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 providing you with interactive financial calculators and tools as well as publishing objective and original content. This allows you to conduct research and compare information for free to help you make financial decisions with confidence. Bankrate has agreements with issuers, including but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make Money The offers that appear on this site are from companies that pay us. This compensation could affect how and when products are featured on the site, such as, for example, the order in which they may appear in the listing categories, except where prohibited by law. This applies to our mortgage or home equity products, as well as other home lending products. But this compensation does have no impact on the content we publish or the reviews appear on this website. We do not contain the entire universe of businesses or financial deals that could be open to you. FG Trade/Getty Images
4 minutes read. Published March 02, 2023
Writer: Rebecca Betterton Written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She is a specialist in helping readers with the ways and pitfalls of borrowing money to purchase cars. The article was edited by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate from late 2021. They are dedicated to helping readers gain the confidence to control their finances by providing clear, well-researched information that breaks down otherwise complex topics into manageable bites. The Bankrate guarantee
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You have money questions. Bankrate has the answers. Our experts have been helping you master your money for over four decades. We strive to continuously provide our readers with the professional guidance and the tools necessary to make it through life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and reliable. Our award-winning editors, reporters and editors create honest and accurate content to help you make the right financial choices. The content we create by our editorial team is objective, factual and is not influenced from our advertising. We’re open regarding how we’re capable of bringing high-quality content, competitive rates and helpful tools to you , by describing how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated for the promotion of sponsored goods and services, or through you clicking specific links on our site. Therefore, this compensation may influence the manner, place and in what order products appear within listing categories, except where prohibited by law for our mortgage, home equity and other products for home loans. Other factors, such as our own rules for our website and whether the product is available in the area you reside in or is within your own personal credit score could also affect the manner in which products are featured on this website. While we strive to provide an array of offers, Bankrate does not include specific information on each credit or financial item or product. The median monthly cost for a used vehicle was $526 in the fourth quarter of 2022, and brand new vehicles were more expensive at $716, according to . If you’re a first-time car buyer, numbers this steep can be daunting and more overwhelming when you aren’t experienced with the buying process. But confidence is all made of preparation. So take time prior to going to the internet or a dealership to learn the most important actions to follow when purchasing your first vehicle. 1. Decide how much you are able to manage to afford. The first step in making buying a car that is successful is to first determine . The credit rating, your monthly income and the type of car you’d like to purchase should all factor into the decision. The most important thing is to find a compromise between your budget and selecting the perfect car to meet your requirements. When you budget, take a look at the , not just the price is advertised. The actual price for the car is the total amount you’ll have to pay, which includes taxes and dealer fees. Once you have that number — or a suitable estimate, you can factor in your typical salary and use an, which can aid you in determining what your monthly cost to finance the car will be. Tips from Bankrate
Car ownership has its own costs, the responsibility of paying for it, so make sure that you have room in your budget to cover any extra expenses.
2. Make a savings account for a downpayment the price of your new car is the initial lump sum you pay for it. Aim to cover at 20 percent of the purchase price which could take some time. Being patient and saving up for a is likely worth it if you delay getting an automobile until you’ve got the money. This can save you more money in the long run and reduce the cost of your monthly expenses. If you’re not able to be patient, you can opt for the lower down payment. But, you might not receive a fair rate from your lender. In this instance, think about an alternative that is less expensive. The lower your overall cost, the less you will have to put aside for a down payment. 3. Check your credit report If this vehicle is your first major financial investment, it is likely to be that you do not have a long credit history. If that’s the case, look over your credit history to find out which loan alternatives are available. The credit score of yours is the primary factor that lenders use to determine the rates of interest they will offer. The higher your credit score, the more favorable the interest rate you will receive. Check your credit score before talking to a potential dealer. You can do so online through or for free at . It’s best to get your credit in good condition prior to applying for financing for a vehicle in the event that you are eligible. 4. Choose the right car for you Choosing which vehicle is the best fit for your needs requires a lot more consideration than just the color or design. Also, consider other aspects such as the vehicle’s durability as well as its size and capacity for your requirements, the latest technology, safety features, fuel efficiency and the climate in which you reside. Look up these statistics and additional details about the price the car you are interested in typically is sold for. This is also a good moment to decide if you want an . Although a brand-new car is exciting, certified pre-owned (CPO) could offer an affordable price and still offer modern features as well as a manufacturer-backed warranty. And if you aren’t forced to get behind the wheel as soon as possible it is possible to get a better deal by waiting . 5. Apply for prequalification for financing Once you’ve gathered information about the type of vehicle you wish to purchase and your financial history, apply with lenders that offer prequalification. This is essential to save money as well as putting you in control when it comes to choosing the most appropriate financing option. Prequalification is different from full approval, so even after the prequalification process is completed, it’s not a final deal. Preapproval, however, will give you an idea of the potential rates and conditions. You’ll still need to fill out an application form the preapproval, but you’ll have an idea of whether you’re able to pay for it ahead of time. The following information is required when you apply to prequalify your finances and income. Personal information. Information about employment. Any current debt. 6. Visit the dealer- in person or online After prequalifying for an loan and setting your sights on the vehicle of your dreams, it is time to start the buying process. Ideally, you should to see what vehicles are available in your region. A majority of dealers have their inventory listed on their websites and let you schedule appointments. It is crucial to take the wheel of your potential vehicle and take it for a test drive before you buy. Be sure to adjust the seat, measure the space in your garage and can manage your daily routine. You aren’t limited to dealers that are local to you. Online dealers like Carvana, TrueCar and Vroom provide access to the entire inventory of used vehicles. You can browse and get financing from the comfort of your home, and when you pick the car you want, you can get up to seven days to test the car before you buy it . 7. Negotiate Negotiation can feel intimidating however, finding the right deal boils in the form of being a strong advocate for yourself. Be prepared with all the paperwork needed, a thorough understanding of your credit history and ask. The bottom line is this: be prepared to leave if you don’t secure the loan you want. When the time has come to conclude the deal, remain steadfast on the deal’s agreed-upon amount. It is possible for the dealer to press for . Don’t accept options such as paint protection or fabric when an add-on like gap insurance might be more appropriate. The next steps to negotiate can be difficult But getting the best deal boils in the form of taking a stand for yourself. Bring any documents required, a clear knowledge of your credit history and to ask. Be focused on the purchase price instead of the monthly payment. And be prepared to walk away if don’t get the deal that you’re looking for. When it’s time to close the deal, remain steadfast on the agreed-upon number. You can expect the dealer to insist on . Don’t be averse to options such as paint protection or fabric, when an add-on like gap insurance might be more useful. Find out more
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This article is written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She has a specialization in helping readers with the ins and outs of securely borrowing money to purchase cars. Written by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate since the end of 2021. They are committed to helping readers gain the confidence to take control of their finances through providing clear, well-researched information that breaks down otherwise complex subjects into bite-sized pieces.
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