Buying a car for the first time, or even the second or third time, can be a perplexing and stressful experience. There’s so much to know and understand.

What are the best first cars? Which cars are cheapest? Which is safest? What should I pay? How much can I afford?

Where can I find cheap cars? How do I get a car loan?  What if I have no credit, or bad credit? How does the car buying process work? How will I know if I’m being cheated?

What about auto insurance? Which company has the best rates?

Should I buy a new car, or used? Buy from dealer or individual seller?

Can I sell/trade my car if I still owe money? How about leasing?

These are all common questions asked by first car buyers — or any car buyer.

We give you the the answers you need, the expert advice, and the specific knowledge you need so that you can go into your car buying experience with confidence that you’ll make the right decisions, get the best deals, and not get cheated.

Welcome to First Car Guide.

Before taking your first car out for a spin, you can research rates for auto insurance at www.21st.com, and find affordable coverage that works for you.

One of the best ways to get the best prices on new cars is to take advantage of monthly sales incentives such as rebates and bonus discounts sponsored by car manufacturers through dealers (see Best Car Deals for details).

However, the catch is that those incentives are only good on selected vehicle models and styles, and only for a limited time.  If the particular brand, model, and style that you want is not one of those with incentives offers this month, you are back to square one — negotiating for deals the old fashion way.

A new company has come along that changes all that, and may change how we buy cars in the future.

TrueCar answers the question, “What should I pay for my car?” Even if you are a shrewd negotiator, you have to know your target price. You also would benefit by knowing what other people are paying for the same car, same model, same style that you want. With that knowledge, you will know the price you should be aiming at.

Car companies frequently offer special monthly lease deals but Honda does it a little better. They offer their deals in two different flavors — with a down payment and without — which is unique.

Special lease offers from car companies typiclly require a down payment (cap cost reduction), first month’s payment, and possibly a security deposit. It’s only a good deal if you adhere to the rules and make the down payment as required. If you choose not to make a down payment, it’s a different deal and one that is not so good anymore. Honda’s deals are different.

Honda offers special lease deals nearly every month on at least one style with each of it’s model lines. They can do this by reducing the sale price, reducing the finance rate (lease money factor), and boosting the lease-end residual value. All of these things, in combination, make for an attractively low monthly payment. In fact, these deals are much better than a customer could negotiate for himself. The “catch” is that the deals only apply to certain styles and not to all.

Therefore, customers have to decide if they want the style being promoted. To choose another model or style would require a normal, non-promotional lease at normal terms. However, Hondas are one of the most leaseable brands out there — due to high residual (resale) values — and are nearly always good deals when compared to other brands.

As you may already know, car manufacturers offer sales incentives nearly every month. Some are better than others in any particular month.

The most common type of incentive is a rebate, which is given to customers at the time they buy the particular vehicle model and style on which the rebate is offered. It is applied as a down payment and is especially attractive to customers who might be short on their own down payment cash.

Rebates, when at least $2000, are generally better than 0% APR loan deals and save you more money. As you may know, if a car company is offering both a rebate and 0% APR (or other low-interest loan rate), you must choose one or the other, but not both.

American car companies (General Motors, Chrysler, and Ford) have traditionally offered the best and highest rebates, although there have exceptions. Rebates are usually largest at the end of the model year, during the months of September, October, November, and December. Car companies and dealers are trying to sell off last year’s models to make room for incoming new models.

Car manufacturers offer special sales incentives every month on particular vehicle makes, models, and styles. Incentives vary from month to month.

Incentives come in the form of direct-to-customer rebates, special lease deals, and low-interest loans, including 0% APR loan deals. See Best Car Deals for current new-car incentives, including 0% loans.

Zero percent financing, when offered, means that the customer pays no interest or finance charges on his car loan. This saves money. Monthly payments are smaller and total costs are reduced.

Calculating payments for a zero percent loan is easy. Simply divide the cost of the car by the number of months in the loan. Non-zero-percent loans are much more difficult to calculate and require a car loan calculator.

