Tips for First-Time Car Buyers To Have The Best Experience

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.

Buying A Car For First Timers

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.

1. Determine Your Budget

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 also 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

  • Opt for used cars - New cars depreciate the moment you drive it off the lot. You can avoid this by buying used cars.
  • Get pre-approved - Having a pre-approved car loan makes it easier for you to negotiate at a dealership or with a private seller.
  • Have a down payment - It's good to have a down payment, especially if you're using financing to buy a car.
  • Avoid leasing - With leasing, you can't sell the car and make some money back. You also can't take advantage of its trade-in value.

2. Explore Auto Industry Resources

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

  • Edmunds - You can get prices on new or used cars and detailed expert vehicle reviews on Edmunds' website. It also offers a free value appraisal for your car.
  • Kelley Blue Book - Kelley Blue Book gives you prices and values when buying and selling new or used vehicles. You can also find car reviews, ratings, and comparisons on its website.
  • NADAguides (National Automobile Dealers Association) - NADAguides provides accurate information and pricing guides on different vehicles. You can also get a free dealer price quote from them.
  • TrueCar - You can receive upfront prices on any new or used vehicles in your local area on TrueCar's website.  Its extensive database allows you to compare various car models.

3. Decide Between A New or Used Car

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.

4. Think About Your Needs, Not Wants

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

  • Choose a car body type based on your needs. A sedan is a classic choice for a practical car with space for passengers. If you need more space, you can go for hatchback or crossover options. SUVs and minivans make it easy to haul a combination of people and cargo.
  • Choose manual or automatic transmission. A car with manual transmission is often cheaper to buy and service. It may provide a better fuel economy than the automatic version of the same car.

Automatic is easier to drive, but you won't need to have it frequently serviced if you take good care of it. 

  • Think about longevity. If you want your car to last longer, you'll need to spend more to get a quality car. Cheaper cars usually require regular servicing and maintenance.
  • Ask for vehicle ownership history. If you're buying a used vehicle, you should see the history of the car's ownership, any repairs, or servicing. The ownership report also includes the mileage on the odometer by the time of sale and the vehicle's accident history.

5. Carefully Calculate Your Down Payment

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.

6. Know How Much Car Payment Can You Afford

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.

7. Explore Auto Loans and Financing Options Before Showing Up

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).

8. Exhaust Your Search Options

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

  • Consider a car dealer’s reputation. Check their history online to see how many years they have been operating.
  • Read independent reviews from customers and see how their car-buying experiences. Watch out for any problems or concerns.
  • Find out if the car dealer offers any special services. For example, some dealers provide vehicle delivery as a safety measure during the COVID-19 crisis.
  • Look at several dealers' selections and pricing of saved vehicles. EchoPAt ark®, we offer nearly new vehicles priced up to 40% less than a new car. Most of our cars are still under the manufacturer's warranty. 

9. Negotiate Your Price - Don't Focus on Payments

Negotiating the price helps you get a better deal on your car and potentially save thousands of dollars.

It can be helpful to talk about the price after the test drive. You can bring up any concerns you may have about the car and use them in negotiating.

Contract Caveats

  • The car buying process involves lots of documents and contracts that you need to sign. Take some time to read and review the terms carefully. Check your personal information to ensure it is correct.
  • The car sales contract or vehicle purchase agreement details your auto financing and payment information. It should break down the total cost of sale, including all taxes, fees, and associated costs.
  • If your car purchase involves financing, your interest rate, interest charges and length of the loan should be in the car sales contract. Make sure the figures match what was agreed upon. 
  • The vehicle reassignment form and report of sale describe the vehicle for sale, year, make, VIN, and license plate number. This form also transfers ownership. Make sure the selling price matches what you have negotiated. 

10. The Test Drive Isn't A Joy Ride

Once you've found a car that is 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

  • Check the overall condition of the body. Check the car's body panel, roof,and doors. Look closely for any damages, dents, scratches, chipped paint and obvious repairs. 
  • Have a qualified mechanic inspect the car. A qualified mechanic can help you spot red flags and reveal any hidden problems with the body, frame or engine. 
  • Request a vehicle history report. Request a vehicle history report from independent companies, like Carfax or Autocheck. They provide the vehicle identification number (VIN), mileage and title status. The vehicle history report also includes damage history, odometer fraud and unfixed recall status.
  • Request a copy of the car's maintenance records. Maintenance records are provided by most used-car dealers. If you are buying from a private party, ask the owner for the car's service records and review them.

How EchoPark® Can Help

EchoPark® provides the best value for first-time car buyers. With our New Car Alternative, you can enjoy the latest body styles, newest safety features, improved fuel economy and upgraded technology found in late-model vehicles.

Get our best price, fees and financing terms in writing even before you see us, and save hours in the dealership.

Categories: Pre-Owned Inventory