First time car buyers are often intimidated by the process of purchasing a vehicle. However, by keeping in mind a few tips about the car buying experience, first time buyers can avoid common mistakes made by less prepared shoppers.
Know Your Budget
The first step in developing good car shopping habits is having a clear and realistic budget in mind before setting foot on a car lot. First time car buyers should remember to include the cost of insurance, registration, taxes, and average fuel usage in the budget for the car. Calculate what you can reasonably afford to spend on a down payment. The down payment you can afford will directly inform the maximum cost for the car itself, as a down payment should be at least 20% of the total price.
New vs. Used
First time car buyers should never overlook used cars as worthwhile options when shopping for a vehicle. A late model used car is less expensive than a brand new car, is usually easier to finance, and can offer the safety, comfort, and style of the newest model on the market. A comparison of the new cars in your budget to those in your budget that are used will prove whether or not you can get the amenities you need in a pre-owned vehicle.
Overcoming Credit Issues
Most people who have never purchased a car before are also concerned about a lack of credit history or poor credit rating. There are ways to overcome any credit issues you are concerned about as a first time car buyer.
In-house financing through the dealership you are purchasing the vehicle from is an option first time buyers should explore if credit issues have prevented them from buying a car in the past. Dealerships are known to be more willing to work with limited credit worthiness, as long as an income capable of supporting monthly payments can be proven.
Gather your financial documents, such as tax returns and paycheck stubs, before going to the dealership. A check of your credit history report can also give you helpful information. If you are still worried you may not be able to get approval on a car loan based on your financial situation, approach potential cosigners before shopping for a car.
Preparation and realistic expectations can help first time car buyers make the best deal for their unique set of circumstances. Do research on the kind of car that’s right for your life, focusing on your realistic budget.
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