Are 0% loans good deals?

Maybe.

Although we’ve discussed this topic previously (see Lease vs Buy), there is one aspect that we haven’t discussed and continue to hear questions about.

The question is essentially this: “If a car dealer is offering a special promotional lease deal, a purchase rebate, and a low interest loan on the car I want, which one is the best deal?”

The short answer to this question is that the lease deal will nearly always be better — and it’s not simply because monthly payments are less. If the lease deal is one that is being offered by the car manufacturer, the company has usually applied a price discount, a low money factor (finance rate), and a high lease-end residual value. The combination of all these things makes for an attractive low monthly payment. Customers are not able to negotiate these kinds of deals for themselves  because a dealer only controls one of those three things — price.

Even many experienced car buyers don’t know about the “secret” factory-to-dealer rebates given to dealers by car manufacturers.

Car companies often select certain models and styles for these rebates, and the selection can change from month to month.

Dealers can use factory-to-dealer cash (sometimes called “marketing support”) in almost any way they choose but most pass it along to customers in the form of price discounts. Some dealers might advertise the low prices (not the rebates themselves) or simply offer a discount to customers during the buying process. He may choose to give all or just some of the total rebate.

Most customers are not aware of which vehicles have factory-to-dealer rebates, or the amounts. Therefore, it is difficult to factor in those discounts in the negotiating process. However, our sister web site, Best Car Deals, provides such information.  Some of these rebates are very large and represent a significant discount off of sticker price. This is particularly true for last year’s leftover models that dealers must sell in order to make room for this year’s incoming models.

If a dealer gets a factory rebate on a particular model and gives it to customers as a price discount, he still makes his usual profit on that car, even though customers may be getting a great deal. Smart customers will expect the dealer to contribute some of his usual profit as an additional discount — which makes an even better deal. In many cases, customers can buy a car for less than dealer invoice price, which is only possible if the car manufacturer is helping with the deal.

In summary, factory-to-dealer rebates can be a large factor in making new cars — especially first cars — more affordable. Look for vehicles with the largest factory-to-dealer rebates.

You can get free price quotes for any vehicle at Edmunds.com. The prices you get will contain any current price discounts and manufacturer incentives that are available.

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If you don’t like having to spend a lot of time and research effort when looking for a new car, wouldn’t it be nice to find out what other people were buying, assuming that most of those other people had spent the time and effort, and had made good informed decisions.

If you decided to buy one of the cars that other people are buying the most, you could reasonably assume that those purchases are being made on the basis of those cars having most of the good characteristics that people want in a new car — such as good reliability, good safety ratings, good performance, good styling, good fuel economy, and good driving comfort.

Following is a list of the top ten best-selling new vehicles in the U.S. for the last several months:

Of all the cars available to teenagers, which are the best first cars?

If you simply want the fastest answer to that question, without explanation, we would say the Honda Civic is the best all-around car for teens. The Toyota Corolla would be a close second.

If you don’t like the Civic or Corolla there are other cars with similar characteristics and different styling that might suit you better.

But what is it about the Honda Civic, Toyota Corolla, and similar models that make them great as a first car for teenage drivers?

First, they are economical — relatively inexpensive to buy, inexpensive to insure, and inexpensive to drive.

It doesn’t cost much to buy a new or relatively new Civic. Used models might be a little higher priced that other brands but that works in your favor too. When you get ready to sell or trade, Honda and Toyota vehicles hold their resale value better than most.

Car manufacturers use incentives to make their new cars more affordable during limited-time promotions.

The most common incentive is a direct to customer rebate, although there can also be other incentives such as low-interest loans, 0% APR loans, special car lease deals, and “hidden” factory-to-dealer cash.

Incentive programs vary from month to month depending on which models and styles manufacturers feel need sales “help”. Slow selling models or last-year’s leftover vehicles typically get the best rebates and incentives. However, it not ususual for a brand new model to get good rebates or other incentives.

