A lot of young adults today work and ride public transportation all the way through college. Others use a family car during their early driving years. In either case, this means many people are well into their twenties before they decide on the best first car to buy.
Buying your first car can be a daunting task, but it doesn’t have to be. Considering things like engine size, safety ratings, and other common measures of quality can be confusing, to say the least. Plus, then you have to factor in your realistic budget, the local market, and other personal factors. Regardless of income, we can assist you with finding affordable auto insurance that fits your budget.
If you’re still wondering how to buy your first car, have no fear. Before you venture out to any car dealerships, take a look at our 8 first-time car buyer tips you should know when you’re buying your first car.
- Strongly Consider Buying Used
Some of the best first cars to buy end up being used models. On average, a new car loses 9% to 11% of its value the moment you leave the lot. Every following year for the next 5 years, the car depreciates by 15% to 25%. And after five years, a car is worth just 37% of whatever you agreed to pay for it.
- Set a Budget and Then Pick a Car
The first question you need to answer is, “What is my budget?” It isn’t exciting, but it’ll narrow down the field from hundreds of cars to a handful (or two).
Options to make your car purchase more affordable:
- Reduce your monthly car payments by putting more down upfront.
- Find a car from a personal seller or classified ad. You might be able to pay cash and eliminate a monthly payment.
- Buy a car that needs some work if you or someone you know looks at it and knows how to fix it.
Setting a budget before you buy your first car is a critical step that shouldn’t be skipped. Fortunately, there are still ways to reduce the cost of your first car when you’re on a budget.
- Get What You Need
Once you know your price range for financing or a cash purchase, you can evaluate your needs. These are the features your first car absolutely must have. Keep in mind that your needs should always be kept separate from what you want. You may need:
- Great gas mileage to stay strictly within your monthly budget
- Room for extra passengers or cargo
- All-wheel drive for snowy winters
- Extra airbags so your mom won’t worry too much
- Do Your Homework
You know what you need. Now you need to know where to buy your first car. If you’re purchasing from a friend or neighbor, this part is easy. Just make sure you follow local laws regarding:
- A bill of sale
- Title transfer
- Sales tax
- Insurance
- Registration
Don’t forget the most important research method of all: the test drive. A thorough test drive will take you down bumpy back streets and test high freeway speeds so you can get a feel for the car’s capabilities and know if it’s a good fit for you. Don’t feel pressured to hurry through this step, it could save you from regret later on.
- Check Out First-Time Car Buyer Programs with No Credit HistoryBottom of Form
A first-time car buyer program offers a loan to those with little to no credit history, which is ideal if you’re buying your first car at 18. This type of first-time car buyer financing can be extremely helpful if you’ve never had to take out a loan before or haven’t otherwise paid off any major expenses in life yet. You can get a first-time car buyer loan from a lender or from an automaker.
- Focus on the Right Numbers
Never tell a salesperson how much you plan to pay each month for your first car. If you do, they may manipulate the cost of a car that is out of your price range to fit your budget. Salespeople can do this by:
- Adjusting the interest rate
- Offering you a longer term on the loan
- Restructuring the financing in a way that creates a payment that fits in your budget
So, while you can technically “afford” it now, in the end, it can add thousands of dollars and years of extra payments on your first car loan. So, instead of offering a monthly dollar amount, stick to the total price. If you’re willing to pay $8,000 for the car, stick to $8,000 in the negotiation, plus taxes, title, and registration. If the car lists for $9,000, you can try to talk the price down to $8,000 or go elsewhere. If it lists for $8,000, try to get taxes and legal fees included in the price.
- Get Covered by Auto Insurance before You Drive
You’re going to need coverage by law, and certain companies may not offer the best deals for first-time car buyer insurance. Insurance providers like proven, predictable, stable drivers, because they pose less risk of a costly accident and payout. You, on the other hand, are a first-time buyer, young, and not as experienced.
We can help you find affordable auto insurance, because we can check with our carriers to find out which one(s) have the best offer. Keep in mind best doesn’t always mean cheapest. We want your premium payments to be within your budget, however, we also want you to have the right amount of coverage that fits our auto insurance needs.
- Don’t Overpay, and Don’t Underinsure
Every state has minimum requirements for liability coverage. It is car insurance that pays for injuries or damage you might cause other people and their property. Your auto liability minimum requirements might look like this:
- $25,000 per person in an accident
- $50,000 per accident in total
- $20,000 for property damage
Your policy will list these amounts as 25/50/20. While $50,000 per accident might sound like a lot of coverage, it can actually add up to very little depending on the vehicles, people, and other factors involved. If the accident costs more than your coverage, you’ll have to pay the difference. If you have no assets for a court to use to pay your debt, the injured person can go after your future earnings for an indefinite length of time until that debt is paid. So, get as much liability coverage as you can afford.
If you’re financing your car with the dealership or a credit union, you’ll also need collision coverage and comprehensive coverage in most cases. Collision coverage pays for physical damage to your car after an accident, while comprehensive coverage can pay for damage caused by threats other than collision, including windshield breaks, hail damage, vandalism, and more.
- (Bonus Tip) Work with an Independent Insurance Agent
If you go with a big-brand company that spends millions on advertising every year, you’ll probably overpay for car insurance. As an independent insurance agent, we can compare lots of different policies and prices from all kinds of companies to find the one that offers you the most coverage for the best price.
Source: Christine Lacagnina | January 13, 2023 https://www.trustedchoice.com/insurance-articles/wheels-wings-motors/buying-your-first-car/
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