thing (and can even improve your credit), it’s important to think about your monthly finances. How much can you comfortably afford to spend on car payments? Will your credit allow you to take out a big enough loan?
For some, the car buying process may include taking a few extra months to boost their credit score before taking out a loan. There are several steps you can take to make this happen, but here are our top recommendations:
- Cut back on unnecessary spending (shopping, dining out, entertainment)
- Ditch unused subscriptions, services, and memberships
- Consolidate your debt and/or start paying it down
- Pay all of your bills on time
- Dispute any inaccuracies in your credit report
- Lower your debt to income ratio
2. Get Preapproved
Once you feel you’re ready to start car shopping, you need to do one thing first – get preapproved for a loan. Getting preapproved through a bank or lending company doesn’t mean you have to use them when it comes time to buy. However, it is a vital part of the car buying process.
Getting preapproved lets you know exactly how much you can afford to spend on a vehicle, it’s quite embarrassing to sit down with a car salesman to buy a car only to find out you don’t qualify. Getting preapproved also allows you to start budgeting. We never recommend maxing out your budget, which can lead to financial strain in the future.
3. Consider Your Automotive Needs
Next, you need to start thinking about what kind of vehicle you want to buy. This can largely be determined by your day to day lifestyle or your recreational needs. For example, if you live in the city and will primarily be using your car to get to and from work, a smaller, more fuel-efficient car may be your best bet.
Alternatively, if you like the outdoor life such as hiking, fishing, camping, and hunting, you may need a more utilitarian vehicle. In this case, you should search for “Jeep Dealerships near me” online to get started.
4. Decide – New or Used?
Now you need to consider the age-old car buying question. Should you buy new or used? Both have tremendous benefits.
If you buy brand new, you know you’re getting a car with no pre-existing or hidden issues. No one has ever owned it before, it has state-of-the-art technology as well as all of the newest features from the manufacturer, including warranties. However, buying brand new also means spending a little more money, which may or may not be an option for you.
Alternatively, buying used means you can get more car for your money. You can upgrade to higher-class models, save on insurance, and have more options available to you. Additionally, vehicle history reports do an amazing job of tracking vehicles (damages, repairs, recalls, owners, and more).
5. Shop Around and Test Drive
During the car buying process, it’s important to look at all of your options. It’s easy to get sucked into the first car you see, but you should keep your options open, even if it means eventually returning to your first choice. Doing so will allow you to see what other dealerships have to offer, different car models, and more.
Also, never buy a car without test-driving it first. This is important in used cars to make sure everything runs and functions as it should. However, it’s also important to determine if you even like driving the car (comfort, luxury, maneuverability, noise, features, etc.).
6. Consider All of the Costs
At this point in the car buying process, you’re likely getting ready to put down your offer. Before you do, however, make sure you have considered all the costs. Buying a car, new or used, comes with additional costs that are easy to overlook.
- Down payments (not always required but can significantly improve your loan terms)
- Car insurance
- Loan terms (interest rate, length of the loan, etc.)
- Maintenance (oil changes, tire rotations, repairs)
- Fuel costs
Accounting for these costs before purchasing a car is vital to ensure you financial security after that fact. A lot of car buyers find themselves scraping the bottom of the barrel to come up with the money they need for the extra costs listed above.
Finally, when you place an offer on a vehicle, new or used, know that the costs are negotiable. At most car dealerships, they have additional costs, such as sales taxes, documentation fees, and destination fees. These are common and legitimate fees that dealerships must charge to account for their own costs.
However, there are also negotiable fees such as advertising fees, preparation fees, extra transportation fees, and extended warranties. These aren’t necessarily unfair or illegitimate fees, but there’s definitely room for negotiation.
Looking for More Help With the Car Buying Process?
We know the car buying process can be a little intimidating, especially when looking for your first car. However, as long as you follow the advice written above, you’re on the right track. Just remember not to get emotionally attached to any cars before you seal the deal, which can lead to a lot of frustration and heartache.
Good luck, and be sure to check out some of our other articles before you go for everything automotive. We can help you learn about mechanics, financing, and more.