A rebate is a credit that you receive when you buy a new car during the promotional period. It shows up on your paperwork the same as a down payment, although the money comes from the manufacturer’s pocket, not the dealer’s, and is like a gift to you that reduces the amount you pay for your car.

However, a rebate is not a price discount. It doesn’t change the selling price of the car (although it changes what you pay).  Rebates and discounts are NOT the same, although both reduce the amount you pay for a car. Let’s explain.

 There are literally thousands of combinations of different automobile types, makes, models, styles, and prices, which can make it difficult to choose. However, we will help you determine the perfect car for your needs.

What is a good first car?  Which car is the best buy? Which is more reliable? Which gets the best gas mileage? Should I buy a SUV or pickup? Which car is safer? Which is more economical? Which is cheaper to insure?

What car should I buy as my first car?

If you were to ask this question and you gave no other information about yourself or what you wanted, we would suggest you buy either a Honda Accord or Toyota Camry, two of the most popular and most purchased first cars in America.

However, if you already know you don’t want a Honda or Toyota, stay with me. I’m not going to try to convince you that these are the only brands you should consider. I’m just using them as a starting point to help you choose the right car for you.

Who needs a co-signer for a car loan? How does it work?

New or first-time car buyers are often surprised at being turned down for a car loan because they have no credit history, which unfortunately has about the same effect as having bad credit. Getting a co-signer might be the answer.

Lenders want to see that a borrower has a good record with previous loans and credit cards. Without a history of credit, a borrower represents a risk to lenders. If they don’t know a borrower’s history, they take the low road and assume the worst.

It’s a familiar “catch-22″ situation in that you can’t get a loan to establish credit without already having credit. So what is the answer?

What is the answer?

The most common solution is to have someone “co-sign” your loan contract. Typically, it’s family member who has a good credit score. A co-signer plays no part in the loan unless the primary borrower fails to make payments. In that case, the loan company would have the right to seek payment from the co-signer.

We see this question being asked frequently: “What is the best car to buy?”

Of course, the real answer as to what is the best car can vary, depending on your own personal needs, preferences, and finances. Some people place a great deal of importance on reliability. Others might think safety or cost is more important. And others might feel that the best car should have great looks and high performance. 

Many people believe that to get the best car, you must spend a lot of money — that the best cars are the most expensive one. Strangely, this is just not true. Actually, some of the best cars are the least expensive — and some of the most expensive cars are the least reliable and the least efficient.

One of the best automobiles, overall, is the Honda Civic. Why? Because it has the most perfect combination of all the factors that most car buyers look for — cost, fuel efficiency, reliability, cost of operation, cost of insurance, style, performance, resale value, riding comfort, luxury features, and handling.

Buy-here-pay-here car dealers provide auto loans to people with bad credit.

Most car dealers do not directly finance loans on cars they sell. They work with outside banks and finance companies to provide loans for their customers. It’s up to those banks and finance companies, not the dealer, to approve and provide customers car loans.

However, a different breed of used car dealer, called  ”buy-here-pay-here” dealers,  do provide their own financing without an outside bank or loan company. They primarily function to sell used cars to people who have bad credit and cannot get approved for loans from conventional sources.

Buy-here-pay-here (BHPH) dealers can be recognized by their promotional ads or storefront signs. They use the terms “easy finance” or “no credit checks” or “we finance anybody” or “in-house financing” or “fast loan approval” or “we approve you regardless of your credit.”  They are sometimes called “tote the note” dealers.

Should I keep my old car and fix it up, or buy a new car?

Expressed another way, the question is this: Is it smarter, more practical, and more economical for me to keep and fix my old car than to buy another car, new or used?

This is always a tough one to answer. Generally, it’s going to be better to fix up an old car than buy a new car every five years or so.

However, the real answer depends on your particular circumstances. Here are some tips that will help you make a decision.

