How to buy your first car Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our mission is to help you make better financial decisions by offering interactive tools and financial calculators, publishing original and objective content. This allows you to conduct your own research and compare information for free – so that you can make sound 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 could affect how and when products are featured on this website, for example such things as the sequence in which they appear in the listing categories and other categories, unless prohibited by law. Our mortgage, home equity and other products for home loans. However, this compensation will affect the information we publish, or the reviews appear on this website. We do not include the vast array of companies or financial deals that could be open 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 is a specialist in helping readers in navigating the details 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 the end of 2021. They are dedicated to helping readers gain confidence to control their finances by providing concise, well-studied information that dissects complicated subjects into bite-sized pieces. The Bankrate promises
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If you have questions about money. Bankrate can help. Our experts have helped you understand your money for over four decades. We are constantly striving to give our customers the right advice and tools required to make it through life’s financial journey. Bankrate adheres to a strict code of conduct policy, which means you can be confident that our content is truthful and accurate. Our award-winning editors and journalists produce honest and reliable content that will help you make the best financial decisions. The content created by our editorial team is factual, accurate and uninfluenced from our advertising. We’re transparent regarding how we’re 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 are compensated in exchange for the placement of sponsored products and, services, or by you clicking on specific links on our website. So, this compensation can impact how, where and when the items appear in listing categories, unless prohibited by law for our mortgage or home equity products, as well as other products for home loans. Other elements, such as our own rules for our website and whether or not a product is available within your region or within your self-selected credit score range could also affect how and where products appear on this site. While we strive to provide the most diverse selection of products, Bankrate does not include details about every credit or financial products or services. The monthly average amount 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 . If you’re a first-time car buyer, numbers this steep can be daunting and more overwhelming when you aren’t familiar with the buying process. But confidence is all about preparation, so make sure you take your time before you go online or to a dealership to learn the most important actions to follow when purchasing your first automobile. 1. Determine how much you can afford The key to a successful buy is to first determine . Your credit score, monthly income and the type of car you’d like to purchase should all factor into this decision. It is important to find a compromise between meeting your budget and selecting a car right for your needs. When budgeting, look at the whole picture, not just the price you see advertised. The true out-the-door price is the entire cost that you will be expected to pay, which includes tax and dealer charges. Once you’ve got that figure — or a suitable estimate, you can factor in your salary average and take advantage of a , which can assist you in determining what the monthly cost of financing the car will be. The bankrate tip
Car ownership is a major expense, the responsibility of paying for it, so make sure that you’ve got room 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 that you’ll pay. Try to pay at least 20% of the cost of purchase, that could take a while. Be patient and save for a car will likely be worth it if you put off purchasing an automobile until you’ve got the money. This can save you more money in the long run and reduce your monthly costs. If you can’t wait, you can make the lower down payment. But, you might not be able to get a favorable rate with your lender. In this instance, think about the option of a cheaper vehicle. The lower your overall cost and the lower your monthly expenses, the less you’ll have to put aside for a downpayment. 3. Examine your credit history If this is your first major investment in a financial institution, it’s likely there isn’t a lengthy credit history. If that’s the case, check your credit history to find out which loan alternatives are available. Credit scores are the primary factor lenders consider to determine the interest rates you will be offered. The better your credit, the more favorable your interest rate will be. Make sure you know your credit score prior to making contact with a potential dealer. You can do so online or free at . It’s best to get your credit in good shape before applying for car financing if you can. 4. Find the best car for you. Deciding which car is the best fit for your needs requires many more factors than just style or color. Consider other factors, like the car’s durability, size for your needs, technology security features, fuel efficiency and the weather where you reside. Look up these stats as well as additional information about how much the car you’re interested in is sold for. It is also a good time to determine if you’d like a . Although a brand-new car is exciting, certified pre-owned (CPO) will give you a lower price tag but still come with new features and a manufacturer-backed warranty. If you’re not in a hurry to take the car out whenever you can it is possible to get a better deal by waiting . 5. Get prequalified for financing after you gather some information on the type of vehicle you want to buy and your financial background, make an application to lenders who offer prequalification. This step is vital to saving money and putting you in charge in deciding the most suitable financing option. Prequalification, or , differs from full approval. Therefore, even when the prequalification process ends, it’s not a done deal. Preapproval, however, will give you an idea of possible costs and terms. You will still have to fill out an application in a formal manner the preapproval, but you’ll know if you can afford the application prior to. You will need the following for prequalification the program: Average income and financial information. Personal information. Information about employment. Any current debt. 6. Visit the dealerin person or online After obtaining prequalification for an loan and setting your sights on the vehicle of your dreams now is the time to start the buying process. It is recommended check out the available vehicles available in your local area. The majority of dealers will list their inventory on their websites. They will also allow you to set up appointments. It is important to get behind the wheel of the potential vehicle and take it for an initial test drive prior to making a buy. Make sure you adjust the seat, measure whether it will fit into your garage and is able to handle your day-to-day routine. But you are not limited to dealers that are local to you. Online dealers such as Carvana, TrueCar and Vroom offer access to a national inventory of pre-owned cars. You can browse and get financing without leaving the house, and when you pick one, you are given up to one week to the car before you buy it . 7. Negotiate Negotiation may be intimidating but getting the best deal comes in the form of taking a stand for yourself. Be prepared with all the paperwork needed, a firm knowledge of your credit score and be prepared to inquire. The bottom line is: be ready to walk away if you can’t secure the loan you want. When the time has come to close the deal remain steadfast on the number you agreed to. The dealer is likely to push for . Don’t accept options such as fabric or paint protection while an extra option such as gap insurance might be more useful. Next steps Negotiation can feel difficult However, finding the best deal comes from being a strong advocate for yourself. Come prepared with any paperwork needed, a firm understanding of your credit score and be prepared to inquire. Concentrate on the price of the purchase and not on the monthly installment. Also, be ready to leave if you can’t get the deal you’re entitled to. When the time has come to conclude the deal, keep your stance on the finalized number. The dealer is likely to insist on . Say no to options like paint protection or fabric, when an add-on like gap insurance may be more beneficial. Learn more
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This article is written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She has a specialization in helping readers with the ins and outs of securely borrowing money to purchase a car. Written by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate since the end of 2021. They are committed to helping readers gain the confidence to manage their finances by providing precise, well-researched and well-researched facts that break down complex topics into manageable bites.
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