Buying your first car can be a daunting albeit exciting experience. It is one of the first major purchases you’ll be making as you enter adulthood. And it’ll be an investment that will serve you well, depending on how you take care of it, for the foreseeable future. Of course, like any other huge investment, there are several vital factors to consider before putting pen to paper and signing that binding loan. In this article, we will offer some tips and tricks that you should know as a first-time car buyer.
Is It A Need Or A Want?
The first thing you should ask yourself before you make plans to buy a car is the why. Why do you need a new car? Is public transportation available? Do you need it to commute or just for the sake of having a car?
If you only need it for long road trips, you may want to consider getting a rental instead since that option won’t be as heavy a burden on your financials. Different people, circumstances, and needs will determine your reasons for wanting to buy a car in the first place. Though, it does make sense to a certain degree (financially) to buy a car to cover your daily commute.
For instance, if you live nearby your university or workplace, buying a car could serve as more of a detriment rather than a benefit, unless you are unable to sufficiently carry out your daily or weekend activities without it.
Convenience is the keyword here. Figure out if the convenience of having a car outweighs the burden it will place on your wallet. Then move from there.
Keep Track of Your Finances
As mentioned, buying a car is a steep investment, especially if you’ve just joined the workforce and barely have any savings. Though it may seem tedious and an arduous process, sorting out your personal finances will help you to figure out whether or not you’re ready financially to buy a car in the first place.
The first thing you should look at is more than just the price of the car itself; any and all associated fees like title and registrations fees, sales tax, extended warranties, parking, servicing, petrol, road tax, etc. should be taken into account when planning your monthly budget. Bearing all of these things in mind will definitely help you in gaining the perspective needed to plan your budget when looking for a new car.
In short, the total cost of ownership of a car is inevitably going to be more than the actual price on a brochure. When financing your first car, do make sure that you can actually afford to pay the monthly repayment to avoid tanking your credit score. And when taking a loan, it’s also important to consider how long the term of the loan is, the interest rate, and the downpayment will affect your monthly budgeting (though this will be better suited for a topic for a different time).
Credit Score Matters
Speaking of credit scores, yours will have an influence on the interest rate that you pay for a car or car insurance. Essentially, it is the numerical equivalent of trust/faith that the bank has in you that you will be able to pay back the loan in due time.
Having better credit scores means you are in a favourable position of gaining better rates. This would then affect how well your overall car-buying budget is.
Thus, if your loan application has been rejected, then it could possibly be due to a low credit score rating. Here are some simple steps you may take to improve your score:
- Update your personal details
- Pay bills on time
- Always be up to date on your financial relationships
- Build up your credit history
- Get out of debt as soon as possible
Do Your Research and Due Diligence
Allow us to reiterate once more. Buying your first car is a big deal in any adult’s life. So you should make sure to dedicate enough time to do your due diligence for the entire process. The decision to buy a car isn’t one that can be made overnight or even after weeks or months — it is a time-consuming process due to the impact it has on your life. As such, you should not feel pressured to get it all figured out immediately. And definitely do not rush it or succumb to peer pressure. Things like the type of insurance coverage you’ll need for your first car, or the model or make of the car (which could determine resale value), or even whether to buy used/new are some of the decisions that you’ll have to make when deciding to buy your first car. In fact, you should also make it a point to go for test drives for any car that you plan on buying as you won’t really understand the situation until you’ve experienced it for yourself.
Even if you’ve read hundreds or thousands of reviews, you won’t know if the car is suitable for you unless you take it out for a spin. Some things to look out for when on your test drive include:
- Comfortable and adjustable seats
- Test the blinkers, brakes, and air conditioners
- Be aware of any strange sounds that the car makes while on the road
- Check if the steering wheel is responsive
- Look for any other warnings or symbols flashing on the dashboard panel