Online car buyers exposed to common car scam by criminal sellers

Users of online car buying sites such as AutoTrader, Craigslist, online newspaper classified auto ads, and other non-dealer car sites often find unbelieveable good deals, only to find it was no deal at all, but a common car sales scam.

We often hear the question, “Is this a scam?” from car buyers who have found a “great deal” online. Buyers become suspicious because the price is “too good” and the payment and pickup arrangements seem a little fishy.

Cheap cars advertised on Internet sites can be scams, and it is relatively easy to spot them after the seller has been contacted, but not before. A car-for-sale ad placed by a scammer looks like any other ad — except the price is much lower than normal. They even provide pictures and VIN numbers of real cars (snagged somewhere on the Internet) to make the ads seem more believeable.

As this is being written, this year, 2011, has become the best time to buy a new car in years. And 2012 looks to be even better.

In normal years, we would tell you that the best time to buy a car is when sales are slow at the end of the month, end or the year, or during vacation season. We would tell you that you might still have to negotiate your prices because dealers aren’t just going to give you a good deal because they like you.

BUT……..things are much different now. Sales have been slow for over a year and are still slow right now. As a result, we are now seeing some of the biggest and best car incentives on new cars that we’ve seen in years. Nearly every car manufacturer is now offering a combination of large factory-to-customer rebates, low-interest loan deals, 0% APR loans (even on long 72 month loans), special lease deals, free maintenance, and “secret” factory-to-dealer rebates that dealers usually give to customers.

Why has 2011 become such a good time to buy a car?

Cheap cars can be found in many places — if you know where to look. Following are just some of the places you might find cheap cars:

Independent Used-Car Dealers – Independent used-car lots are a potential source of affordable cheap second hand cars. Many lots have older vehicles that can be real bargains, but might require a little work. You should take care to determine if the price is fair and that the vehicle has no hidden problems. Most used cars are sold “as-is” and come without any kind of warranty or return policy. Check out local used-car lots in your area but also consider large national or regional used-car dealers such as CarMax.

New-Car Dealer Used Car Lots - Many new-car dealers also sell pre-owned cars. Most new-car dealers only offer relatively late model used vehicles that have been taken in trade or are off-lease, and are in good condition — and are relatively expensive. But bargains can be found. Therefore, it doesn’t hurt to check out local new-car dealers but also look at other sources listed below. Some new-car dealers sell “certified” used cars — at a higher price. These cars have been inspected thoroughly and come with a short guarantee.

Buy-Here-Pay-Here (BHPH) Dealers – BHPH dealers are a different kind of used-car dealer that provides in-house financing, usually with no credit check. Most BHPH dealers are local and can be recognized by their “we finance anyone” or “no credit check” banners. Be aware that interest rates are usually very high and payment terms are strict. See “Should I Buy From a Buy-Here-Pay-Dealer Car Dealer” for more details.

What are the most popular used cars — the cars most people are interested in — the best used cars?

We wondered about that question too. Are there certain cars that most people are buying, asking about, seeking information about, and asking for pricing on? What car makes and models are most popular? Are they the best cars to buy?

Well, we went to one of the most-visited used-car web sites, UsedCars.com, and found such a list. Actually, the site compiles a real-time list of the makes and models that their site visitors most often request information about, which is an indicator of the most popular cars.

The most-popular car list can change from day to day, but not by much. A vehicle that is #1 today might fall to #2 tomorrow, and vice versa, because the rankings depend on what online visitors to their web site are asking about and searching for on any particular day.  

Here’s the current list of most popular used cars at the time of this writing:

Figuring car payments is easy if you have the right calculator — it’s not easy math otherwise

Car payment calculation is not simple math. It requires a rather complex business math formula that is not easily done by hand and most people are not capable, or not willing, to take it on. It’s not as simple as dividing loan amount by the number of months in the loan. Finance charges (interest), which change every month, must be accounted for.

