How to buy your first car Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our aim is to assist you make smarter financial decisions by offering interactive financial calculators and tools, publishing original and objective content. We also allow you to conduct research and compare information for free – so that you can make sound financial decisions. Bankrate has partnerships with issuers including, but not limited to American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Earn money The products that are advertised on this website are provided by companies that compensate us. This compensation can affect the way and when products appear on this site, including for instance, the order in which they appear within the listing categories and other categories, unless prohibited by law. This applies to our mortgage or home equity products, as well as other home lending products. But this compensation does have no impact on the information we provide, or the reviews appear on this website. We do not cover the universe of companies or financial offers that may be available to you. FG Trade/Getty Images
4 min read published March 02, 2023.
Writer: Rebecca Betterton Written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She specializes in helping readers with the details of taking out loans to purchase a car. Written by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate from late 2021. They are enthusiastic about helping readers gain the confidence to take control of their finances with clear, well-researched information that breaks down otherwise complex topics into manageable bites. The Bankrate guarantee
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Car ownership comes with so be sure you have room in your budget for any additional expenses.
2. Reserve money for a down payment Your future car is the first lump sum you’ll pay. Try to pay at 20 percent of the cost of purchase, which could take some time. Saving up for a car will likely be worthwhile if you can put off purchasing the car until you have the funds. It will save you cash in the end and decrease your monthly costs. If you are unable to be patient, you can opt for a lower down payment. However, you may not get a good rate with your lender. If this is the case, you should consider the option of a cheaper vehicle. The lower the price overall and the lower your monthly expenses, the less you’ll need to save for a downpayment. 3. Examine your credit score If this vehicle is your first large investment in a financial institution, it’s likely there isn’t an extensive credit history. If that’s the case, you should check your credit history to determine the loan alternatives are available. The credit score of yours is the primary element that lenders look at when determining the rates of interest you can expect to receive. The higher your credit score is, the better the interest rate you will receive. Make sure you know your credit score prior to meeting with a dealer. You can do it online through or for free at . It’s worth it to make sure your credit is in good shape before applying for car financing if you can. 4. Decide what car is right for you Choosing which vehicle is best for you takes much more than just color or style. Also, consider other aspects such as the vehicle’s durability as well as its size and capacity for your requirements, technological features, safety features, gas mileage and the weather where you live. Take a look at these stats — and extra information about the price the car you’re interested in sells for. This is also an excellent time to determine if you’d like to purchase a . While a new car is thrilling, certified pre-owned (CPO) can give you an affordable price and still offer the latest features, as well as manufacturer-backed warranty. And if you aren’t in a hurry to take the car out whenever you can it is possible to save money by waiting for . 5. Apply for prequalification for financing Once you gather some information on the type of vehicle you wish to purchase and your financial history, apply with lenders that offer prequalification. This is essential in saving money and puts you in charge when it comes to selecting the best financing option available. Prequalification, or , differs from full approval, and so even after the prequalification procedure is completed, it’s not a complete agreement. Rather, preapproval will give you an idea of potential rates and terms. You’ll still need to submit an application in a formal manner however, you’ll be able to determine whether you are able to afford it before the deadline. The following are required when you apply to prequalify your finances and income. Personal information. Information about employment. Any current debt. 6. Head to the dealership -either in person or on the internet. After obtaining prequalification for a loan and selecting the vehicle of your dreams, it is time to start the buying process. In the ideal scenario, you’ll need check out the available vehicles available in your region. Most dealers will list their inventory on their websites. They also allow you to set up appointments. It is important to sit behind the wheel of your potential vehicle and take it for an initial test drive prior to making a buy. Make sure you alter the seat and see the space into your garage and is able to handle your day-to-day routine. But you are not limited to dealers that are local to you. Online dealers such as Carvana, TrueCar and Vroom give you access to a nationwide inventory of pre-owned cars. You can look through and obtain financing at home and, when you choose the car you want, you can get up to a week to test the car before you buy it . 7. Negotiate Negotiation can feel intimidating but finding the right deal boils down to standing up for yourself. Come prepared with any paperwork required, a clear knowledge of your credit history and to ask. But the most important thing to remember is this: be prepared to leave if you don’t secure the loan you want. When it’s time to close the deal, remain steadfast on the deal’s agreed-upon amount. The dealer is likely to press for . Do not accept alternatives like paint protection or fabric, while an extra option such as gap insurance may be more beneficial. Next steps Negotiation can feel daunting, but getting the best deal comes down to taking a stand for yourself. Come prepared with any paperwork required, a clear understanding of your credit score and to ask. Concentrate on the price of the purchase instead of the monthly payment. And be prepared to leave if you aren’t able to get the deal you’re looking for. When the time has come to close the deal, remain steadfast on the agreed-upon number. You can expect the dealer to press for . Don’t be averse to options such as fabric or paint protection while an extra option such as gap insurance could be more useful. Find out more
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The article was written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She is a specialist in helping readers in navigating the ins and outs of securely taking out loans to purchase an automobile. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate from late 2021. They are passionate about helping readers gain the confidence to manage their finances with precise, well-researched and well-researched details that cut otherwise complex topics into manageable bites.
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