10 tips for first-time car buyers

First-time car-buying checklist

Before setting foot in a car dealership or browsing online listings, consider factors like the number of passengers you typically carry, the amount of cargo space you need and the type of driving you'll be doing (e.g., city commuting, long-distance trips, off-roading). Then you can set your budget, research models and make a financing plan before buying the car of your dreams.

1. Determine your needs and budget

It’s important to evaluate your transportation needs and lifestyle and establish a realistic budget. Analyze your finances and determine how much you can comfortably afford to spend on a car — take into account not just the upfront cost of the vehicle but also the associated expenses (e.g., insurance, fuel, maintenance, registration costs, financing). It's crucial to be honest with yourself about your financial situation and avoid stretching your budget too thin.

Once you clearly understand your needs and budget, you can narrow your options and focus on vehicles that align with your requirements. This initial step will save you time and help you make more targeted decisions as you proceed with the buying process.

2. Research car models and features

Researching car models and features is crucial when searching for a vehicle that meets your needs. Here are some key factors to consider when choosing a car:

• Car model: Look into various sizes, body types and reputable brands to find a wide range of options.
• Added features: Identify the specific features that matter to you, such as advanced safety features or technology compatibility.
• Fuel efficiency: Consider the fuel efficiency of different models, especially if you have long commutes or take frequent road trips.
• Safety elements: Prioritize safety by researching ratings and features like anti-lock brakes, air bags, stability control and advanced driver assistance systems (ADAS).
• Reliability and resale value: Look into reliability ratings, long-term durability and maintenance costs. Researching resale value can also help gauge potential future value.
• Vehicle history: Do you want a new or used car? New cars offer manufacturer’s warranties and the latest features, but used cars can be more affordable and provide a wider selection. Weigh the pros and cons of each option.

» MORE: How to buy a new car

3. Assess your financing options

Once you have a clear idea of the car models you're interested in, it's time to assess your financing options. Financing a car can be a significant part of the buying process, so it's important to explore different avenues and make an informed decision.

Check your credit score

Find out your credit score; it affects the loan terms and interest rates you'll qualify for. A higher score usually leads to better terms, so knowing your credit score can help you anticipate what to expect from your rates and address any outstanding credit issues.

» BAD NEWS? How to buy a car with bad credit

Explore financing sources

Consider options like bank loans, credit unions or dealership financing. Banks and credit unions often offer competitive rates and flexible terms, while dealership financing may offer convenience and special offers. Either way, review the terms carefully to ensure they align with your financial goals.

Consider paying in cash

If possible, paying for the car in cash eliminates the need for financing and interest payments. However, ensure that it doesn't strain your finances or deplete emergency savings. Also, keep in mind that dealers typically make more when you finance the car with them — don’t let them push you into this option if you can pay in cash instead.

4. Shop around for the best loan rates

If you plan on financing your car, it's helpful to shop around and compare loan rates from different lenders. By taking the time to research and negotiate, you can secure the best deal possible and potentially save a significant amount of money over the life of the loan.

• Compare interest rates and terms: Gather loan offers from various lenders (e.g., banks, credit unions, online lenders). Compare their interest rates, terms and fees. Look for competitive rates and favorable terms that align with your goals.
• Consider the overall cost: Look beyond interest rates and consider the loan's total cost. Evaluate factors such as the loan term, monthly payments and any additional fees. Understanding the overall cost gives you a clearer financial picture.
• Negotiate loan terms: Don't be afraid to negotiate with lenders. If you have a strong credit score and financial standing, you may be able to secure lower interest rates or more favorable terms. Remember, lenders want your business, so explore opportunities to save.
• Consider preapproval: Get preapproved for a loan before visiting dealerships. Preapproval involves applying for a loan and receiving conditional approval for a specific amount. It helps you understand your budget, strengthens your negotiation position and can save time during the buying process.

» COMPARE Best car loan companies

5. Schedule pre-purchase inspections

When buying a car, it's crucial to have a trusted mechanic conduct a thorough inspection before finalizing the purchase. A pre-purchase inspection can uncover any potential issues with the vehicle and provide you with some peace of mind. Here's why it's important:

• Expert assessment: A professional mechanic can assess the car's condition and identify any hidden issues. Their expertise ensures a comprehensive evaluation and helps you make an informed decision.
• Uncover hidden problems: Even if the car appears fine, a thorough inspection can reveal hidden problems like a bad engine, transmission issues, accident damage or excessive wear. Identifying these issues early on saves you from future costly repairs.
• Negotiation leverage: Inspection findings can be used for negotiation. You can negotiate a lower price or request that the seller address the identified issues before finalizing the purchase. If the problems are significant or the seller is uncooperative, it may be best to walk away.
• Peace of mind: A professional inspection ensures you're making a well-informed decision and reduces the risk of buying a car with undisclosed issues. You can proceed with confidence knowing you've taken the necessary steps to protect your investment.

When scheduling an inspection, choose a trusted mechanic or independent inspection service with no affiliation to the seller. Expect to pay a fee for the inspection, but it's a worthwhile investment considering the potential savings in case of future problems.

A reviewer on our site said about the car-buying inspection process: "The customer service was outstanding, characterized by a positive and helpful attitude. They fulfilled my specific requests and made sure I obtained all the desired features in the car. The vehicle underwent a thorough inspection to ensure everything was in working order, and they ensured my complete satisfaction before I left the dealership." That’s the ideal scenario.

