How to buy your first car Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our aim is to assist you make smarter financial decisions by offering interactive tools and financial calculators, publishing original and objective content. This allows you to conduct research and compare information at no cost and help you make sound financial decisions. Bankrate has partnerships with issuers such as, but not restricted to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Earn money The products that are advertised on this site come from companies that pay us. This compensation could affect how and where products appear on this website, for example for instance, the order in which they may appear in the listing categories, except where prohibited by law. This applies to our mortgage home equity, mortgage and other home loan products. However, this compensation will not influence the information we provide, or the reviews that you read on this site. We do not cover the entire universe of businesses or financial offerings that might be accessible to you. FG Trade/Getty Images
4 minutes read Read published March 02, 2023.
Authored by Rebecca Betterton Written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She specializes in helping readers with the ins and outs of securely borrowing money to buy a car. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since late 2021. They are dedicated to helping readers gain confidence to take control of their finances by providing clear, well-researched information that breaks down otherwise complex topics into manageable bites. The Bankrate guarantee
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You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four years. We strive to continuously provide consumers with the expert advice and tools required to be successful throughout their financial journey. Bankrate follows a strict policy, which means you can be confident that our content is honest and reliable. Our award-winning editors and journalists produce honest and reliable information to assist you in making the right financial choices. Our content produced by our editorial staff is factual, accurate and is not influenced by our advertisers. We're honest about how we are able to bring quality information, competitive rates and useful tools for our customers by describing how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We receive compensation for the placement of sponsored products and services or through you clicking specific links on our site. So, this compensation can impact how, where and when the products are listed within categories, with the exception of those the law prohibits it for our mortgage home equity, mortgage and other home lending products. Other elements, such as our own proprietary website rules and whether or not a product is available within the area you reside in or is within your self-selected credit score range can also impact the manner in which products are featured on this website. Although we try to offer the most diverse selection of products, Bankrate does not include details about every financial or credit product or service. The monthly average payment for a used car came to $526 during the quarter-fourth of the year 2022, and brand new vehicles were higher at $716, according to . For a new buyer, numbers this steep can be daunting and more overwhelming when you aren't comfortable about the process. But confidence is all in the preparation. Therefore, you should take the time before heading to the internet or to a dealer to know the essential steps to take when you are buying your first car. 1. Determine how much you can afford The key to a successful buy is to first determine . Your credit score, your monthly income, and the kind of vehicle you're looking for will all be considered in the decision. The key is to find a compromise between your budget and selecting the perfect car to meet your needs. When determining your budget, consider the , not just the sticker price that you will see advertised. The actual price for the car is the entire cost that you will be expected to pay, which includes tax and dealer charges. When you've got that number -- or a suitable estimate -- factor in your salary average and make use of a , which will aid you in determining what your monthly cost of financing the car will be. The bankrate tip
Car ownership has its own costs, the responsibility of paying for it, so make sure that you have room in your budget for any additional expenses.
2. Make a savings account for a downpayment The for your future vehicle is the initial lump sum that you'll pay. Try to pay at 20 percent of the purchase price, that could take a while. Saving up for a is likely worth it if you hold off buying the car until you have the funds. It will save you cash in the end and decrease your monthly costs. If you're not able to wait, you can make the lower down payment. However, you may not get a good rate with your lender. In this case, consider the option of a cheaper vehicle. The lower your overall cost, the less you will need to save for a downpayment. 3. Examine your credit report If this is your first significant purchase, it's likely to be that you do not have an extensive credit history. If that's the case, look over your credit score to see what loan options are available. Credit scores are the main element that lenders look at when determining the interest rates they will offer. The higher your credit score will be, the better the interest rate you will receive. Check your credit score before meeting with a dealer. You can do so online or free at . It's best to make sure your credit is in order before applying for vehicle financing if you can. 4. Decide what car is right for you. Choosing the vehicle that is the best fit for your needs requires many more factors than just color or style. Also, consider other aspects like the car's durability, size for your needs, technology security features, gas mileage , and the climate in which you reside. Look up these statistics as well as additional information on how much the vehicle you're looking at is sold for. This is also an excellent time to consider whether you want to purchase a . While a brand new car can be an exciting option, certified used (CPO) could offer a lower price tag and still offer modern features as well as a warranty from the manufacturer. And if you aren't forced to get behind the wheel whenever you can it is possible to get a better deal by waiting . 5. Get prequalified for financing after you have gathered some details about the kind of car you'd like to purchase as well as your financial history, make an application to lenders who offer prequalification. This is crucial to save money as well as putting you in charge when it comes to choosing the most suitable financing option. Prequalification, or , differs from full approval, and so even when the prequalification process closes, it's still not a final deal. Rather, preapproval will provide you with an idea of the potential rates and conditions. You will still have to complete a formal application after, but you will know of whether you're able to pay for the loan before the deadline. You will need the following in order to be prequalified the program: Average income and financial information. Personal information. Employment information. Any current debt. 6. Go 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 check out the available vehicles available in your local area. Most dealers will list their inventory on their websites. They will also permit you to schedule appointments. It is important to sit behind the steering wheel of your prospective vehicle and take it for a test drive before you purchase. Make sure you alter the seat and see whether it will fit in your garage , and if it can handle your day-to-day routine. You aren't limited to dealers that are local to you. Online dealers like Carvana, TrueCar and Vroom offer access to a national inventory of used vehicles. You can look through and obtain 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, and then take it . 7. Negotiate Negotiation may be intimidating however, finding the most favorable deal is in the form of taking a stand for yourself. Bring any documents required, a clear understanding of your credit history and to ask. But the most important thing to remember is this: be prepared 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 deal's agreed-upon amount. You can expect the dealer to press for . Say no to options like paint protection or fabric, while an extra option such as gap insurance could be more useful. Next steps in negotiation can be intimidating However, getting the best deal comes from taking a stand for yourself. Come prepared with any paperwork needed, a firm understanding of your credit history and be prepared to inquire. Focus on the purchase price instead of the monthly payment. And be prepared to walk away if don't get the deal that you deserve. If it's time to close the deal keep your stance on the finalized number. You can expect the dealer to press for . Say no to options like paint protection or fabric, when an add-on like gap insurance may be more useful. Find out more
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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 taking out loans to purchase cars. The article was edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since late 2021. They are committed to helping readers gain confidence to take control of their finances through providing clear, well-researched information that breaks down complex subjects into bite-sized pieces.
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