If you’re thinking of buying your first car, you’re not alone. Car sales are on the rise in the US, topping over 15 million sales in 2021 for the first time, and we’re on track to beat that record again this year!
However, many consumers don’t take buying a new car as seriously as they should. Especially when buying your first car, there are some important tips to keep in mind to find the best deal. Let’s talk about some of the most important ones!
Tips for Buying Your First Car
1. Set a Budget
How much are you willing to spend upfront, and how much are you willing to spend each month? Keep in mind that this decision will affect the next 5 years (or more) of your financial future, so choose wisely. If you have to buy a new car before you pay off this one, you don’t want to have to fall into the vicious cycle of rolling over loans.
For a 4-year or 5-year loan, every $1,000 that you pay down will remove close to $20 from your monthly payment. Those $20 payments add up quickly, so putting down as much as you can at the time of sale will save you a lot on interest and headaches for your loan. If you want to pay off your loan early, you should consider making a bigger down payment.
Currently, the average cost of a new car is a whopping $47,000 for the first time ever. For most first-time car buyers, you will likely be looking for used vehicles.
When buying a used vehicle, you have to find the sweet spot between too old and too expensive. In most cases, this is after two to three years, as cars lose most of their value from depreciation during this period. However, buying 5- to 10-years old may make more financial sense for some people.
Either way, set a realistic budget and try to find a reliable vehicle that fits within that price. More on that later.
2. Choose the Right Type of Vehicle
For your budget and your personal needs, it’s important to have an idea of the type of car you want. For example, if you have a family, you may want an SUV or a minivan. However, SUVs and other larger cars are in high demand, so it could save you a lot of money to buy a sedan or coupe if all you need to do is the commute to work!
If you want to save on gas, you may want to look for hybrids or EVs if your budget allows for it, but this isn’t often feasible for a first vehicle. You may also need a vehicle that works for off-roading, driving in harsh weather conditions or certain other specifications. Either way, go into your shopping with an idea in mind.
From there, all you have to do is choose the vehicle itself. There is one major benefit of buying used vehicles, and it’s that customers have had time to test them out. When researching older vehicles, you’ll be able to see how they hold up after several years.
3. Research Different Vehicles
Researching different vehicles that offer the size, performance, and value that you need is very important. Remember, your first car is likely the most important financial decision you’ve made so far in your life. For that reason, conducting some research is warranted.
When it comes to your finances, the “coolest” car isn’t always the best car. For example, if you need a small SUV, you might think a Jeep Wrangler is the best option. Well, there may be comparable options from a brand that’s less prone to rusting, or that’s known to last longer.
We’re not trying to pick on the Wrangler or Jeep in general, nor are we suggesting that there’s anything wrong with their vehicles. We’re just saying that, especially if you’re buying a used vehicle, longevity is the most important factor for your finances. Buying a car with 100,000 miles on it is always a gamble, so it’s important to minimize your risk.
If you see a car for sale that fits your needs, try looking up some basic questions, such as:
- How long does XYZ last?
- What are some common problems with XYZ?
- XYZ vs ABC comparison
Don’t just read the Google snippet, either. It’s always a great idea to hop on Reddit, Quora, or car-related forums and see what owners have to say about their vehicles.
For our personal recommendations (don’t take them to heart), Toyotas and Hondas tend to make the longest-lasting, most reliable vehicles. However, if your top priority is safety, towing capacity, or anything else, then always search for these factors and how the specific models you’re interested in will hold up.
4. Inspect the Vehicle Thoroughly
Before even taking the vehicle for a test drive, there are things to look for, even on the pictures online. Rust on the exterior, serious body damage and previous accidents are all red flags, as these problems will likely worsen over time. Other than that, you want to check:
- If the vehicle starts up
- Fluid levels under the hood
- Leaking fluids
- Tire treads
- Rust under the vehicle
- Damage to the paint or coating (may cause rust)
- Interior quality
- Integrity of glass
- Proper functioning of doors and windows
- Date of inspection sticker
- Lights and signals
- Sound system and controls
These are all things you can check on the lot, so run through the list and ensure that these work as designed.
If you have a mechanic that you trust, bring the car in for a pre-purchase inspection. Don’t rely on the dealership’s service department or their “guy’s” shop to tell you what’s wrong with the vehicle. A trusted third party is always the best option.
