7 Tips for Buying a First Car

Fran
Lucy Lazarony
November 4, 2020

Buying your first car is exciting. You can’t wait to have your very own set of wheels. But you do have a budget to keep in mind. So you’ll be looking at the finest that economy vehicles have to offer. But you haven’t ruled out used cars either, since the prices are so much cheaper. Let’s start with new cars first, since being the first owner of a brand-new car is such a fun experience. Research what you want. Visit car manufacturer websites and check out what’s out there. Do you want a hatchback or a sedan? What trim and what color suit you? Visit expert sites for the pros and cons of the vehicles you’ve been checking out. Check out Kelley Blue Book, Edmunds, Motor Trend, Car and Driver and J.D. Power. Every car has flaws so you might as well know about them in advance and the more opinions the better when you are making a big purchase. So research is step one. But there is plenty more to do to prepare to buy a car, like getting your credit ready and working out a budget and shopping for car insurance. Let’s get to it.

Get Your Credit Ready

It’s time to check your credit. And the first step is checking your credit score. You might get free credit scores with one of your credit cards so be sure to look. Lots of credit sites such as Credit Karma, offer them for free. You can purchase your score from FICO. And any of the three major credit reporting agencies, Experian, Equifax and TransUnion also offer credit scores, sometimes for free.

How does your credit score look? Do you have a good score? Then you are almost ready to go car shopping. But there is one more thing to do. To make sure your credit is the absolute best that it can be, you'll want to make sure there aren’t any errors on your credit report. The wrong account, especially an unpaid one, can really hurt your credit. So visit AnnualCreditReport.com and request a copy of your credit report. You’re entitled to free report from each of the three major credit reporting agencies each year. And car shopping is a good time to request your copy. Review your credit report carefully. Do you recognize all the accounts? Is there an unpaid account anywhere that doesn’t belong to you? If everything is correct and in order, you can relax. If there is an error, take the necessary steps to correct the error so your credit score will bounce up to where it is supposed to be.

Work Out Your Budget

When it comes to car shopping there is a lot to think about when it comes to budgeting. What kind of car payments can you afford? Do you have money for a down payment, if so how much? Take a close and realistic look at your current monthly budget. Can you afford car payments and insurance payments too? How steady is your income? Do you have a full-time job? Or are you busy juggling two part-time jobs? How much can you rely on your income from week to week and month to month?

The steadier your current source of income, the easier it will be to make car and insurance payments. Calculator.net has an auto loan calculator that asks you the car price, loan term, interest rate, down payment, trade-in value of an old car if you have one and your state. Crunch the numbers and see what works best for you. You want a monthly car payment you can afford. Adjusting the loan term and down payment amount will give you plenty of options.

Shop Around for Car Financing

The next step is to shop around for car financing. You want to walk into a dealership with approved financing in hand. That way if a dealer wants your financing business, he will have to beat the best interest rate that you found on your own. A good place to start is with your bank or credit union. You already have an account with them and they would be happy to get your loan business if your credit is good enough. There are plenty of online sites that offer auto loans such as CarGurus, Carvana and Lending Tree. So shop around and see what kind of interest rate you can find.

Check Out Cash Rebates and Discount Financing

Does the car you want have a cash rebate or discount financing offer? Not sure which one to take? Let’s look at the options. If you don’t have good credit, you won’t qualify for the discount financing, that’s reserved for people with good credit. So cash is the best option for you. If you have good credit and you qualify for the discount financing, you have a choice to make. And neither one is bad. Would you like rock-bottom financing for the life of your loan or would you like some cash back right up front? Take a moment to re-examine your budget and then make your choice.

Shop Around for Car Insurance

Don’t forget this step. You’re looking for car insurance for your new car. And as with auto financing, you get your best deal by shopping around. SmartFinancial makes it easy to do. Just input a zip code to get started. Next, answer a few, quick questions and you’ll be comparing car insurance rates near you in no time.

SmartFinancial has access to more than 200 insurance companies so you are bound to find the auto insurance deal at the price that you are looking for.

Hang On to A New Car For The Long Haul

What’s the best financial advice for a new car owner? Plan to drive the car until the wheels come off. Your car, as much as you love it, is a depreciating asset. It will be worth less next year and the next year after that. To get the most value out of your car you want to hang on to your car as long as you can. So unless your driving needs change, hang on to that new car for the long haul. Plus, life without car payments is a pretty nice place to be. So once you get there you’ll want to stay there as long as possible.

Be good to your car and follow necessary maintenance. Get oil changes. Keep the tires inflated to their proper levels. Get new brakes when you need them. All these things matter and will keep your car running like it should.

Choosing a Used Car

Decided on a used car for your first car? It is a savvy financial choice. New car values drop by more than 20 percent in the first 12 months and for the next four years you can expect to lose 10 percent of the car’s value each year. As the second owner of the car, you miss the big depreciation hit. And there are plenty of used cars to choose from.

Find Affordable Car Insurance Coverage

Sites such as Cars.com, AutoTrader.com and Carfax make it easy to find used cars near you. Research cannot be emphasized enough. Do some digging on the make and model of the car that you like. Check out the pros and the cons. Visit a few different used cars lots before you make your choice. Check the vehicle history report of a used car to find out previous owners and its service history.

Have your financing approved ahead of time. Start with your bank or credit union and then check out online lenders for the best deal. Crunch the numbers on an auto loan calculator until you find the best down payment and monthly payment for you. Shop for car insurance with SmartFinancial and get the best rate for your car insurance. Once you find the car that you want at the price you can afford, make a deal. And enjoy your new set of wheels.

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