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Published April 22, 2021
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Buying your first car can be exciting yet challenging. Car ownership usually involves choosing a car, finding a dealer, exploring your financing options and signing the paperwork. It may seem a lot to manage, but don't let it discourage you.
Planning makes the process easier and less stressful. We provide some valuable tips for first-time buyers to ensure they get the best car-buying experience.
Establishing your budget is the first important thing to consider in buying a car. It helps you narrow your options within your price range.
Using an auto calculator gives you an idea of the costs associated with owning a car. You can also get estimates for your monthly loan or lease payment by using the tools at echopark.com.
Take a realistic look at your finances, and don't spend more than you can afford. Consider your basic living costs, such as food, shelter and medical expenses.
You should set aside money for monthly payments, insurance, maintenance and repair fees that go along with owning a car.
Important Budget Considerations for First-Time Buyers
Using auto industry resources makes researching car prices easier. Car dealers and auto lenders also use these guides to determine a car's value.
These online resources provide detailed information to help you choose the best car for you.
Car-Buying Guides To Use
On average, a new car loses around 60% of its value after five years. New cars also typically have higher motor vehicle registration fees and higher insurance rates.
Buying a used vehicle will save you money on car registration, insurance, taxes, and depreciation.
When choosing your first car, prioritize your needs instead of your wants.
Look for a car that doesn't go over your budget and still leaves room for your other necessities. Also, consider your lifestyle and your use for the vehicle.
What You Should Focus on For Your First Vehicle
Automatic is easier to drive, but you won't need to have it frequently serviced if you take good care of it.
To calculate the down payment, multiply the total amount by the percentage required by the lender and minus the value of any trade-in you have.
The average down payment for used cars is about 10.9% of the price of the car.
For example, if you're purchasing a $20,000 vehicle and you need a 10% down payment, your down payment would be $2,000. If your car's trade-in value is $500, you would need to have $1,500.
You can also use an auto finance calculator to determine your down payment, depending on your loan term and interest rate.
You should generally keep your monthly payment at or below 10% of your gross monthly income. You also need to consider your expenses to determine the right budget for your car.
Another factor to consider is loan payment terms. Depending on the lender, auto loan terms generally range from 36 to 84 months.
Choosing a longer repayment term reduces your monthly payment. But over time, you could end up paying more in interest.
Exploring your financing options before going to the dealer could help you save time and money. You can also avoid the high costs of financing and potential scams.
If you are well-prepared and informed about your options, you can make better financial decisions.
Financing Tips To Make Your Experience Easier
The interest rate may be higher for first-time buyers. The best way to counter that is by getting pre-approved for a car loan first.
To get the best loan terms from multiple lenders, make sure to apply to them quickly. Applications made within a 14- to 45-day period will only count as one hard inquiry in your credit score.
Getting a cosigner can make a huge difference in your auto loan rate. However, it may affect you and your cosigner's credit scores.
As a first-time buyer, the annual percentage rate (APR) you qualify for might also be high. Shop around for potential lenders, including a bank, credit union or financial institution.
It is easier to qualify for favorable loan terms if you have a good to exceptional credit score (700 or above).
For instance, you're planning to get a $10,000 car loan and you have a score of 630, you can qualify for 7% APR. If you have a score of 700, you can qualify for 4% APR.
A first-time car-buyer program may also offer financing benefits despite a lack of credit history. An example is Toyota Financial Services Financing for Limited Credit (iFi).
The numerous top-of-market car search engines all over the Internet are not your only options. You can also find local deals on sites like Craigslist and buy from private sellers.
How To Find Reliable Dealers
EchoPark makes car buying, selling and trading easy with our no-haggle approach and up-front pricing.
Once you've found a car suitable for your budget and needs, it's easy to get carried away with excitement.
Evaluate the car first and take it for a test drive. See how comfortable you feel behind the wheel and how it performs.
Car Evaluation Tips
EchoPark makes the process easy and quick. Our inventory includes cars with the latest body styles, newest safety features, improved fuel economy and upgraded technology, and our Experience Guides are ready to help you find the best car for you. No haggling involved!