Buying your first car is a big deal. It’s a milestone in your life because it may be the first big purchase you make after graduating from college and before buying your first home. Did you know that there’s a right way to buy your first car?
I purchased my first car in 2007 – and sold it three years later. I loved the convenience of having a car, but I did it all wrong. If I could go back and do it all over again I would definitely do some things differently.
If you’re in the market for a new set of wheels here are some times on how to buy your first car:
Figure out how much you can afford
According to ConsumerReports.org knowing what can you afford when it comes to buying your first car is the most important step in the process. “Establishing a reasonable budget is critical. The money you have available for a down payment and potential for making monthly installments on a loan will determine your car choices.”
Although a new car is nice – with the smell and all – ConsumerReports.org also says that when buying your first car consider buying a used car. “No question, the best way to save money is to buy used. By purchasing used, you can buy more car, meaning you could afford, say, a midsized sedan rather than a tiny econobox. A new car loses almost half its value in the first five years, on average but has more than half its useful life left. Letting someone else take the depreciation hit is a smart bet. But try to buy the newest car you can, in order to get the most up-to-date safety features.”
Set a realistic budget
This applies to the monthly payments as well as the constant expenses that come with owning a car. Owning a car comes with so much more financial responsibility than just the monthly car note payments. When buying your first car you also need to factor in the cost of gas, parking, maintenance such as oil changes and car washes as well as insurance. All of these costs combined should be factored into your budget.
Some of those costs are fixed and you can’t control them, that’s why it’s important to shop around and find the best price you can for the costs you can control such as your monthly car payment and the cost of car insurance. You should expect to pay a bit more for insurance because you’re a first time car owner, but that doesn’t mean you should overpay.
Know what you’re signing
Before signing on the dotted line, make sure you understand all the terms of the purchase agreement with the dealer and the loan if you are financing the purchase of your first vehicle. Take someone with you who has purchased a car before (like a parent or an older sibling) because they’ll know what to look for and which questions to ask.
When I bought my first car I went to the dealership alone. It was a rash decision and I purchased my brand new Honda Civic on my lunch hour. Big mistake. I should have taken someone with me because then I would have know that I was completely getting ripped off. I was paying $500 a month just for the car payment. When I factored in all the other costs the entire bill was over $800 a month and that was definitely more than I could afford.
Don’t accept the first offer
Everything in life is negotiable, this is especially true when buying your first car. There are several parts to the purchase of a new car such as the car itself, the add ons and extras, the maintenance warranty and the financing. If the car salesperson (used or new) isn’t giving you the car you want at the price you can afford don’t be afraid to walk away.
You can shop around and compare prices between car manufactures i.e. Ford versus Chevy or you can even compare prices between dealerships. The cost of a car in the city can be surprisingly higher than the cost of the same car at a dealership in the suburbs.
Be sure not to settle, especially when it comes to your hard earned money.