Buy Used: A new car loses 11% of its value as soon as you drive it out of the lot and a further 15% to 25% every year for the next five years. After five years, it’s only worth 37% of its original value. If you buy a used car, you’ll be paying for one that’s already depreciated.
First Budget Then Car: The right way to buy a car is first to set a budget. That way, you know what you can afford. Calculate the basic cost of living like rent, mortgage, food, health insurance, investments, and other expenses. See what’s left. That’s what you can spend on car payments, insurance, gas, and maintenance.
Need Before Want: You may want a nice, good looking, fast car with all the bells and whistles. But assess how you’ll be using it and then buy one that meets your needs. Ideally, get a car that’s known for reliability, great mileage, safety, and if you live someplace with extreme weather, all-wheel drive.
Research: Check and follow all laws regarding the bill of sale, title transfer, sales tax, insurance, and registration. Go online and check all resources for legal guidelines, reviews, forums, and learn what to look for during a test drive.
Financing: Stop at your local credit union or community bank before you speak to any car salesman. Check for their auto loan rates, extended warranties, pre-qualification, pre-approval, and recommended down payment.
Focus on the Right Thing: Never negotiate on the monthly payment amount. Only discuss the total price quotations of the car. The dealer can manipulate numbers to make the monthly payment seem low to sell you an expensive model, and you’ll pay tens of thousands more for the next five to seven years.
Buy Insurance: Young, first-time car buyers, are a red flag for insurers. So you may not get the best deal. Contact a local agent that can check with multiple companies or get added to your parent’s policy.
Don’t Underinsure: Ensure that you meet at least the minimum state requirements for liability coverage. Stock up on as much liability insurance as possible. Get comprehensive and collision cover if you can afford it.
