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 providing you with interactive tools and financial calculators, publishing original and objective content. We also allow users to conduct research and compare information for free to help you make financial decisions with confidence. Bankrate has partnerships with issuers such as, but not restricted to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make Money The offers that appear on this site are from companies who pay us. This compensation may impact how and when products appear on the site, such as, for example, the order in which they may be listed within the categories of listing in the event that they are not permitted by law. This applies to our mortgage, home equity and other products for home loans. However, this compensation will not influence the content we publish or the reviews appear on this website. We do not contain the vast array of companies or financial offers that may be open 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 assisting readers with the ins and outs of securely borrowing money to buy a car. Written 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 the confidence to take control of their finances through providing precise, well-studied and well-researched data that dissects complicated subjects into bite-sized pieces. The Bankrate promises
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Car ownership is a major expense, the responsibility of paying for it, so make sure that you’ve got enough money in your budget for any extra expenses.
2. Reserve money for a down payment Your future car is the initial lump sum you’ll pay. Aim to cover at minimum 20% of the purchase price, that could take a while. Being patient and saving up to purchase a car is probably worth it if you hold off buying the car until you’ve got the money. This can save you money overall and lower the monthly cost. If you are unable to be patient, you can opt for a lower down payment. But, you might not be able to get a favorable rate from your lender. In this instance, think about a less pricey vehicle instead. The less you pay overall and the lower your monthly expenses, the less you’ll have to pay to pay for a down payment. 3. Examine your credit history If this vehicle is your first significant investment in a financial institution, it’s possible to be that you do not have a lengthy credit history. If that’s the case, check your credit score to see which loan alternatives are available. The credit score of yours is the primary factor lenders consider to determine the rates of interest you will be offered. The higher your credit score will be, the better your interest rate will be. Make sure you know your credit score prior to talking to a potential dealer. You can do so online through or for free at . It’s worth it to get your credit in order 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 much more than just color or style. Consider other factors, such as the vehicle’s durability as well as its size and capacity for your requirements, the latest technology and safety features, as well as fuel efficiency and the climate where you live. Take a look at these statistics as well as additional information on how much the vehicle you’re looking at is sold for. It is also a good time to determine if you’d like to purchase an . While a brand new car can be an exciting option, certified used (CPO) could offer an affordable price and still offer the latest features, as well as warranty from the manufacturer. If you’re not forced to drive as soon as possible 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’d like to purchase as well as your financial history, make an application to lenders who offer prequalification. This is crucial in saving money and puts you in charge in deciding the most appropriate financing option. Prequalification differs from full approval, so even after the prequalification process ends, it’s not a final deal. Preapproval, however, will give you an idea of possible rates and terms. You’ll still need to complete a formal application after the preapproval, but you’ll be able to determine if you can afford it ahead of time. The following are required when you apply to prequalify the program: Average income and financial information. Personal information. Information about employment. Any current debt. 6. Head to the dealership — in person or online after obtaining a prequalification for an loan and selecting the car you want to buy now is the time to begin the buying process. In the ideal scenario, you’ll need to see what vehicles are available in your local area. A majority of dealers list their inventory on their websites. They will also permit you to schedule appointments. It is important to take the wheel of the potential car and take it for an initial test drive prior to making a buy. Be sure to adjust the seat, measure the space in your garage and can be used for your day-to-day activities. However, you’re not restricted to the dealers local to you. Online dealers such as Carvana, TrueCar and Vroom give you access to a national inventory of pre-owned cars. You can search and apply for financing without leaving the house If you decide to purchase one, you are given up to seven days to test the car before you buy it . 7. Negotiate Negotiation isn’t easy, but finding the most favorable deal boils down to standing up for yourself. Come prepared with any paperwork needed, a thorough knowledge of your credit score and ask. The bottom line is: be ready to walk away if you can’t obtain the credit you are due. If the time is right to close the deal, stay steadfast in your commitment to the number you agreed to. You can expect the dealer to insist on . Say no to options like paint protection or fabric, when an add-on like gap insurance could be more beneficial. The next steps to negotiate can be intimidating However, finding the best deal comes in the form of being a strong advocate for yourself. Be prepared with all the paperwork required, a clear understanding of your credit history and ask questions. Focus on the purchase price and not on the monthly installment. And be prepared to leave if you can’t get the deal you deserve. If it’s time to close the deal, be firm on the agreed-upon number. The dealer is likely to push for . Don’t be averse to options such as paint protection or fabric, when an add-on like gap insurance could be more useful. 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 has a specialization in helping readers with the ways and pitfalls of borrowing money to purchase an automobile. The article was edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing 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 otherwise complex topics into manageable bites.
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