Buying your first car

It doesn't matter how old you are, buying your first car is an intimidating process. There's almost an endless supply of choices to make - what size do you want? Are you interested in a hybrid or electric car? Should you go for used or new? What color do you like best?

The budget
Before you start wandering the car lots, sit down and do the math to figure out what your hard and fast budget is. You'll need to know how much you have saved for a down payment and what you can afford each month. According to Kelly Blue Book, if you're financing the car, you should estimate your loan payment at $20 per month for every thousand dollars you borrow for a 60-month loan. This cost estimation is just how much you'll spend for the car payment. You'll also have auto insurance, gas and maintenance to pay for.

Figuring out all of these things can take a bit of research, but it's crucial to know how much you can afford to pay for your car and its expenses each month. Otherwise you'll end up in the position of not being able to make a car payment or fill the tank.

Wants versus needs
Once you've determined your budget, you can narrow down the type of vehicle that's right for you. However there's still going to be a wide range of choices for any budget. Determine which features you can't live without and which are just bonuses. Rank your priorities then keep them in mind to help you narrow your search even further.

Homework required
There's so much information online, you can research companies, makes, models, safety features and more quickly and without leaving home. Look at the vehicles available in your budget and that have the features you need, then research:

  • Safety and reliability records
  • Recalls
  • Estimated in town and highway gas mileage
  • Expense of maintenance
  • Average auto insurance costs
  • Customer reviews
  • Prices for the vehicles in your area
  • Go for a test drive
    At this point you've narrowed your choices down to a select few. Don't be tempted to buy one of the options right away. Instead, speak with a few dealers around your area to find a salesperson you like and set up test drives for vehicles you're interested in. A car on paper may sound perfect, but once you get in it and find out how it feels and handles the road, you may change your mind.

    Get pre-approved
    If you need a car loan, it's best to get pre-approved by a lender before you do too much shopping. This way you know you won't fall in love with a car then not be able to purchase it. Dealerships will often offer financing, and if you're pre-approved through another lender you'll be able to compare which business is offering the best terms.

    Prepare to negotiate
    Buying a car is costly but you don't have to pay the first number the salesperson states. Talking money can be scary, and if it's your first car-buying endeavor, it's best to bring an experienced friend or family member with you. They'll be better able to tell if you're being taken advantage of.

    Be prepared with knowledge of what is a fair price for the car. Know the average sale prices in your area, and if it's a used car, learn how the price is affected by the age, mileage and accident history. Additionally, when you go into a negotiation, know exactly where you draw the line for the price. It can be difficult to walk away, but if the seller won't come down to a reasonable price, it's OK to say you'll find something else.

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