Buying your first car is a monumental, milestone event that you will remember for the rest of your life. It is a rite of passage that many people eagerly look forward to, but you may have heard stories about others making costly financial mistakes when financing their first car. Avoiding making these same mistakes yourself is a top goal, and it is easier to do when you follow a few helpful tips.
Understand the Costs of Ownership
When you think about buying a car, you may think about the primary expense of the monthly payment for the lease or loan. However, there are other expenses associated with owning or leasing a car, such as the auto insurance premium, the cost of fuel and maintenance and repair costs. You should adjust your budget to account for all of these expenses, bearing in mind that they can vary based on which vehicle you purchase.
Determine the Most Affordable Car to Purchase
Because the costs can vary based on which vehicle you choose to purchase, it is important that you determine which vehicle is most affordable for you to own or lease. First, narrow down your list of options to the top two to four vehicles that meet your needs. Then, contact your insurance company to get insurance quotes for each one. Consider using a monthly loan payment calculator online to estimate payments for each vehicle. Then, review fuel economy ratings to estimate your average fuel expense for each one. This does take some time and effort to do, but the end result will be that you make a financial decision that is most affordable for your budget.
Review Leasing Versus Buying Options
After you have determined which vehicle you want to buy, you can then begin exploring the financing options in greater detail. There are lease versus buying calculators online that will give you more information about which options may be most affordable over the short-term and long-run. Keep in mind that there are up-front fees and fees due when you turn in the vehicle if you choose to lease it. You can shop around for more information on the different rates and terms available through different financing companies. Review the final information you receive regarding the monthly payment with the budget that you have created to ensure that all of your budget numbers are correct.
Get Pre-qualified Up-Front
Before you visit the dealership to finalize your buying plans, take a moment to get pre-qualified with the lender that has the best deal available. Your pre-qualification letter can be taken to the dealership, and you can present it to the financing department as the offer that they need to beat if you are going to use them for financing.
Consider the Dealer’s Financing Offer
When you walk into the dealership’s financing office with a loan or lease offer in hand, you will have the confidence of knowing that you can purchase the vehicle that you have your eye’s set on. However, avoid making a hasty decision, and consider any financing offers that the dealer brings to you. Consider all aspects of the financing offer, including up-front costs, closing costs, monthly payment, interest rate and term. Always remember the budget that you have prepared, and make a financial decision that is affordable for your budget.
Buying your first car can be exciting, but it can also be intimidating. When you follow these helpful tips, you can more easily navigate through the process successfully.