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 that provide objective and unique content. This allows you to conduct research and compare information at no cost to help you make financial decisions with confidence. 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 deals that are displayed on this site come from companies that pay us. This compensation could affect how and when products are featured on the site, such as, for example, the order in which they appear in the listing categories, except where prohibited by law for our mortgage home equity, mortgage and other home loan products. But this compensation does not influence the information we publish, or the reviews you read on this site. We do not cover the vast array of companies or financial offers that may be available to you. FG Trade/Getty Images
4 minutes 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 details of borrowing money to purchase a car. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since the end of 2021. They are dedicated to helping readers gain the confidence to manage their finances by providing clear, well-researched information that reduces complex topics into manageable bites. The Bankrate promises
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We make sure that everything we publish will ensure that our content is reliable, honest and trustworthy. The loans journalists and editors focus on the areas that consumers are concerned about the most — the various types of loans available, the best rates, the best lenders, ways to repay debt, and more — so you’ll feel safe making a decision about your investment. Integrity of the editing
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You have money questions. Bankrate has the answers. Our experts have helped you understand your money for over four decades. We are constantly striving to provide consumers with the expert advice and tools needed to be successful throughout their financial journey. Bankrate follows a strict policy, which means you can be confident that our information is trustworthy and reliable. Our award-winning editors and journalists create honest and accurate content that will help you make the right financial decisions. The content created by our editorial team is factual, objective, and not influenced by our advertisers. We’re transparent about the ways we’re capable of bringing high-quality content, competitive rates and helpful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We receive compensation for the promotion of sponsored goods and services, or through you clicking specific links on our site. So, this compensation can affect the way, location and when products appear within listing categories, unless prohibited by law for our mortgage, home equity and other home loan products. Other factors, like our own proprietary website rules and whether or not a product is offered in your area or at your personal credit score can also impact the manner in which products are featured on this website. We strive to offer a wide range offers, Bankrate does not include details about each credit or financial products or services. The average monthly cost for a used vehicle came to $526 during the quarter-fourth of the year 2022, and brand new vehicles were higher at $716, according to . If you’re a first-time car buyer, numbers this steep could be intimidating, and more overwhelming when you aren’t experienced with the process. But confidence is all in the preparation. Therefore, you should take time prior to going online or to a dealership to learn the most important steps to take when you are buying your first automobile. 1. Find out how much you can pay for an effective purchase is to determine first . The credit rating, your monthly income, and the kind of vehicle you’re looking for must all be taken into consideration when making the decision. It is important to strike a balance between meeting your budget and choosing the right car for your requirements. When determining your budget, consider the , not just the sticker price that you will see advertised. The true out-the-door price is the total cost you’ll have to pay, including taxes and dealer fees. Once you have that number — or a suitable estimate, take into account your salary average and make use of a , which will assist you in determining what the monthly cost of financing the vehicle will be. Bankrate tip
Car ownership is a major expense, an expense, so ensure that you have room in your budget to cover additional costs.
2. Make a savings account for a downpayment the price of your new car is the first lump sum you pay for it. Try to pay at least 20% of the cost of purchase, which could take some time. Saving up to purchase a car is probably beneficial if you are able to put off purchasing a car until you’ve got the money. This can save you more money in the long run and reduce the cost of your monthly expenses. If you’re not able to be patient, you can opt for the lower down payment. But, you might not get a good rate with your lender. If this is the case, you should consider an alternative that is less expensive. The less you pay overall it is the less you have to put aside for a downpayment. 3. Check your credit report If this is your first major investment in a financial institution, it’s possible to be that you do not have a long credit history. If this is the case, check your credit score to see which loan alternatives are available. The credit score of yours is the most important element that lenders look at when determining the interest rates that they will offer. The better your credit, the more favorable the interest rate you will receive. Make sure you know your credit score prior to meeting with a dealer. You can do it online or free at . It is worth waiting to make sure your credit is in order before applying for vehicle financing if you can. 4. Find the best car for you. Deciding which car is best for you takes many more factors than just color or style. Consider other factors, such as the vehicle’s durability and size to meet your requirements, the latest technology and safety features, as well as fuel efficiency and the climate where you live. Check out and for these stats — and extra information 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 . While a brand new car can be an exciting option, certified used (CPO) will give you the lowest price, while still boasting the latest features, as well as manufacturer-backed warranty. And if you aren’t in a bind to take the car out in the shortest time possible You can save money by waiting . 5. Prequalify for financing After you gather some information on the kind of car you want to buy and your financial background, look for lenders that provide prequalification. This is crucial to saving money and putting you in charge in deciding the most suitable financing option. Prequalification, or , differs from full approval, so even after the prequalification process closes, it’s still not a complete agreement. Rather, preapproval will give you an idea of potential rates and conditions. You will still have to submit an application form however, you’ll know if you can afford it ahead of time. The following are required in order to be prequalified the program: Average income and financial information. Personal information. Information about employment. Any current debt. 6. Visit the dealerin person or online after obtaining a prequalification for an loan and setting your sights on your dream car It is now time to start the purchasing process. Ideally, you should check out the available vehicles available in your area. Most dealers will list their inventory on their websites. They also allow you to set up appointments. It is crucial to take the wheel of your potential car and take it on an inspection before you purchase. Make sure you adjust the seat, and determine the space into your garage and is able to be used for your day-to-day activities. But you are not limited to local dealers near you. Online dealers like Carvana, TrueCar and Vroom give you access to the entire inventory of used vehicles. You can look through and obtain financing at home, and when you pick a car, you get up to one week to the car before you buy it . 7. Negotiate Negotiation isn’t easy, but getting the best deal boils from taking a stand for yourself. Bring any documents needed, a firm understanding of your credit history and be prepared to inquire. The bottom line is this: be prepared to leave if you don’t obtain the credit you are due. If the time is right to close the deal, remain steadfast on the deal’s agreed-upon amount. It is possible for the dealer to press for . Do not accept alternatives like paint protection or fabric in the event that an additional option like gap insurance may be more useful. Next steps in negotiation can be difficult But getting the best deal comes from taking a stand for yourself. Bring any documents required, a clear understanding of your credit score and ask questions. Be focused on the purchase price and not on the monthly installment. And be prepared to walk away if don’t get the deal that you’re looking for. When the time has come to close the deal, remain steadfast on the agreed-upon number. It is possible for the dealer to insist on . Do not accept options like paint protection or fabric while an extra option such as gap insurance might be more beneficial. 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 taking out loans to purchase a car. Written by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate from late 2021. They are passionate about helping readers gain the confidence to control their finances by providing precise, well-researched and well-researched details that cut otherwise complicated topics into digestible pieces.
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