12 Tips for First Time Car Buyers

12 Tips for First Time Car Buyers

Many first-time car buyers seek advice from more experienced buyers such as family members or friends. That can lead to mixed results… as not everyone has the same priorities or knowledge of cars. Getting a good deal can also take a bit of luck. Below you will read tips for first-time car buyers and what exactly you should pay attention to.

1) Establish a realistic budget

There are three components to budgeting for a car. First is the purchase price, second is any maintenance the car needs immediately, and third is ongoing operating cost.

The purchase price is pretty straight forward. If you can buy a car in cash, that is the best option. If a car dealer is talking about “what monthly payment” you are looking for, that means they are thinking about selling you a loan along with the car. If you counter with “my max budget is X”, that reframes the discussion.

Immediate fixes + maintenance only applies to used cars, but mentally you’ll want to include that in your max out of pocket.

As for ongoing costs, these include fuel, scheduled maintenance, unplanned maintenance (breakdowns) and insurance. A mechanic will be able to tell you what to expect in terms of regular maintenance. You can look up common problems the make and model of vehicle might have based on its age and mileage. Purchasing a warranty can help offset unexpected repairs, but in a sense you are pre-paying for those services which will add to your out of pocket. As for insurance you can get a quote for adding / changing cars from your insurer in advance of the purchase, but it helps if you know the VIN.

2) Know what you can spend monthly

This was discussed in the previous part, but let me mention it again. You should definitely know how much the monthly expenses for the car will be, such as fuel, maintenance, and sudden breakdowns. If you are getting financing, make sure your payment fits into your budget. It is pretty easy to budget for a car provided you do your research up front and everything goes well mechanically.

3) Establish your transportation needs

Do you need a city car, a car that is good for long trips, a van to live in (seriously), or a truck for hauling stuff. When thinking about the car you want to buy, consider how you will use it, how many people (or items) you need to carry. There is always a trade off between size and economy.

4) Identify and prioritize your wants

Although this looks like the previous part, it is not like that at all. When considering which vehicle to buy, don't buy a truck just because. Instead identify and prioritize your needs, because that way you will pay less and you will have fewer maintenance costs. In other words, you need a car to get from point A to point B, not to impress your friends or show off.

5) Do your research (it’s never been easier)

Today it is much easier to research everything about the car you want to buy. There are many pages about cars and information about the cars you want to buy. It is up to you to do your research. You’ll want to consider things like fuel economy, reliability, reviews by experts, history of recalls, major out of warranty defects (like engine failure at X miles).

Crash test safety is another important thing to check on. The Insurance Institute for Highway Safety puts out a great publication on which vehicles are safest for teens. In general, the cars on this list get more favorable insurance ratings. If you do end up with one of those models it means more room in your budget.

6) Locate a convenient dealer or buy private party

Just as you can find information about the car you want to buy, you can also find a suitable car dealer. There are many websites where you can shop online (Carmax, Carvana, Shift, etc). It is up to you to decide if you want to buy from a dealer or private party. In general you will get a better deal when buying private party, but it is more leg work on your part. You can still arrange to get a loan for a private party purchase through your credit union or bank.

7) Take a test drive

When you have a choice narrowed down, ask to take a test drive. You can test drive multiple vehicles until you find one you really like. While you are not there to joy right you should test how it handles both in down and on the freeway. Bring your driver's license and insurance card, which the seller may need a copy of.

8) Get it inspected by an independent mechanic

Once you have a top choice, get it inspected by an independent mechanic. This might cost you up to $180, but it is worth it to rule out major issues. The mechanic will not only let you know what is due in terms of maintenance (fluids, brakes, tires, belts/hoses etc), but also if the car was improperly repaired in the past.


9) Check the vehicle history

It is very important to get a carfax history of the vehicle so you can be sure of what you are buying. A carfax report tells if the car was involved in an accident, what the title status is, and how many owners it had. If the car has a branded title (salvage, flood, theft recovery), then proceed at your own risk. In general a car with a branded title may not be insurable, and might actually be two cars welded together!

The carfax report may include maintenance as well. Typically dealers do not have maintenance records, but if you are buying from a private party they should be able to provide you with records of oil changes and other maintenance. 

10) Determine the proper purchase price

Once you have decided which car to buy, then you need to determine how much you are willing to pay. TrueCar is one way to verify a “fair” price. You can also look at similar offers for the same make/model of the same age and mileage. With cars everyone expects a little haggling to happen before a final price is agreed upon. So when you look at the quoted price, mentally subtract some percentage for the “real” price.

11) Secure financing, or know your options

If buying from a dealer they may try to sell you a loan. Check the interest rate and terms. It is likely your credit union or bank could give you a better deal. Shopping for a car loan is part of shopping for a car if you know you need financing, and the better deal you get on the loan the more car you can buy. 

12) Enjoy the process!

When you buy a car for the first time, it can be stressful. By following the steps above not only can you enjoy the process but you can feel more in control of the situation. When you complete the transaction you can relax because you got the car you wanted at a good price and you know it is in good shape. 

Conclusion: These are excellent tips for first-time car buyers. I hope you enjoy the car when you finally buy it.  Check out our used car buying checklist to bring with you when shopping.

The post 12 Tips for First Time Car Buyers is part of a series on personal finances and financial literacy published at Wealth Meta. This entry was posted in Personal Finance, Budgeting
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