First Car: Advice on Buying a First Car
It’s Time to Buy Your First Car
You are a student or just out of school, have some income and you need some advice on buying your first car. This is not for a $1,500 rust bucket, but a car with insurance and payments. Buying a car is exciting and without some sort of plan and guidelines, your dream car can turn into a nightmare of high payments and repair costs.
The top piece of advice to remember is that your first car purchase lays the ground work for all of the future cars you will buy. Do not think of this car as your ultimate driving machine, but the first step towards the ultimate car.
First Car Tips and Advice
Owning a car involves several expenses. There will be the obvious monthly car payment and insurance, but do not forget gas and maintenance. You should have an idea on how much the insurance, gas and maintenance will cost. What is left is the size of the monthly payment. Even if you can afford, say $400 a month, you don’t need to spend the whole $400. Set your budget at $300.
Find out how much car your $300, or whatever your budget is, will buy. Ideally your first car loan should have a 36 to 48 month term. The idea is to pay this first car off quickly so you can go buy the next, better car. To determine how much car you can buy, remember this number $30 per $1,000. For each $30 of payment you can buy $1,000 worth of car.
You will need assistance to qualify for your first car loan. This is called a co-signer. If you mess up and can’t make your car payments, the co-signer gets to make the payments and you cause problems for both your’s and your co-signer’s credit ratings. If your parents belong to a credit union, go in and talk to someone about getting your first car loan. Credit unions can be very helpful in getting your credit history started. Otherwise you get to take your co-signer down to the dealership and work out a credit arrangement there.
Fun at the Car Dealership
The visit to the car dealership will be a reaction to schizophrenic forces. You want to buy a car and the dealer wants to sell you one. That is good. You want to buy a good car that fits your budget. The dealership wants to get a much of your money as it can. The challenge is to buy a car and protect your financial interests. You should first read these tips on purchasing a car.
The car salesman will focus on the monthly payment for your new car. You need to keep an eye on both the price and payment. The dealer will meet your payment by stretching the loan term to 60 months. Don’t let them. Plan your purchase for a 36 month loan and tell the salesman you will go to 42 months if you get close to a deal.
The car salesman and his manager negotiate car deals every day. This is your first one, and you are at a disadvantage. Your best defenses are sticking to your preplanned budget and do not get emotionally involved with the car or the negotiating process. It is strictly business until you drive the car off the dealer’s lot. Then you get to enjoy your new car!
Resources
The Unofficial DMV Guide: https://www.dmv.org/how-to-guides/buying-first-car.php
Car Buying Tips: https://www.carbuyingtips.com/first-time-buyer.htm
Photo Credit: donandcarol, flickr creative commons
