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. This allows you to conduct your own research and compare data for free and help you make informed financial decisions. Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Earn Money The offers that appear on this site are from companies who pay us. This compensation can affect the way and where products appear on this website, for example such things as the order in which they may appear within the listing categories, except where prohibited by law. Our mortgage or home equity products, as well as other home lending products. This compensation, however, does not influence the content we publish or the reviews you read on this site. We do not contain the universe of companies or financial offerings that might be open to you. FG Trade/Getty Images
4 min read The publication was published on March 02, 2023.
Authored by Rebecca Betterton Written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She is a specialist in helping readers to navigate the ways and pitfalls of borrowing money to buy cars. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since late 2021. They are passionate about helping readers gain the confidence to manage their finances through providing precise, well-studied and well-researched data that breaks down otherwise complex subjects into bite-sized pieces. The Bankrate promise
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There are money-related questions. Bankrate has the answers. Our experts have been helping you master your finances for over four years. We strive to continuously provide our readers with the professional guidance and the tools necessary to succeed throughout life's financial journey. Bankrate adheres to strict standards , so you can trust that our content is honest and accurate. Our award-winning editors and journalists create honest and accurate information to assist you in making the right financial decisions. The content we create by our editorial staff is factual, accurate and uninfluenced through our sponsors. We're open regarding how we're in a position to provide quality information, competitive rates and helpful tools to our customers 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 by you clicking on specific links that are posted on our site. Therefore, this compensation may influence the manner, place and when the products are listed within categories, except where the law prohibits it for our mortgage home equity, mortgage and other products for home loans. Other factors, such as our own proprietary website rules and whether or not a product is available in the area you reside in or is within your own personal credit score can also impact the way and place products are listed on this site. Although we try to offer an array of offers, Bankrate does not include details about every financial or credit products or services. The average monthly payment for a used car is $526 for the 4th quarter in 2022 and the newer cars were more expensive at $716, according to . As a first-time buyer, numbers this steep can be daunting and more overwhelming when you aren't familiar with the process. However, confidence is made of preparation. So you should take the time before heading to the internet or to a dealer to understand the key actions to follow when purchasing your first automobile. 1. Determine how much you can pay for an effective purchase is to determine first . The credit rating, monthly income, and the kind of vehicle you're looking for must all be taken into consideration when making the decision. The key is to strike a balance between fitting your budget and choosing the right car for your needs. When budgeting, look at the , not just the sticker price that is advertised. The true out-the-door price is the total amount you'll be required to pay, including tax and dealer charges. Once you've got that figure or a reasonable estimate, you can factor in your typical salary and make use of a , which can aid you in determining what your monthly cost of financing the vehicle will be. Bankrate tip
Car ownership is a major expense, the responsibility of paying for it, so make sure that you have room in your budget to cover any extra expenses.
2. Reserve money for a down payment Your future car is the initial lump sum you pay for it. Try to pay at 20 percent of the purchase price, that could take a while. Saving up for a is likely worthwhile if you can put off purchasing an automobile until you have the funds. This will help you save cash in the end and decrease the cost of your monthly expenses. If you are unable to be patient, you can opt for the lower down payment. However, you may not receive a fair rate with your lender. In this instance, think about an alternative that is less expensive. The lower your overall cost it is the less you have to pay for a down payment. 3. Take a look at your credit report If this vehicle is your first large investment in a financial institution, it's possible that you don't have an extensive credit history. If that's the case, check your credit history to find out the loan options are available. The credit score of yours is the primary factor lenders consider to determine the interest rates that you will be offered. The better your credit will be, the better your interest rate will be. Verify your credit score prior to meeting with a dealer. It is possible to do this online or free at . It's worth it to make sure your credit is in good condition prior to applying for financing for a vehicle if you can. 4. Choose the right car for you. Deciding which car is best for you takes many more factors than just color or style. Take into consideration other aspects, such as the vehicle's durability, size for your requirements, the latest technology and safety features, as well as fuel efficiency and the climate in which you reside. Check out and for these stats and additional details about the price the car you're interested in sells for. This is also an excellent time to consider whether you'd like an . Although a brand-new car is thrilling, certified pre-owned (CPO) will give you an affordable price but still come with the latest features, as well as warranty from the manufacturer. If you're not in a bind to take the car out whenever you can, you can get a better deal by waiting . 5. Get prequalified for financing after you have gathered some details about the type of vehicle you want to buy and your financial background, apply with lenders that offer prequalification. This step is vital in saving money and puts you in charge when it comes to choosing the most appropriate financing option. Prequalification differs from full approval, so even after the prequalification process is completed, it's not a done deal. Preapproval is a good way to give you an idea of the potential costs and terms. You will still have to fill out an application form, but you will be able to determine whether you are able to afford it before the deadline. The following information is required when you apply to prequalify your finances and income. Personal information. Information about employment. Any current debt. 6. Head to the dealership -- in person or online after obtaining a prequalification for a loan and selecting the car you want to buy It is now time to begin the purchasing process. It is recommended look up the types of cars available in your local area. Most dealers have their inventory listed on their websites. They will also allow you to set up appointments. It is essential to get behind the steering wheel of your prospective vehicle and take it for a test drive before you buy. Make sure you alter the seat and see the space in your garage , and if it can be used for your day-to-day activities. But you are not limited to dealers that are local to you. Online dealers such as Carvana, TrueCar and Vroom offer access to a nationwide inventory of used cars. You can look through and obtain financing at home and, when you choose one, you are given up to a week to test drive your car and have it . 7. Negotiate Negotiation may be intimidating but finding the most favorable deal is down to taking a stand for yourself. Bring any documents required, a clear knowledge of your credit history and to ask. The bottom line is: be ready to leave if you don't get the deal you deserve. When it's time to close the deal stay steadfast in your commitment to the agreed-upon number. You can expect the dealer to press for . Don't accept options such as paint protection or fabric while an extra option such as gap insurance could be more beneficial. The next steps to negotiate can be daunting, but getting the best deal boils down to being a strong advocate for yourself. Be prepared with all the paperwork required, a clear understanding of your credit history and ask questions. Be focused on the purchase price, not the monthly payment. And be prepared to walk away if you don't get the deal that you're entitled to. When it's time to close the deal, be firm on the agreed-upon number. The dealer is likely to press for . Do not accept options like paint protection or fabric, when an add-on like gap insurance may 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 is a specialist in helping readers in navigating the ways and pitfalls of borrowing money to buy a car. Written by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate since late 2021. They are committed to helping readers gain confidence to control their finances by providing precise, well-researched and well-researched details that cut complicated topics into digestible pieces.
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