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 decisions by providing you with interactive tools and financial calculators that provide objective and unique content. We also allow users to conduct research and compare data for free to help you make sound financial decisions. Bankrate has partnerships with issuers such as, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Earn Money The deals that are displayed on this website are provided by companies that pay us. This compensation can affect the way and where products appear on this website, for example such things as the sequence in which they appear within the listing categories and other categories, unless prohibited by law. This applies to our mortgage, home equity and other products for home loans. But this compensation does have no impact on the content we publish or the reviews that appear on this website. We do not contain the vast array of companies or financial deals that could be accessible to you. FG Trade/Getty Images
4 minutes read. published March 02, 2023.
Written by Rebecca Betterton 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. 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 manage their finances with clear, well-researched information that breaks down otherwise complex issues into digestible chunks. The Bankrate promises
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If you have questions about money. Bankrate has the answers. Our experts have been helping you manage your finances for over four years. We are constantly striving to give our customers the right advice and tools required to be successful throughout their financial journey. Bankrate follows a strict standard of conduct, so you can rest assured that our content is truthful and accurate. Our award-winning editors, reporters and editors create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual and uninfluenced by our advertisers. We're honest about the ways we're capable of bringing high-quality content, 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 are compensated in exchange for placement of sponsored products and services, or when you click on certain links posted on our site. Therefore, this compensation may impact how, where and when the products are listed within categories, except where it is prohibited by law for our mortgage or home equity products, as well as other home lending products. Other factors, like our own rules for our website and whether the product is available in your area or at your personal credit score could also affect the manner in which products are featured on this site. We strive to offer an array of offers, Bankrate does not include details about every financial or credit products or services. The monthly average cost for a used vehicle is $526 for the 4th quarter in 2022, and new cars were sitting more expensive at $716, according to . If you're a first-time car buyer, numbers this steep could be intimidating, and more daunting when you're not familiar with the process. However, confidence is about preparation, so you should take time prior to going to the internet or a dealership to know the essential steps to take when you are buying your first automobile. 1. Decide how much you are able to manage to afford. The first step in making an effective purchase is to first establish . The credit rating, monthly income and the type of car you'd like to purchase must all be taken into consideration when making this decision. The key is to find a compromise between your budget and choosing a car right for your needs. When determining your budget, consider the total, not only the sticker price that you will see advertised. The true out-the-door price is the entire cost that you'll be required to pay, including dealer fees and taxes. Once you have that number or a reasonable estimate -- factor in your average salary and use an, which can assist you in determining what the monthly cost to finance the vehicle will be. Tips from Bankrate
Car ownership has its own costs, so be sure you've got enough money in your budget to cover additional costs.
2. Make a savings account for a downpayment The for your future vehicle is the initial lump sum you'll pay. Aim to cover at 20 percent of the purchase price which might take some time. Be patient and save for a is likely beneficial if you are able to delay getting the car until you have the funds. This can save you more money in the long run and reduce the monthly cost. If you're not able to put off making the lower down payment. However, you may not receive a fair rate with your lender. In this instance, think about a less pricey vehicle instead. The lower your overall cost and the lower your monthly expenses, the less you'll have to put aside to pay for a down payment. 3. Examine your credit report If this is your first significant investment in a financial institution, it's likely there isn't a long credit history. If this is the case, you should check your credit history to find out which loan options are available. The credit score of yours is the most important factor that lenders use to determine the interest rates you will be offered. The higher your credit score is, the better your interest rate will be. Verify your credit score prior to making contact with a potential dealer. You can do so on the internet or at no cost at . It is worth waiting to ensure your credit is in good shape before applying for car financing in the event that you are eligible. 4. Decide what car is right for you. Choosing the vehicle that is right for you requires many more factors than just color or style. Also, consider other aspects for instance, the car's longevity and size to meet your needs, technology security features, fuel efficiency and the climate in which you live. Take a look at these figures and additional details about how much the car you're looking at sells for. It is also a good moment to decide if you'd like to purchase a . Although a brand-new car is thrilling, certified pre-owned (CPO) can give you a lower price tag but still come with modern features as well as a warranty from the manufacturer. If you're not in a hurry to drive whenever you can it is possible to save money by waiting for . 5. Prequalify for financing After you've gathered information about the kind of car you wish to purchase and your financial background, look for lenders that provide prequalification. This step is vital to save money as well as putting you in control when it comes to choosing the most suitable financing option. Prequalification is different from full approval, and so even after the prequalification procedure closes, it's still not a complete agreement. Preapproval is a good way to provide you with an idea of possible rates and conditions. You'll still need to submit an application form the preapproval, but you'll be able to determine of whether you're able to pay for the application prior to. The following are required when you apply to prequalify your finances and income. Personal information. Employment information. Any current debt. 6. Go to the dealershipin person or online After prequalifying for a loan and selecting the car you want to buy now is the time to start the buying process. In the ideal scenario, you'll need check out the available vehicles available in your region. A majority of dealers have their inventory listed on their websites. They also permit you to schedule appointments. It is crucial to get behind the wheel of your potential car and take it for an initial test drive prior to making a buy. Be sure to alter the seat and see if it fits in your garage and can manage your daily routine. But you are not limited to local dealers near you. Online dealers like Carvana, TrueCar and Vroom offer access to the entire inventory of used vehicles. You can browse and get financing without leaving the house and, when you choose one, you are given up to seven days to test the car, and then take it . 7. Negotiate Negotiation may be intimidating However, finding the most favorable deal comes from taking a stand for yourself. Bring any documents needed, a thorough knowledge of your credit history and to ask. But the most important thing to remember is this: be prepared to walk away if you can't obtain the credit you are due. When the time has come to close the deal be firm on the deal's agreed-upon amount. The dealer is likely to push for . Do not accept alternatives like fabric or paint protection when an add-on like gap insurance may be more useful. The next steps to negotiate can be difficult, but getting the best deal boils in the form of taking a stand for yourself. Be prepared with all the paperwork required, a clear understanding of your credit score and to ask. Be focused on the purchase price and not on the monthly installment. Be prepared to leave if you aren't able to get the deal you deserve. If it's time to close the deal, remain steadfast on the agreed-upon number. The dealer is likely to insist on . Say no to options like paint protection or fabric, in the event that an additional option like gap insurance might be more useful. Find out more
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The article was 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 an automobile. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate from late 2021. They are passionate about helping readers gain confidence to manage their finances through providing clear, well-researched facts that break down complex subjects into bite-sized pieces.
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