From there, ask for a report on the vehicle to see if it’s been in any major accidents, how many owners it’s had, and how long it’s been sitting on the lot. If it has zero accidents, one owner, and it hasn’t been on the lot for too long, then it’s worth a test drive if it meets your needs!
5. Always Take a Test Drive
It’s a great idea to find vehicles that meet your needs and your budget, but you should never buy a car without taking a test drive. There are certain things you need to look for, especially how you feel inside. If you’re going to drive for long hours in this vehicle, it’s important that you feel comfortable and safe inside.
Other than that, you’ll need to test the vehicle’s performance to make sure it isn’t a hunk of junk. Most importantly, look for:
- Handling around sharper turns – Start slow and safely build up speed in a parking lot to test
- Alignment – See if the car is pulling in one direction on a straightaway
- Integrity of the brakes – Find a safe place to test the stopping power at moderate speeds
- Acceleration – Does the engine make too much noise, or does the transmission slip?
Once you’re back on the lot, double-check under the hood again and see if there are any fluid leaks, smoke, or other issues. If you discover anything during your inspection or test drive, tell the dealer about it right away and see how they intend to address the issue. They may have their service department take care of it right away, lower the price, or they may not do anything about it at all.
Either way, tell them and compare your test drive and inspection with other vehicles for sale in the area. You want to feel safe and in control, while operating your vehicle, so take the extra time and do your diligence.
6. Research Insurance Options
As a new driver, it’s especially important to find a good deal on your insurance premiums! Getting in contact with an insurance company before purchasing a vehicle is a great idea. You can fill out the forms with the vehicle specifications later, but it doesn’t hurt to compare reviews, rates, and coverage between insurance providers in your area ahead of time.
Also, there may be special insurance requirements depending on the type of your vehicle. Electric vehicles, luxury vehicles, and vehicles that will be used for commercial purposes may require a different type of insurance. Make sure you’re aware of this before choosing an insurance provider.
For older vehicles, you may not need comprehensive insurance. It may cost a lot more on your premiums for little to no benefit, as you may easily find the parts you need at a junkyard, or you may simply decide it isn’t worth it. However, this is entirely up to you!
7. Find a Trusted Dealer
Reputable used car dealerships are worth their weight in gold. It’s often a dirty business, and the problem is more institutional, not just a result of shady salespeople. This is because they’re motivated and incentivized to sell cars, even if they have problems, and somebody else will if they don’t.
For this reason, you can always look at online reviews of dealerships to get a good idea of customer satisfaction. One-star or five-star reviews mean nothing without context, so always read what they have to say. If several reviewers say that they were sold lemons or had issues with the sale, then it’s best to look for another dealership.
Remember, the last thing you want is to buy a car and find out that you need a new transmission or engine in a few months. If you want to be extra sure about a car before buying it, buy a cheap OBD reader for $20 to $50 and read the codes on the car’s computer to check for any issues. You’ll get to keep it forever, and it can save you from making an unfortunate decision.
Otherwise, find a mechanic or shop that you trust, as many will check these codes pre-sale for free. This is a great way to make an informed decision for such a large purchase.
8. Find the Right Auto Loan
Especially with interest rates being so high, it’s important to find the right loan for your needs. A 2% difference in your interest rate will translate into hundreds of dollars in savings, but that’s not all that’s important. You’ll need to take a look at the policies of the lender to make sure you’re getting a good deal.
For example, some lenders may have high late fees, fees for paying off your loan too early, or others. If any of these will cause issues for you, keep in mind that this will affect your financial life for the next 4 to 6 years. It’s not a decision to take lightly.
The best strategy is to apply for loans ahead of time and compare them with one another to find the best deal. After that, you should be ready to purchase a car. A prequalification or preapproval will certainly help speed up the buying process when the time comes to finalize the sale!
Shop for Your First Car Today
Now that you know some helpful tips on buying your first car put them to use and find a car that meets your needs. No car is perfect, but we build attachments to our first cars like no others, and we make memories in them that last for a lifetime. Make sure that your memories are fond ones by shopping around and finding the best deal!
Stay up to date with our latest auto news and apply for a loan today to get the best deal!