6. Do a test-drive

One of the most important steps in the car-buying process is to test-drive the vehicles you're considering. Test-driving lets you experience the car firsthand and evaluate its performance, comfort and overall suitability to your needs.

Make sure to drive multiple cars to compare their performance and features. Pay attention to each car's handling, responsiveness and acceleration, and assess how it maneuvers in different driving conditions. Note any vibrations, noises or unusual behavior that could indicate issues.

Also, evaluate your comfort — consider seating position, ergonomics, legroom, headroom and cabin materials. Comfort is vital for daily commutes and long journeys.

Ultimately, ask yourself: “Did the car meet my expectations and fulfill my needs?” Consider how it made you feel and if it aligns with your preferences and lifestyle. Don't hesitate to ask questions about features, technology, maintenance or any concerns you have. The salesperson should provide the information you need.

7. Negotiate the price

Negotiating the price of a car can potentially save you significant money. With some research and effective negotiation strategies, you might be able to secure a better deal.

Here's how to approach the negotiation process:

• Research market prices: Before negotiating, research current market prices for the specific make, model and year of the car you want. Online marketplaces and dealership websites provide valuable insights. This knowledge establishes a baseline and helps you determine a fair price.
• Use comparable listings: Gather information on comparable car listings with similar mileage, condition and features. These listings support your negotiation by justifying your offer or negotiating a lower price. Concrete examples strengthen your position.
• Be confident and prepared: Approach negotiations confidently and articulate your reasons for the proposed price. Highlight unique features, recent maintenance or repairs or other value factors. Be assertive but respectful, and be willing to walk away if terms are unsatisfactory.
• Consider bringing a knowledgeable person: If needed, bring a friend or family member who understands cars and negotiation. They can provide guidance, advice and added confidence during the negotiation.
• Explore other negotiation points: Price isn't the only negotiation point. Consider negotiating warranties, accessories or service packages. These can add value to your purchase and lead to long-term savings. Be open to exploring different negotiation points.
• Stay within your budget: While negotiating, stick to your predetermined budget. Don't get carried away and compromise your financial limitations. Ensure the final price aligns with what you can comfortably afford.

8. Get insurance quotes

Insurance is a necessary expense (in almost all states, at least) that protects you and your vehicle, and it's essential to obtain the right car insurance coverage at an affordable rate. Insurance premiums vary based on factors like make and model, your driving history, location and level of coverage. Ensure you can afford the estimated insurance costs for any vehicle you’re considering.

To find the best rates, get quotes from several insurance providers. Each company has its own rating system and considers different factors when determining premiums; contact different insurers, provide the necessary information and compare coverage options, deductibles and premiums to find the most suitable policy.

You can also explore additional coverage options (beyond basic liability), like comprehensive coverage, collision coverage, uninsured/underinsured motorist coverage and medical payments coverage. Assess your needs and priorities to determine the appropriate level of coverage for you.

When comparing insurance quotes, carefully review the policy details. Make sure you understand the coverage limits, deductibles and any exclusions or limitations. Read through the terms and conditions to ensure you clearly understand what’s covered and what’s not.

Providers often offer discounts for safe driving records, multiple policies, anti-theft devices and completing driver safety courses — ask about these and other discounts to reduce your premiums.

» MORE: How much is car insurance?

9. Estimate ownership costs

Consider the various ownership costs associated with maintaining and operating the vehicle you want (aside from insurance). Understanding these costs upfront allows you to budget appropriately and avoid any financial surprises down the road. Keep reading to understand the costs associated with ownership.

» MORE: Best extended car warranty companies

10. Finalize the purchase and enjoy your new car

The final step in the car-buying process is carefully reviewing and finalizing the purchase, ensuring all necessary paperwork is in order. Once everything is in place, it's time to enjoy your new car.

Carefully review all documents and ensure accuracy

Take the time to thoroughly read and understand all the documents related to the purchase. This includes the purchase agreement, sales contract, financing or lease agreement (if applicable), warranty details and any other supporting documents. Pay attention to the fine print and seek clarification on any confusing terms or conditions.

Verify that all the information on the documents is accurate and matches the agreed-upon terms. Check the vehicle identification number (VIN), purchase price, financing details (if applicable) and any additional features or add-ons. Address any mistakes or discrepancies before finalizing the purchase.

Once the purchase is finalized, obtain copies of all the signed documents for your records. These documents serve as proof of the transaction and will be important for future reference, warranty claims or insurance purposes. Store them in a secure place.

Consider additional protection plans

You may be presented with additional protection plans, such as extended warranties, maintenance packages or gap insurance. Evaluate these options carefully, considering your specific needs and budget. If you decide to proceed with any additional plans, make sure the terms and costs are clearly outlined in the documents.

» IS IT WORTH IT? What does a car warranty cover?

Enjoy your new car

Finally, it's time to take home your new car. Take a moment to appreciate the excitement and satisfaction that comes with your purchase. Familiarize yourself with the features, take it for a drive and make lasting memories. Your new car is a symbol of your careful research and decision-making. Embrace the freedom and convenience of owning a car and enjoy the journey ahead.