9 tips for buying your first car
Buying your first car can be exciting, but there’s a lot to manage. Planning ahead can help make the process easier—and help ensure you end up with the best car for you. Here are some important things to keep in mind as you start shopping for your first car.
Be honest about your needs
A fancy sports car in snowy weather? An SUV for a train commuter? Evaluate your lifestyle and the driving conditions you face most often. Take an honest look at your finances, too. Carefully assessing your situation is a great first step toward finding the right car.
Set a reasonable budget
When buying your first car, it’s easy to forget all the ownership expenses beyond the monthly car payment. Be sure to factor the costs of maintenance, insurance, gas and repairs into your budget. Learn more about the true cost of owning a car.
Know your credit score
Your credit score helps determine the interest rate you pay on a car loan. Better credit may help get you a more favorable interest rate, which in turn will affect your overall car-buying budget. Visit AnnualCreditReport.com to get a free copy of your credit report from each of the three major credit bureaus (Experian, Equifax and TransUnion). You may also be able to get your credit score for free through your credit card provider.
Make a down payment
Typically, buying a car doesn’t require a down payment, but making one is usually a good idea: You don’t have to borrow as much, and your monthly payment is lower. (For every $1,000 you put down, your monthly car payment generally drops by about $20.) Use Bank of America’s auto loan calculator to see how a down payment can affect your monthly car loan payment.
Apply for a loan
Shopping for a car loan before shopping for a car may seem counterintuitive, but it’s useful. It gives you an idea of how much you can borrow (and at what interest rate), which means you don’t need to make financing decisions on the fly at the dealership. Start at your bank or credit union, then get quotes from other lenders to make sure you get the best rate.
Cast a wide net
Shopping for your first car is a lot easier for you than it was for your parents. For example, online search tools give you access to a broad range of cars in your price range that might meet your needs.
Take a test-drive
Once you’ve identified a few cars that look good on paper and on the lot, take each for a test-drive to see how you feel in it and how it performs. Try to test-drive all the cars you’re considering on the same day so you can easily compare them.
Get the data
If you look at new cars, ask multiple dealers to quote you prices. If you look at used cars, be sure to ask for a Carfax report, which details a used vehicle’s history, including any accidents.
Close the deal
You’ve done your research, you know what you want and you have your financing in place. When it’s time to negotiate the deal, you’re in control. Before you sign, though, be sure you understand the terms of any financing or warranty agreement.