8 Tips for Buying Your First Car

Buying your first car is an exciting milestone and a major financial decision. With so many choices and details to consider, it's important to approach the process with a plan. The tips below are designed to help you feel prepared and confident as you navigate purchasing your first car.

1. Know what you can afford.

When you decide to look for a car, having a realistic budget is important. The budget should be centered on what you can afford per month. When determining the amount that you can spend, consider all your expenses throughout the month. Be sure to factor the costs of maintenance, taxes, insurance, gas and repairs into your budget. (Need help making a budget? Visit our Financial Resources page for helpful tips and information.) 

2. Do your research. 

Take the time to do your research. Research everything ranging from the price to the consumer ratings regarding a particular model. This can help you narrow down your choices and single out exactly what you are looking for. Take note of the suggested retail prices and the invoice prices of those cars you think would be a good fit for you. Keep in mind that by choosing a less expensive car you can have some leeway within your budget for other monthly expenses.

3. Determine your ‘wants’ vs. ‘needs’. 

When purchasing your first car, take time to clearly separate what you truly need from what you simply would like to have. Start by thinking about how you will use the car every day including your commute, how much cargo space you need, and the type of driving you do most often. Safety features, reliability, fuel efficiency, and insurance costs are also important needs to consider. After that, you can look at your wants, such as premium sound systems, leather seats, sunroofs, or technology upgrades. The extra attention you give these details will help you prioritize features within your budget, ultimately helping you find a car that fits both your lifestyle and your financial goals.

4. Find the right dealership. 

Finding the right dealership, whether local or out of town, can be beneficial, especially if they have a good reputation. Ask friends and family for referrals, and research online reviews and ratings to compare pricing, customer service, and available services. A reputable dealership is more likely to offer fair terms and ongoing support, and you may be able to take advantage of additional benefits such as car care services they may offer.

5. The fun part - go for a test drive.

Taking a test drive can change your perspective beyond what the reviews or comments have disclosed. You will want to take the car for a test drive in conditions that are similar to your daily routine to determine whether or not to purchase the vehicle. If you are considering a used car, it's also a good idea to have a trusted, independent mechanic inspect the vehicle before you finalize your decision, so you can better understand its condition and any potential repair costs.

6. Focus on the purchase price. 

Once you have chosen the car that fits your criteria, now comes the time to negotiate the purchase price. Before you begin negotiating, review the vehicle’s market value from multiple sources, and use that information to set a target price you are comfortable with. Be prepared to walk away if the price does not meet your budget, and do not feel pressured to accept add-ons you do not need. Also keep in mind, when negotiating costs, not to reveal what you can pay each month but to stick to a total purchase price.

7. Secure financing. 

Before you visit the dealership, it is helpful to get pre-approved for an auto loan with a trusted financial institution. A pre-approval lets you know how much you can comfortably afford, what your estimated monthly payment may be, and what interest rate you qualify for based on your credit and other terms. Having this information in advance gives you a clear price range to shop in, helps you stay within your budget, and provides added confidence and control when you are ready to discuss pricing and financing at the dealership.

8.  Enjoy the process. 

Buying your first car is one of the largest investments you will make and it only happens once! Taking your time and understanding the process will make your first car buying experience an enjoyable one.