How to buy your first car Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our goal is to help you make better financial choices by offering financial calculators and interactive tools, publishing original and objective content, by enabling you to conduct research and compare information for free – so that you can make financial decisions with confidence. Bankrate has partnerships with issuers including, but not restricted to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make Money The offers that appear on this site come from companies who pay us. This compensation may impact how and when products are featured on the site, such as for instance, the order in which they may appear within the listing categories and other categories, unless prohibited by law. This applies to our mortgage, home equity and other home loan products. But this compensation does not influence the content we publish or the reviews that you read on this site. We do not cover the entire universe of businesses or financial offers that may be open to you. FG Trade/Getty Images
4 minutes read Read published March 02, 2023.
Writer: Rebecca Betterton Written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She specializes in assisting readers in navigating the ins and outs of securely borrowing money to purchase a car. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate from late 2021. They are enthusiastic about helping readers gain confidence to control their finances through providing precise, well-studied and well-researched data that dissects complicated issues into digestible chunks. The Bankrate promise
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You have money questions. Bankrate can help. Our experts have been helping you master your finances for more than four years. We strive to continuously provide consumers with the expert guidance and the tools necessary to succeed throughout life’s financial journey. Bankrate adheres to a strict code of conduct standard of conduct, so you can rest assured that our content is truthful and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. Our content produced by our editorial team is factual, accurate and uninfluenced by our advertisers. We’re open regarding how we’re able to bring quality content, competitive rates, and useful tools for you , by describing how we earn money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We receive compensation for the promotion of sponsored goods and, services, or through you clicking specific links that are posted on our website. Therefore, this compensation may influence the manner, place and in what order the items appear in listing categories, except where the law prohibits it for our mortgage or home equity products, as well as other home lending products. Other elements, such as our own proprietary website rules and whether the product is offered in your region or within your own personal credit score can also impact how and where products appear on this site. While we strive to provide an array of offers, Bankrate does not include specific information on every financial or credit product or service. The monthly average payment for a used car was $526 in the fourth quarter of 2022 and the newer cars were higher at $716 according to . For a new buyer, these numbers can be daunting and more overwhelming when you aren’t experienced with the process. But confidence is all about preparation, so you should take time prior to going to the internet or a dealership to learn the most important steps to take when you are buying your first vehicle. 1. Find out how much you can afford The key to an effective purchase is to first establish . Your credit score, your monthly income, and the kind of car you want must all be taken into consideration when making this choice. It is important to find a compromise between meeting your budget and choosing a car right for your needs. When you budget, take a look at the whole picture, not just the sticker price that is advertised. The actual price for the car is the total amount you’ll be required to pay, including taxes and dealer fees. Once you have that number or an appropriate estimate — factor in your typical salary and make use of a , which can assist you in determining what the monthly cost of financing the car will be. Tips from Bankrate
Car ownership is a major expense, an expense, so ensure that you’ve got room in your budget for any extra expenses.
2. Reserve money for a down payment Your future car is the initial lump sum that you’ll pay. Aim to cover at 20 percent of the purchase price that could take a while. Saving up for a is likely worth it if you put off purchasing a car until you’ve got the money. This can save you more money in the long run and reduce the monthly cost. If you can’t wait, you can make the lower down payment. But, you might not be able to get a favorable rate from your lender. In this case, consider the option of a cheaper vehicle. The lower the price overall and the lower your monthly expenses, the less you’ll have to put aside to pay for a down payment. 3. Examine your credit score If this is your first significant investment in a financial institution, it’s possible there isn’t an extensive credit history. If that’s the case, check your credit score to see which loan alternatives are available. Your credit score is the primary factor that lenders use to determine the interest rates you can expect to receive. The higher your credit score will be, the better your interest rate will be. Check your credit score before making contact with a potential dealer. It is possible to do this online or free at . It’s best to ensure your credit is in good shape before applying for car financing if you can. 4. Decide what car is right for you. Deciding which car is right for you requires many more factors 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 weather where you reside. Look up these stats — and extra information on how much the vehicle you’re interested in is sold for. This is also a good time to consider whether you’d like a . Although a brand-new car is thrilling, certified pre-owned (CPO) could offer a lower price tag while still boasting new features and a manufacturer-backed warranty. And if you aren’t forced to drive as soon as possible, you can save money by waiting for . 5. Apply for prequalification for financing Once you gather some information on the kind of car you want to buy and your financial situation, you can look for lenders that provide prequalification. This is essential in saving money and puts you in charge when it comes to choosing the best financing option available. Prequalification, or , differs from full approval. Therefore, even after the prequalification procedure ends, it’s not a complete agreement. Rather, preapproval will give you an idea of potential rates and terms. It is still necessary to submit an application in a formal manner, but you will have an idea if you can afford the application before the deadline. The following are required when you apply to prequalify the program: Average income and financial information. Personal information. Employment information. Any current debt. 6. Head to the dealership -in person or online After obtaining prequalification for a loan and selecting your dream car now is the time to begin the car purchasing process. Ideally, you should look up the types of cars available in your local area. A majority of dealers have their inventory listed on their websites. They also let you schedule appointments. It is crucial to sit behind the steering wheel of your prospective vehicle and take it for an initial test drive prior to making a buy. Make sure you adjust the seat, and determine whether it will fit in your garage and can manage your daily routine. You aren’t limited to dealers that are local to you. Online dealers such as Carvana, TrueCar and Vroom give you access to the entire inventory of pre-owned cars. 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 one week to the car before you buy it . 7. Negotiate Negotiation can feel intimidating but getting the best deal comes from standing up for yourself. Be prepared with all the paperwork needed, a thorough knowledge of your credit score and ask. The bottom line is: be ready to leave if you don’t get the deal you deserve. If the time is right to conclude the deal, stay steadfast in your commitment to the agreed-upon number. You can expect the dealer to push for . Do not accept alternatives like fabric or paint protection in the event that an additional option like gap insurance may be more beneficial. Next steps Negotiation can feel daunting However, getting the best deal comes in the form of standing up for yourself. Bring any documents needed, a firm understanding of your credit history and be prepared to inquire. Focus on the purchase price, not the monthly payment. Be prepared to walk away if you can’t get the deal you’re looking for. When it’s time to close the deal remain steadfast on the agreed-upon number. It is possible for the dealer to press for . Do not accept options like paint protection or fabric while an extra option such as gap insurance might be more beneficial. Learn more
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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 a car. The article was edited by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate since the end of 2021. They are passionate about helping readers gain the confidence to take control of their finances by providing concise, well-researched, and clear information that breaks down complex topics into manageable bites.
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