How to buy your first car Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our aim is to assist you make smarter financial decisions by offering interactive financial calculators and tools, publishing original and objective content. This allows users to conduct research and compare information at no cost – so that you can make informed financial decisions. Bankrate has partnerships with issuers including, but not limited to American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make Money The deals that are displayed on this site are from companies that pay us. This compensation may impact how and when products are featured on this site, including such things as the order in which they be listed within the categories of listing and other categories, unless prohibited by law for our mortgage, home equity and other home lending products. However, this compensation will have no impact on the information we publish, or the reviews that appear on this website. We do not cover the universe of companies or financial offerings that might be accessible to you. FG Trade/Getty Images
4 minutes read. Published March 02, 2023
Authored by Rebecca Betterton Written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She specializes in assisting readers with the ways and pitfalls of borrowing money to purchase an automobile. Written by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since late 2021. They are dedicated to helping readers gain the confidence to take control of their finances with precise, well-studied and well-researched data that breaks down otherwise complex subjects into bite-sized pieces. The Bankrate guarantee
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You have money questions. Bankrate has the answers. Our experts have been helping you manage your finances for over four decades. We are constantly striving to give our customers the right advice and tools needed to succeed throughout life’s financial journey. Bankrate adheres to strict standards , so you can trust that our information is trustworthy and accurate. Our award-winning editors and reporters produce honest and reliable content to help you make the right financial decisions. The content created by our editorial team is objective, factual and is not influenced through our sponsors. We’re honest regarding how we’re capable of bringing high-quality information, competitive rates and helpful tools to our customers by describing how we earn money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for the promotion of sponsored goods and, services, or through you clicking certain links posted on our site. Therefore, this compensation may impact how, where and when the items appear in listing categories, with the exception of those prohibited by law for our mortgage or home equity products, as well as other home loan products. Other factors, like our own website rules and whether the product is offered in your region or within your own personal credit score may also influence how and where products appear on this website. Although we try to offer the most diverse selection of products, Bankrate does not include details about every financial or credit products or services. The average monthly payment for a used car is $526 for the 4th quarter in 2022 and new cars were sitting more expensive at $716, according to . If you’re a first-time car buyer, these numbers could be intimidating, and more overwhelming when you aren’t comfortable with the process. However, confidence is made of preparation. So make sure you take time prior to going to the internet or to a dealer to understand the key steps to take when you are buying your first vehicle. 1. Decide how much you are able to manage to afford. The first step in making an effective purchase is to first establish . your credit scores, monthly income, and the kind of car you want should all factor into this decision. It is important to find a compromise between fitting your budget and selecting a car right for your needs. When you budget, take a look at the whole picture, not just the price on the sticker that you will see advertised. The true out-the-door price is the total amount you will be expected to pay, including tax and dealer charges. When you’ve got that number or a reasonable estimate, you can factor in your typical salary and use a , which will assist you in determining what the monthly cost to finance the vehicle will be. Tips from Bankrate
Car ownership is a major expense, an expense, so ensure that you’ve got enough money in your budget for any extra expenses.
2. Reserve money for a down payment the price of your new car is the initial lump sum you pay for it. Aim to cover at least 20% of the purchase price, which could take some time. Saving up for a car will likely be worth it if you delay getting an automobile until you have the funds. This will help you save more money in the long run and reduce the cost of your monthly expenses. If you are unable to put off making the lower down payment. However, you may not receive a fair rate from your lender. In this case, consider the option of a cheaper vehicle. The lower the price overall, the less you will have to put aside for a downpayment. 3. Check your credit score If this is your first major investment in a financial institution, it’s possible there isn’t an extensive credit history. If this is the case, check your credit history to find out which loan alternatives are available. The credit score of yours is the most important factor that lenders use to determine the rates of interest they will offer. The better your credit will be, the better your interest rate will be. Make sure you know your credit score prior to talking to a potential dealer. You can do it online or free at . It’s worth it to make sure your credit is in good shape before applying for vehicle financing If you are able to. 4. Decide what car is right for you. Deciding which car is right for you requires much more than just style or color. Consider other factors, such as the vehicle’s durability and size to meet your requirements, technological features and safety features, as well as gas mileage and the climate in which you live. Look up these statistics and additional details about how much the car you are interested in typically is sold for. This is also an excellent moment to decide if you’d like to purchase to purchase a . Although a brand-new car is thrilling, certified pre-owned (CPO) could offer a lower price tag but still come with new features and a manufacturer-backed warranty. And if you aren’t forced to get behind the wheel as soon as possible, you can get a better deal by waiting . 5. Apply for prequalification for financing Once you gather some information on the type of vehicle you want to buy and your financial situation, you can apply with lenders that offer prequalification. This step is vital to saving money and putting you in control when it comes to selecting the best financing option available. Prequalification, or , differs from full approval, and so even after the prequalification procedure is completed, it’s not a done deal. Preapproval is a good way to give you an idea of possible costs and terms. It is still necessary to fill out an application in a formal manner however, you’ll have an idea of whether you’re able to pay for it prior to. The following information is required when you apply to prequalify your finances and income. Personal information. Information about employment. Any current debt. 6. Go to the dealershipin person or online After obtaining prequalification for a loan and setting your sights on your dream car It is now time to begin the car purchasing process. Ideally, you should check out the available vehicles available in your area. Most dealers have their inventory listed on their websites. They will also let you schedule appointments. It is important to take the wheel of your potential vehicle and take it for an initial test drive prior to making a buy. Be sure to adjust the seat, measure if it fits into your garage and is able to be used for your day-to-day activities. But you are not limited to dealers that are local to you. Online dealers such as Carvana, TrueCar and Vroom offer access to the entire inventory of used vehicles. You can browse and get financing at home, and when you pick a car, you get up to one week to the car, and then take it . 7. Negotiate Negotiation isn’t easy, but finding the right deal boils down to taking a stand for yourself. Bring any documents needed, a firm understanding of your credit history and ask. The bottom line is this: be prepared to quit if you are unable to get the deal you deserve. If the time is right to close the deal stay steadfast in your commitment to the agreed-upon number. You can expect the dealer to press for . Say no to options like fabric or paint protection when an add-on like gap insurance could be more beneficial. Next steps in negotiation can be daunting But getting the best deal comes in the form of taking a stand for yourself. Come prepared with any paperwork required, a clear understanding of your credit history and to ask. Be focused on the purchase price instead of the monthly payment. Be prepared to leave if you don’t get the deal that you deserve. If it’s time to close the deal keep your stance on the finalized number. It is possible for the dealer to press for . Do not accept options like fabric or paint protection when an add-on like gap insurance might be more useful. Learn more
This article is written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She specializes in assisting readers with the ins and outs of securely borrowing money to purchase cars. The article was edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since late 2021. They are passionate about helping readers gain confidence to control their finances through providing concise, well-researched, and clear facts that break down otherwise complex subjects into bite-sized pieces.
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