It’s much easier to use a hand-held business calculator, such as the HP 12c or HP 17b, or, even better, use an easy online auto loan calculator which does the math for you.

To use a car loan calculator, you must know the amount being financed, the number of months you want to finance, and the interest rate. You’ll also need to know the down payment amount, if any, and the value of your trade-in vehicle, if any. You also need to know the sales tax rate that applies to your home location, not where you buy your car.

Better to Buy Pre-Owned Car, or New Car?

First time car buyers have a choice of buying a brand new car, or buying a used car. Which is better?

There are advantages and disadvantages to either choice. Most people would rather have a brand new car with its new-car smell and latest style, but there are reasons that a new car might not be the best choice. Let’s take a look at the pros and cons of buying new and buying used.

Advantages of Buying New

• You get a brand new car with new-car feel and smell
• You get the latest style and technology
• You get the latest safety equipment
• You get a full manufacturer’s warranty
• You get Lemon Law protection
• You get lowest loan interest rates, if you qualify
• You get the option to lease
• You may get special manufacturer-sponsored pricing and financing

Is it possible to sell a car if you are still making loan payments and the loan is not yet paid off?

This is a very common question with car buyers and owners.

The answer is yes, you can sell the car, but you must get enough money in the sale to pay off your loan, so that your bank can give you a “clear” title to give to the new buyer. This is where problems often arise. Let’s see how.

If you are upside down

If you are still paying on your loan, you still have an outstanding balance, which might be more than your car is actually worth. This means you are “upside down” and would need additional cash, after the sale, to fully pay off your loan. Loan companies want to be paid in full immediately after the sale. They won’t allow you to continue to make payments on a car you no longer have.

Is auto insurance really necessary? Why do I need it?

Since car insurance is so expensive, partiularly for teenagers and other young drivers, it’s natural that this question should come up frequently for first time car buyers.

You need insurance on your car to protect you from the risk of disasterous financial problems resulting from accidents,  personal injury and property damage, and loss by theft, fire, or natural disasters. It may seem pointless to spend so much money on something you may never need. But if you ever need it, you’ll be really happy you have it.

It’s tempting to believe that you don’t need insurance because you are a safe driver and will never cause an accident. However, other people can involve you in an accident that is not your fault. If the other driver doesn’t have sufficient car insurance, your own insurance will take over and pay your repair bills and medical expenses.

You might avoid insurance if you had enough money to cover such problems on your own.  This is called “self-insurance.” However, self-insurance is not legally sufficient in most states and is not practical for most people.

Understanding the basics of auto insurance 

You may go through your entire life and never have a car accident. But the odds are against you. Auto insurance protects you from potentially disasterous costs of such accidents. If you are buying your first car, you must understand how car insurance works and why you need it.

Laws in most states require that drivers have at least a minimum level of liability insurance – repeat, liability insurance – not collision or comprehensive, although lenders and lease companies may require full coverage, including liability, collision, and comprehensive.

Types of insurance
An auto insurance policy might include one or more of the following types of coverage:

Is Cheap Car Insurance Possible?

Auto insurance is one of those irritating expenses of car ownership that has no immediately obvious benefit. We pay and pay, and may never get anything in return. Teenage first car buyers are always a bit startled by the high cost of insurance.

Car insurance is one of the most expensive costs of owning and driving a car, especially for teenagers and other new drivers who can least afford it. 

In this article we’ll show you how and where to find the car insurance company for your first car that has the best rates and provides the best service.

Lease vs Buy? What’s the Difference?

One of the best ways to decide between car leasing and buying with a loan is to directly compare the attributes of each, which we will show you in this article. We’ll tell you about how payments compare, about how fees are different, about advantages, and disadvantages.

Another way to help make a decision between leasing and buying is to compare the cost of each for a specific lease vs. buy situation. For this, you’ll need a special Lease vs. Buy Calculator.

Now, let’s take a look at how car leasing compares with buying with a loan.