Buying your first car is exciting – it’s a milestone that brings freedom, independence, and maybe even a few road trip playlists. But before you hit the gas, there’s a lot to consider. From setting a budget to negotiating the best deal, the car-buying process can feel overwhelming, especially if you’re navigating it for the first time.
The good news? You don’t have to go it alone. With the right knowledge and a smart game plan, you can drive away in a car that fits your needs and your budget – without any buyer’s remorse. Whether you’re eyeing a sleek new ride or a reliable used car, this article will provide tips to help you make confident financial decisions and enjoy the road ahead.
Part #1: Gearing Up
The thought of getting behind the wheel of your first car can be exhilarating. However, it’s also a significant financial decision that requires careful planning. Before you start searching for cars online or swing by the local dealer for a test drive, hit the brakes!
The most common car-buying mistakes happen due to a lack of preparation. Before you hit the gas, take a moment to check your mirrors and the following tips:
- Map Out Your Finances – Review your finances and determine how much you can afford to spend on car payments monthly. Then, work backward with our online financial calculators to determine how much car you can afford. But don’t stop there – there are other factors to still consider:
Fuel Costs: If you commute to work or school, how much will you spend monthly on gas?
Maintenance: Older vehicles often require more frequent repairs, while newer vehicles have more costly maintenance costs. Pad your monthly budget with funds to keep your ride performing at its best.
Down Payment: Do you have money you can pay upfront to help lower your monthly payments? Every dollar you put down lowers the amount financed – reducing the amount of interest you’ll pay over the life of your loan.
- Research Your Trade-In – Speaking of down payments, if you have a vehicle to trade in, you’re ahead of the game. Your trade will serve as a portion of your down payment. To ensure dealers don’t undervalue your trade, do some research first. Use online tools like Kelley Blue Book to estimate the value of your current car. You can also stop by local dealers to obtain a written appraisal. These figures will help you negotiate a better dollar amount for your trade-in.
- Check Your Insurance – Throughout the excitement of buying a new car, one mistake that can be costly is forgetting to obtain new quotes from your car insurance company. The year, make, and model of a vehicle can all affect your insurance premiums. The last thing you want to do is buy a new car and then struggle to make insurance payments. If you have a vehicle in mind, contact your insurance company and ask them to provide a new quote. If you know the specific VIN (vehicle identification number) of the car you plan to buy, they can provide even more accurate pricing.
- Secure Financing – The most powerful car-buying tool is a written pre-approval from the credit union. A pre-approval means that the credit union reviewed your finances and approved you to borrow a specific amount of money toward a new car.
A pre-approval is so beneficial because:
– It eliminates many pricing games and gimmicks at the dealership.
– It gives you the upper hand in negotiations.
– It prevents dealerships from selling costly add-ons.
– It eliminates the stress of obtaining financing while at the dealer.
Part #2: Visiting the Dealership
Once you have your financial ducks in a row, it’s time to head to the dealership. While excitement is in the air, you probably also feel a little uneasy. You know dealerships are notorious for pricing games, and you want to drive off the lot knowing you got a good deal.
The best way to prepare yourself is to practice saying “no.” When you’re comfortable saying “no” to costly add-ons, model upgrades, etc., the whole process becomes easier. Here are a few additional tips to control the car-buying experience.
- Test Drive Before You Buy
While you might have a specific car in mind, always take it for a spin first. You want to ensure all the features and handling match your lifestyle and needs. Sit in the back seats, review safety elements, explore cargo space, and identify potential blind spots while driving.
- Put the Brakes on Your Trade
Hold off telling the dealer you have a car to trade in if possible. Wait until you’ve agreed on a final price for the vehicle you want to buy. Otherwise, they will start factoring your trade-in’s value into the new car’s price – tilting it in their favor.
- Don’t Be Afraid to Negotiate
Dealerships sell cars all day, every day. They begin every sale with maximum profits in mind. Then, they make small concessions throughout the process. They cut deals daily and are more interested in selling a car than losing a sale over minor price adjustments. Never be afraid to ask for a better deal.
- Always Read the Fine Print
It’s said that when you walk into the finance office, the true price of the car is revealed. That’s because you’ll face an onslaught of add-ons – many of which they include without you even asking for them. Always take your time, review the pricing, and ensure nothing is included in the final price you did not consent to or request.
We’re Here to Help!
Buying your first car is exciting but also a big financial decision. Take your time and remember that a few hours of research and planning can potentially save you thousands. With a solid budget and smart choices, you can drive off with confidence – without overspending.
If you’re ready to become pre-approved for your new ride, we’re here to help. Please stop by any of our convenient branch locations or call 800-782-4899 to speak with a team member today.
Each individual’s financial situation is unique and readers are encouraged to contact the Credit Union when seeking financial advice on the products and services discussed. This article is for educational purposes only; the authors assume no legal responsibility for the completeness or accuracy of the contents.