Buying a car for the first time, or even the second, third, or fourth time, can be a confusing and intimidating experience — unless you know what you’re doing. Knowledge means power and confidence when it comes to buying cars.
What You Need to Know
You need to know what car will satisfy your needs and fit within your budget. Online research and shopping at local dealers will help narrow down your choices. Internet car shopping sites such as eBay, Craigslist, and Autotrader offer a large variety of choices and prices.
If shopping for a brand new car, visit car company web sites, which will provide you details and specs for all current vehicles, as well as special incentive offers for the month. Locate local dealers from those sites.
Sites such as ConsumerReports.org can tell you which cars are best in different categories — best small car, best SUV, best sports car, best luxury car, best minivan, and best family sedan. They also tell you which are the most reliable, which are recommended, and which used cars to avoid.
Most car magazines have web sites that publish the results of road tests on new cars. Services such as Kelley Blue Book, Edmunds, and TrueCar.com provide valuable pricing information, including dealer invoice prices.
When buying a first car, you may wonder if it’s better to buy used or new, and the pros and cons of each. Is it best to save money by buying a previously owned car, or enjoy the benefits of a new car at a higher cost? Should I fix my old car or buy another? What’s the best car for a teen driver?
When buying a used car, there may be problems, especially if the car is old with high mileage. How many miles is too many? What’s a fair price for a used car? It’s important to do your price research before going shopping so that you know how to negotiate intelligently with a seller or dealer — and to know that sellers and dealers always set an asking price higher than the price they are willing to sell for. So how much can I talk them down? Is it a good deal?
It’s also important to know the condition of a used car before it is purchased because most pre-owned cars are sold “as-is” which means there are no warranties or return rights. You can’t take it back if you find problems later, even on the drive home after the sale. One of the best ways to determine the condition of a car is to have a professional mechanic inspect it and provide a written report of any current problems, and potential future problems.
It’s advisable to always do a test drive, whether you are buying new or used. Does the car “feel” right for you? Are there sounds that aren’t normal? Is it comfortable to drive? Does all the equipment work as it should. What is a Carfax report? How can it help? You can always do our 50-point inspection yourself on a used car, although it’s not a substitute for a mechanic’s inspection.
You can’t always trust the seller or dealer of a used car to tell you what you need to know. They might simply not know, only willing to tell you what you want to hear, or they can be untruthful or dishonest. It’s important to know what questions to ask.
After you’ve selected your car and found it to be in good condition, there’s the matter of purchasing and financing. How do car loans really work? Can I get a loan if I have no credit, or bad credit? What extra fees are charged? Do I need insurance? What car scams should I be aware of?
If you’re trading a vehicle, it’s only practical if the vehicle is fully paid for, or if the amount still owed on an existing loan is less than the trade value of the vehicle.
Whether new or used, you can always pay with cash or by check for your car — or get a loan. However, don’t expect a better deal if you choose to pay with cash. Dealers actually make money if you finance with a loan.
Many people will choose to finance their car purchase with an auto loan from a bank, credit union, or through a dealer’s finance company. If you have poor credit or a minimum job history, you may find that getting approved for a loan is a problem. Having a co-signer might help. A large down payment might also help. First time buyers will often have this issue.
It is important to make sure you can afford the car you buy, and the monthly payments that come with it. Too often, in their zeal and excitement to buy a car, buyers make a mistake in buying more car than they can afford, and risk a costly repossession as well as future credit issues.
If you find you can’t afford the car you’ve purchased, your options can be limited, especially if you are “upside down” on your loan — meaning you owe more than the car is worth. Can I trade for a cheaper car? Can I refinance? Can I return my car? Can a dealer take my car back? These are all legitimate questions. The answers depend on your particular situation.
What about insurance on your car? All states require minimum liability insurance and it’s illegal to drive without it. Auto insurance should be arranged before you purchase a new car so that you are covered from the moment you drive away from the seller or drive off a dealer’s lot. Where can I find the cheapest insurance?
If you purchased with a loan, the lender will most likely require that you have “full coverage” insurance to protect his interest in the car. This means more expensive collision and comprehensive insurance. Since insurance rates vary widely between insurance companies, it’s smart to shop around at several companies to get the best rates. Rates depend on your age, where you live and drive, how many miles you drive, and the make/model/age car you drive. Teen drivers pay the highest rates.
If you buy your car from a dealer, the dealer will take care of the paperwork associated with the title, tags, and registration of the vehicle for you. He’ll collect the appropriate sales tax and official fees and pass them along to the proper state or county government in your area.
If you buy from a private individual seller, you’ll need to get his title, signed by him, and take it to your local DMV office to get a new title, new registration and tags. You’ll also pay sales tax (in most states) at that time. If you don’t pay cash, you’ll need to get a loan from a bank, credit union, or finance company. Based on your credit score and income, you’ll be told how much you will be able to borrow, at what interest rate. With that information and knowing the price of the car, you’ll know how much down payment you’ll need. Use our car loan calculator to determine your monthly payment.
If you’re a first-time buyer and are shopping for brand new cars, you might ask whether it’s better to buy or lease. Leasing nearly always provides lower monthly payments, but it’s not always the right answer for many people. Leasing is best for people who only drive a “normal” number of miles each year and keep their cars well maintained and in good condition. There are extra lease-end fees for excessive mileage and unrepaired damages, although it’s possible to purchase such vehicles at lease-end to avoid these fees.
There is much to know for first car shoppers but it can all be learned quickly. That’s what this web site is about and what if offers. Best wishes.