It doesn’t matter whether you’re a recent grad with your first real job or someone other than the prototypical first-time car buyer, the car-buying process is never filled with as much uncertainty as it is the first time. But no matter how much affection we develop for our high school hand-me-down or skateboard, at some point it’s time to move on. Being a good first-time car buyer isn’t easy, but if it’s worth doing — and it is — it’s worth doing well. To that end, we’ve come up with some tips to help with the process.
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ESTABLISH A REALISTIC BUDGET
This figure is generally based on what you can afford per month. The ideal is to pay cash, but in most instances when considering a new (or just newer) car, the nature of the transaction price often requires the leverage of financing. So, look at your cost of living in all the more important areas, like shelter, food, health insurance and Happy Hour. Once those are calculated, the remainder could be spent on a car payment, fuel, car insurance and — for cars without a warranty — mechanical maintenance.
Know what you can spend monthly
While this may look similar to #10, your level of indebtedness is different from your monthly commitment. Neither one — for a first-time buyer — should be out of balance in comparison to your other assets (at this point in your life those assets are probably limited to your most recent purchase at H&M). If you’re financing, figure $25/month for every thousand dollars that you borrow for 48 months, and $20/month on 60-month financing. It follows that every $10K borrowed is $250/month for four years, and $200/month for five. Again, this is the base obligation; insurance, fuel and periodic maintenance are above and beyond this.
Establish your transportation needs
We know. Despite our cautionary note, you have short-term enthusiasm UP TO HERE. A MINI Convertible or Fiat Cabriolet may be the car of the moment, but is it going to work for you as a day-in/day-out piece of transportation? Conversely, you may think you need a minivan or pickup for ALL OF YOUR STUFF, but on those occasions when you’re moving to a new apartment or, uh, moving home, you can rent a pickup. Given the cost of fuel, insurance and — in many cities — monthly parking, don’t buy what you don’t need. And perhaps consider renting what you need, only when you need it.
Identify and prioritize your wants
This runs a bit counter to the previous tip. The first-time purchase doesn’t need to be your be-all/end-all acquisition, but you should still pay attention to your want list, as this isn’t a process you need to repeat every 18 months. Better to stretch a bit for those things in a car that satisfy you, than to be hit over the head — and pocketbook — with buyer’s remorse before you’ve emptied the first tank of gas. If getting what you want costs $40/month more, spend it — and skip a couple Happy Hours.
Do your research (it’s never been easier)
In that you’re reading this at one of the foremost websites for car purchasers, online research is also intuitive. There is, at this point, an amazing amount of both information and perspective on new cars and their late-model alternatives. Once you’ve digested it all, balance it with your gut instincts — or those instincts of someone whose gut you trust. And be proactive; if you see someone with a car you have an interest in — and they’re not doing 90 miles per hour — stop and ask them about their ownership experience.
Locate a convenient dealer
For most of car-selling history (we’re talking to you, Karl) the act of buying a car for the first time has run akin to getting a colonoscopy for the first time: Come in, lay down, you’re not gonna’ feel a thing. But despite our almost inherent misgivings, the salesman in the showroom is closer to a normal person than you might think. Most of the abnormal ones — we’ve heard from reliable sources — end up selling something less precious; let your parents worry about them. And while new and late-model cars have never been more reliable, they still need attention and that attention should be easy to access. When weighing a couple of choices — let’s say Mazda3, Kia Soul and Honda Civic — compare dealer locations and, if all other things are equal, showroom environments. We tend to stay away from dealerships where two-thirds of the sales staff is sitting or standing at the front entrance.
Take a test drive
With all of the online sources available for your basic research, we believe the importance of the test drive has been marginalized. Virtually nothing is more important in your decision process than how you feel behind the wheel. And so many variables come into play — seat height, wheel adjustment, steering feel, throttle tip-in, outward visibility, control layout, etc. — that you simply must spend a reasonable amount of time driving the car. And that time should be more than five minutes on someone’s idea of a stop-and-go test route. Take at least half an hour, while trying stop-and-go, freeway merging and freeway speeds. And if your sales rep — you know, the normal guy trying to make a living — doesn’t have the 30 minutes, find a time when he or she does, or take the time to find another dealership.
Determine the proper purchase price
Once you’ve decided what you like — and have already established what you can afford — it’s time to arrive at a purchase price. The Kelley Blue Book Fair Purchase Price gives you an accurate idea of what people have paid in your area for the car you have an interest in. A credit union should also be able to provide you with perspective, and may have a contact on the showroom floor. An important note regarding referrals: Get the referral before taking another salesman’s time for a walkaround and demo. Most of these people work on commission, and commissions are notoriously small. If you plan on working with a referral, start with a referral. Finally, when discussing what you want to pay, don’t reveal a “per month” number; that’s the oldest trick in the book. If you’re thinking you can budget $20K — and you’re looking at a $25K car — tell ’em $20K. You can always work up…while it’s much harder to back up.
Secure financing, or know your options
Financing issues are somewhat like the purchase price; there has been an exponential growth in the number of resources. That, however, is mitigated by your lack of credit history or, in an increasing number of instances, marginal credit history. The last thing you want, however, is to be in a room with an F&I (Finance and Insurance) rep, and he or she is holding all the cards; the deck — if you will — is stacked against you. Better to talk with your credit union, bank or insurance provider (many have the capability and desire to finance your purchase), and line up your financing in advance. You can always go with the dealer option if it’s competitive, but never approach it as if the dealer is the only money game in town. This is an important part to get right, so also see our 5 Smart Steps to Financing Your Next Car.
Enjoy the process
We know, the above advice makes buying a car seem like an ordeal, but even those with no interest or passion in a car or truck can — if the process is given half a chance — be stimulated by the sheer variety of options available, and the genuine creativity that goes into today’s automotive menu. With low financing rates and literally hundreds of great cars to choose from, your options have never been better (especially in the “entry-level” category) — and car ownership has never been more rewarding. Take your time in the process, and you’ll be delighted with the outcome for at least the first 48 (or 60) monthly payments.