13 Must-Know Tips for First-Time Car Buyers
Hey there, full-blown adult! If you’re in the market to buy your first car, there’s a great deal to consider beyond the color of that interior upholstery, that’s for sure. It can be intimidating, so to help you emerge victorious from the dealership or Craigslist resale rabbit hole, we’re rounding up 13 tips you need to know so you can land your dream set of wheels.
Keep your options open, and slow down. First and foremost, consider a handful of models that might work, and then weigh the benefits and drawbacks of each. Don't make any quick decisions.
Do not buy on the first visit. Dealerships inflate prices, and they definitely want to sell you on your first trip to the lot. Establish that you're a discerning consumer, and you'll be able to get a better deal.
Time your purchase wisely. Dealers work month to month and will often acquiesce to lower offers toward month’s end in order to meet their quotas. They’re also significantly less busy on weekdays, so salespeople may be more likely to offer a great deal then than during peak weekend hours.
Consult all the experts. The Internet is full of ratings, reviews, and insider scoops. There are tons of websites that contain detailed user ratings and reviews, such as Kelly Blue Book or Edmunds, as well as forums where consumers discuss must-know information on new and used car models. Is the car you’re considering “a lemon”? Have there been any recalls? Does it handle snow as well as you think it should? Crawl the web to find out.
Get the most out of your used car. Buying a used car is a great way to save, but it takes a lot of work. Finding the best car for you means sorting through a vast expanse of potentially not-right cars. Consult Carfax’s used-car listings to see what different dealers are offering.
Craigslist also has tons of used cars from private sellers. Obtain a Carfax Vehicle History Report to get details on ownership history, readings, service records, and accident history. Before pulling the trigger on a used car, it’s also smart to contract a mechanic to do a full, in-depth inspection.
Check out the car in person (during the daytime!). When buying used, this is extremely important. Make sure body panels match, raise the hood, and peer inside to check the condition of upholstery.
Take a test drive. Whether you’re buying a used car or one fresh off the shipping container, take a test drive no matter what. While on this test drive, use it as you would if it were yours. Try out cruise control. Play with the audio and the AC. Test out the seat recliners. Do it all.
Know the market. If you’re interested in making an offer on a used car, reference Kelley Blue Book's Fair Purchase Price resource to see what comparable cars are selling for.
Before You Start
Consider what’s important to you. For example, is fuel efficiency a primary concern? Do you want to go electric? Thinking about your priorities will help you in the overwhelming search for a good fit.
Assess your transportation needs, and consider cars that can accommodate them. Will you be using your car daily? Skip the convertible (tough life, we know!). Will you be using it to haul around expensive items like boxes or hefty sports gear? Don't go with the mini!
Establish a budget based on what you can afford each month. According to Jeff Ostroff, founder and CEO of CarBuyingTips.com, if you’re buying a new car, it’s advisable that you are able to put 20% down at time of purchase and pay the car off in 48 months. If this feels out of range, consider a three-year-old used car.
When assessing this, take into account all costs of the car, such as insurance, maintenance, unforeseen repairs, and gas mileage. Consult this monthly spending plan from the Federal Trade Commission if you need help figuring out how much you can responsibly spend on financing or leasing a new car.
Learn about loans. If you’re going to take out a loan, decide which is the best fit for you. Direct lending is when you get a loan from a bank or credit union. Once you sign a contract with a dealership to buy your new car, you use the loan from the lender to pay for it. This allows you to shop around for the best terms before buying a vehicle, and also means you’ll have a full grasp of your loan terms while shopping.
Dealership financing, on the other hand, means you enter into a contract with the dealership directly. Many dealerships offer incentive programs for prospective buyers, but they’re also notorious for inflating interest rates.
Things to consider are the amount of the loan, the interest rate (the annual rate charged by the lender), the length of the loan, and fine print, such as if there is a grace period for late payments. You can generally apply for as many loans as you like, so long as it’s within a 14-day window, without it impacting your credit score. So don’t just take the first offer you get; shop around. Learn the process of applying.
Get schooled on auto insurance. Expect that auto insurance will cost you at least $100/month, more or less depending on your location, your driving record, and the state of your car. There are a lot of tools out there to help you find the right coverage, but you’ll ultimately be deciding it based on planned usage and what you want covered in the event of an accident. Learn more about the different car insurance types here.
Did we miss anything? Share your best must-know tips in the comments!