This summer, thousands of newly minted college graduates will be finding jobs, moving into new apartments, and hitting the dealership for their first car. But if you’ve never bought a car before, it can be a befuddling experience. Here’s how to buy the first car that’s right for you.
Start With The Car You Need
First of all … what do you need? Do you need a car to get to work? Will you be taking road trips? Do you just need four wheels and an engine to run errands and have a little fun on the weekends? Do you need a new car, or will a late-model used car better suit your needs and wallet? Knowing what you need will give you a guideline to what to buy, and help you avoid being tempted by the car you may really want, but really can’t use.
Figure Out What You Can Afford
Next, work out your budget and what kind of car payment will fit into it. It’s likely you’ve already worked out a budget to follow. So, what car payment will fit into that budget? Remember that a good budget leaves room for unexpected costs: Don’t buy a car that will have you living from paycheck to paycheck. A good rule of thumb is to take a few months and set aside your maximum car payment in an account, to see how it fits into your budget and see whether or not that amount actually works for you.
Remember: Cars need to be fixed at times, and you’ll also be paying for gas. Include that in your budget.
Build Your Credit
Any major purchase requires a credit score and a credit history … and it’s unlikely for most college grads to have a detailed credit history for companies to draw from. A credit history is important because it establishes what kind of risk you are: Do you pay your bills on time? Do you stay on top of your payments? Do you manage your credit well?
If you don’t have much of a credit history, get a credit card with a low interest rate and use it for six months for small amounts, paying off your full balance every month. A little credit will go a long way. And if you have student loans, stay on top of those, as well.
Get Your Financing First
It’s not often talked about, but a car loan is a product you buy; the interest you pay is the price of the loan. So, just like any other item you buy, it pays to shop around. Use financing networks and apply to as many lenders as you can to find the right financing. This is useful not only for saving money, but it helps keep the buying process simple; all a salesperson has to do is meet your requirements, cutting down on haggling.
Research Online Before You Buy
Most dealerships have their inventory online now, so browse what they have, or search for what you’re looking for, and check each car. Remember, if there’s not a VIN, or vehicle identification number, next to a car, then that car isn’t on the lot. Once you find the car you like, email the dealership for a test drive.
Buying a car doesn’t have to be hard; just follow the steps above, and you’ll have a great first time buying experience.