3 Tips for First-Time Car Buyers
Whether you are a young person who has just obtained a driver’s license or an adult whose economic situation is finally allowing you to purchase your first car, the prospect of signing on the dotted line and making a commitment to car payments for up to six years can be both daunting and thrilling. While recent financial forecasts report that borrowing costs are likely to remain steady for some time, you still may be holding off on buying a car because you are unsure of where to begin. Here are three tips that may help you navigate the sometimes-confusing path of vehicle purchase.
1. Do Your Own Research
Before you step foot onto a car lot, take the time to perform some research about the make and model of car you are considering, its overall history of reliability, what you can afford to spend, and read some online reviews for any dealership you may plan to do business with. Not only will this allow you to make a more informed decision about this major purchase, it may help you feel more confident when you do visit your local dealership, and you can let them know right away exactly what kind of deal you are looking for.
2. Weigh Financing Options
Some dealerships you visit might pitch how in-house financing is the best option for you when it comes to paying for your car. This type of financing, where the loan is held directly by the dealership and not a bank, might benefit you if your credit rating is poor or if you have a limited credit history and cannot secure financing in a traditional manner. However, the interest rates may be higher than those you might get from a bank, so you may want to visit several different lenders before you decide if in-house financing is the right choice for you.
3. Look into the Cost of Car Insurance Before You Buy
One common error first-time car buyers make is to underestimate how much auto insurance will cost. If you are a young driver, premiums may be quite high because of your inexperience, and this is a factor you will need to consider. Insurance costs may also vary depending on your driving history and even the make or model of car you choose. For example, insuring a red sports car may be much more expensive than it would be to insure a four-door blue sedan.
In addition, most banks require that you carry collision and liability on your car for as long as they hold the title, which means the premiums may be higher until you pay off your vehicle. While shopping around for insurance may help you save, knowing what it will cost to keep your new car on the road can help you avoid feeling a financial squeeze later on. You may want to ask your insurance company if it offers any discounts that can help lower your payments.
There are many decisions to be made and much to look into when you are a first-time car buyer, but following these tips may make the process a bit less confusing and give you an idea of where to begin. While the experience of purchasing a vehicle for the first time is usually different for everyone, when you go into the process with a bit of useful information at hand, you may find it an exciting and pleasant journey.