One of the most exciting moments in life is when you start the process of buying your first car. Whether you recently got your driver’s license for the first time, or you finally have enough money coming in to manage a car payment, this major purchase is a huge milestone in life for many. There are several essential steps you should take to ensure you get a great car at a price you can afford. Here are the eight key tips to follow when buying your first car.
1. Set a Budget
The first thing you should do in the car buying process is set a realistic budget. Analyze the amount of money you bring in each month from your job, and determine how large of a car payment you could afford each month. Some experts recommend that your car payment is no more than 10 percent of your gross monthly income. This way, you can sustain the rest of your daily expenses without sacrificing your financial health.
2. Shop for the Right Vehicle
Once you’ve determined the magic number for the price you can pay for your new car, then it’s time to start shopping. Start by looking online for a car that could meet your needs. Be realistic about how much your dream car will cost, and research different models to find the perfect fit for your lifestyle. Learn about different types of vehicles and the pros and cons of owning a larger vehicle versus a smaller sedan. Don’t forget to figure out the cost of gas each month when putting together your short list of finalist car models.
3. Learn About Your Credit Score
Another important part of the car buying process is learning about your credit score. Your credit history can influence the monthly bill you pay when financing your car from a bank. It’s best to learn what your credit score is a few months before you walk into the dealership. This way, if you spot any issues, such as errors or missed payments, you can take steps to correct them before you apply for a car loan.
4. Set Aside a Down Payment
You’ll also need to consider putting a down payment on your car when you finalize the deal. A sizeable down payment can help lower your monthly cost and reduce the amount you need to finance and pay interest on. It’s recommended to put at least 10 percent down on a used car purchase and 20 percent down for a new car. This means you’ll need to plan ahead of time and start saving up years or months before you make a decision about your car purchase.
5. Learn About Car Loans
For a majority of car buyers, buying a car also means getting a car loan. Car loans for first-time buyers are plentiful in the financial market, but you’ll need to do your homework to get the lowest interest rate and save the most money. Smart shoppers read over all of the possible terms for a car loan instead of simply going with the one with the lowest monthly payment.
6. Visit Multiple Dealers
Once you’ve got your car of choice picked out and you’ve secured a loan, it’s finally time to visit the dealer. It’s a good idea to go to multiple dealers in your area and check out any special discounts or sales that are being advertised. Be prepared to make more than one visit to secure the car of your dreams at a great price.
7. Go on a Test Drive
Another vital step is to test drive each vehicle you’re thinking of buying. While your dream car may look great in pictures, if you don’t feel comfortable driving it, that’s a problem. Get a feel for your favorite car models by taking them for a spin in a variety of driving conditions.
8. Try Negotiating
The last step of this process is to finally begin your negotiations. A majority of car dealers are open for price negotiations, so take advantage of this fact to get a better price. Expect to spend several hours at the dealer’s desk getting the price you want.
The process of buying a car for the first time can be daunting, but if you follow these tips, you’ll get the car you’ve always wanted without paying too much. Then, you’ll experience the rush of driving your new car off the dealership lot.
This article was written by Everything Finance from Everything Finance and was licensed from NewsCred, Inc. Santander Bank does not provide financial, tax or legal advice and the information contained in this article does not constitute tax, legal or financial advice. Santander Bank does not make any claims, promises or guarantees about the accuracy, completeness, or adequacy of the information contained in this article. Readers should consult their own attorneys or other tax advisors regarding any financial strategies mentioned in this article. These materials are for informational purposes only and do not necessarily reflect the views or endorsement of Santander Bank.