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 better financial choices by providing you with interactive tools and financial calculators that provide objective and unique content. This allows you to conduct your own research and compare data for free and 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 Make money The products that are advertised on this site are from companies that compensate us. This compensation could affect how and where products appear on this site, including such things as the sequence in which they be listed within the categories of listing and other categories, unless prohibited by law for our mortgage, home equity and other home loan products. This compensation, however, does not influence the content we publish or the reviews you see on this site. We do not cover the entire universe of businesses 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 helping readers to navigate the details of borrowing money to purchase an automobile. The article was edited by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate from late 2021. They are enthusiastic about helping readers gain the confidence to manage their finances by providing precise, well-studied and well-researched data that dissects complicated topics into manageable bites. The Bankrate guarantee
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There are money-related questions. Bankrate has the answers. Our experts have helped you understand your finances for more than four years. We strive to continuously provide consumers with the expert advice and tools required to be successful throughout their financial journey. Bankrate adheres to a strict code of conduct policy, which means you can be confident that our information is trustworthy and precise. Our award-winning editors and reporters create honest and accurate content that will help you make the right financial decisions. The content created by our editorial team is factual, accurate and is not influenced by our advertisers. We’re open about how we are capable of bringing high-quality content, competitive rates, and useful tools for you , by describing how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for the promotion of sponsored goods and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may influence the manner, place and in what order the products are listed within categories, except where prohibited by law for our mortgage, home equity and other home lending products. Other elements, such as our own rules for our website and whether a product is available in your region or within your personal credit score can also impact the manner in which products are featured on this site. While we strive to provide the most diverse selection of products, Bankrate does not include details about each credit or financial item or product. The monthly average cost for a used vehicle was $526 in the fourth quarter of 2022 and the newer cars were more expensive at $716, according to . If you’re a first-time car buyer, numbers this steep can feel intimidating and even more daunting when you’re not experienced with the process. However, confidence is made of preparation. So make sure you take time prior to going to the internet or a dealership to understand the key steps to take when you are buying your first automobile. 1. Determine how much you can pay for a successful buy is to determine first . Your credit score, monthly income, and the kind of vehicle you’re looking for should all factor into the decision. The most important thing is to find a compromise between fitting your budget and finding the right car for your needs. When you budget, take a look at the , not just the price on the sticker that you see advertised. The real price you pay out the door is the total amount you’ll have to pay, including tax and dealer charges. When you’ve got that number — or a suitable estimate, take into account your average salary and take advantage of a , which will aid you in determining what your monthly cost of financing the vehicle will be. Bankrate tip
Car ownership is a major expense, so be sure you’ve got room 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 20 percent of the cost of purchase, that could take a while. Being patient and saving up to purchase a car is probably worth it if you delay getting the car until you have the funds. This can save you more money in the long run and reduce your monthly costs. If you’re not able to put off making the lower down payment. However, you may not receive a fair rate with your lender. If this is the case, you should consider the option of a cheaper vehicle. The lower your overall cost, the less you will have to put aside to pay for a down payment. 3. Examine your credit history If this vehicle is your first major financial investment, it is possible to be that you do not have a lengthy credit history. If this is the case, look over your credit history to determine the loan alternatives are available. Credit scores are the main factor lenders consider to determine the interest rates you can expect to receive. The better your credit will be, the better your interest rate will be. Make sure you know your credit score prior to making contact with a potential dealer. You can do it online through or for free at . It’s worth it to make sure your credit is in good condition before applying for car financing If you are able to. 4. Find the best car for you Choosing which vehicle is the best fit for your needs requires much more than just color or style. Take into consideration other aspects, such as the vehicle’s durability and size to meet your needs, technology security features, fuel efficiency and the climate where you reside. Check out and for these statistics as well as additional information on how much the vehicle you’re interested in is sold for. This is also a good moment to decide if you want a . While a brand new car can be an exciting option, certified used (CPO) can give you an affordable price but still come with the latest features, as well as warranty from the manufacturer. And if you aren’t forced to take the car out as soon as possible it is possible to save money by waiting . 5. Apply for prequalification for financing Once you’ve gathered information about the kind of car you’d like to purchase as well as your financial situation, you can look for lenders that provide prequalification. This step is vital to saving money and putting you in charge when it comes to choosing the best financing option available. Prequalification differs from full approval, so even when the prequalification process closes, it’s still not a done deal. Rather, preapproval will provide you with an idea of the potential costs and terms. It is still necessary to submit a formal application after, but you will know whether you are able to afford it before the deadline. The following information is required when you apply to prequalify: Average income and finances. Personal information. Employment information. Any current debt. 6. Visit the dealer- in person or online After obtaining prequalification for an loan and selecting the vehicle of your dreams It is now time to start the buying process. It is recommended look up the types of cars available in your area. A majority of dealers will list their inventory on their websites. They will also permit you to schedule appointments. It is crucial to sit behind the wheel of the potential vehicle and take it for a test drive before you purchase. Be sure to adjust the seat, measure whether it will fit in your garage , and if it can handle your day-to-day routine. You aren’t limited to dealers that are local to you. Online dealers like Carvana, TrueCar and Vroom give you access to a nationwide inventory of used vehicles. You can browse and get financing at home, and when you pick a car, you get up to seven days to test drive your car and have it . 7. Negotiate Negotiation may be intimidating However, getting the best deal boils from being a strong advocate for yourself. Be prepared with all the paperwork needed, a firm knowledge of your credit score and ask. The bottom line is this: be prepared to walk away if you can’t get the deal you deserve. When it’s time to close the deal stay steadfast in your commitment to the number you agreed to. The dealer is likely to insist on . Say no to options like fabric or paint protection when an add-on like gap insurance might be more appropriate. The next steps to negotiate can be difficult However, finding the best deal comes in the form of taking a stand for yourself. Be prepared with all the paperwork required, as well as a thorough understanding of your credit score and ask questions. 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’re entitled to. If it’s time to close the deal, keep your stance on the finalized number. You can expect the dealer to press for . Do not accept options like paint protection or fabric, when an add-on like gap insurance might be more useful. Learn more
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Written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She specializes in assisting readers in navigating the ins and outs of securely borrowing money to purchase cars. Written by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate since late 2021. They are passionate about helping readers gain confidence to manage their finances by providing clear, well-researched details that cut otherwise complex topics into manageable bites.
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