scorecard11 tips for first-time car buyers, from establishing the right budget to how to have a perfect test drive
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11 tips for first-time car buyers, from establishing the right budget to how to have a perfect test drive

Kristen Lee   

11 tips for first-time car buyers, from establishing the right budget to how to have a perfect test drive
LifeThelife8 min read
  • Lockdowns due to the COVID-19 pandemic are making first-time car buyers out of many.
  • Whether you're buying new or used, it's important to do your research before you commit to anything.
  • Vehicle maintenance is also an important thing to remember.

Thanks to the COVID-19 pandemic, taking public transportation or flying might not seem so safe right now.

For many, the next logical step is to consider car ownership. People who have never owned a car before now suddenly find themselves endeavoring on the daunting task of car buying for the first time ever.

Car dealerships, in response to a drastic decline in foot traffic in their showrooms, have adopted virtual tours and car deliveries to make the process easier for those wishing to stay safe. But the dealership is just a small part of the whole process — there are a number of things that need to happen first before you even set foot in one.

Whether you are looking for a new or used car as your first car, here are some steps you can take to make a smart and informed decision.

1. Establish a budget

Don't spend more than you have. This seems very obvious, but it's still worth repeating. Figure out how much money you have to spend, hopefully without altering your life too much. Do you have enough to pay cash upfront? Or do you need a loan?

If you need a loan, car-buying expert Tom McParland, who owns a service called Automatch Consulting that helps people buy cars, suggests using an easily Google-able tool called the "car loan calculator."

"You can start with your payment, estimated APR and loan term and it will give you your spending limit," says McParland. "Don't forget to factor in for tax, fees, etc. Any trade or down payment you have will increase the budget accordingly."

2. Buy it before you need it

Another thing to keep in mind as you approach car buying is to buy the car before you need it. Basically, if you are faced with a situation where you can't get to work because you don't have a car, it means you likely won't have as much time to devote to careful research and financing options.

Stay ahead of that. If you anticipate you'll need a car soon, it's better to get it sooner rather than later.

3. Consider your timing

There are certain times of the year when you can potentially score a better deal. McParland says, "Late summer [and] fall are usually when dealers try to clear out older inventory in anticipation with new models. And often between Thanksgiving and Christmas, there are good deals."

4. Know what type of car you want

You, being a citizen of this world, have certainly observed that there are many types of cars to choose from.

What sort of car fits your needs? Do you want something compact because you live in a city? Or do you want something bigger to fit all your cargo and family members? Do you live somewhere with inclement weather?

These are all things to think about when considering a car.

Furthermore, ask yourself if you want to go down the new-car or used-car route.

New cars, of course, mean that you'll get stuff like a factory warranty and you can avoid situations where you have to worry about past owners. But new cars also tend to be more expensive and have not taken a depreciation hit yet. If you buy new, you'll take the depreciation hit.

Used cars can be cheaper, but they require a bit more individual looking-over before you can pull the trigger. More on that later.

But for now, also know that if you're thinking about a used car, consider a good Certified Pre-Owned deal — a used car that's been through some kind of pre-sale inspection — but be sure to ask to see the specifics of that inspection and anything that might have been repaired, advises

The other used-car route to think about is the used-rental-car route. Business Insider has detailed how to buy a used rental car here. They're not always as scary as you might think!

5. Research your car(s)

Once you've narrowed your search down to one car — or a few — it's time to read reviews.

There are several places to read up on a car review, Business Insider included. See if you can find any long-term car reviews. Typically, automakers loan cars to journalists for only a week at a time, so while you'll get pretty good driving impressions and material takeaways from shorter reviews, most won't have insight into what it's like to actually live with the car for a long period of time.

For things like safety ratings, go on either the National Highway Traffic Safety Administration's or Insurance Institute for Highway Safety's website for safety information and ratings. NHTSA also has a database of recalls you can look into.

For economy information, simply search for the year, make, and model on the US Department of Energy's website, the official government source for fuel economy information.

Finally, read the forums. Almost every single model of car has dedicated car forums: online communities where owners gather to discuss repairs, issues, or swap stories. Looking through the forums, you can see if owners found things that were commonly defective across all their cars, or listen to their complaints.

6. Get your finances in order

If you are thinking about getting a loan, it's important to know your credit score.

US News recommends obtaining a pre-approved loan before you even set foot in a car dealer as a way to negotiate later: "By applying to at least one local bank, credit union, online bank, or online lender, you can get an offer that a dealer will have to meet or beat to get your business. Without an offer in hand, the seller will have no incentive to cut you a deal."

On top of that, loans come with a bunch of stuff you'll need to learn. US News has this separate guide that walks you through all the vocabulary.

Also, as cars and trucks have gotten more expensive in recent years, lenders have been increasing the length of their loans. Now, you can find 72 and 84-month car loans, which is a terrible idea! Don't fall for those.

Those interest rates are typically higher and you might very well end up owing more money than the car is worth. And when the warranty runs out, you'll have to worry about expensive repairs while still making payments.

Cars are depreciating assets. Keep that in mind. Hardly any car is going to appreciate in value as time goes on.

7. Have a place to park it

The ideal situation is one where you have a driveway or a garage space for the car. But if you don't, will you have to purchase a space to use? A permit? Or will you street park? Are you familiar with the local parking laws around your home?

It's a good idea to square all this away before you bring home a new car.

8. Research the dealership

Not all dealerships are created equal. Some offer better services than others. Some have better inventory than others. In general, it's better to check out a dealer's inventory before showing up just to browse. Call and confirm the specific model you are looking at is available.

Also confirm that test drives are offered. This is arguably the most important part of the whole process, which we'll get into in just a second.

On avoiding bad dealerships, McParland says, "Read reviews on dealerships and especially be careful about places that specialize in selling cars to folks with bad credit. Be sure to understand your contract and be clear about the numbers before you sign."

He goes on, "The internet is key here. Sometimes you can find a better deal or a better value by casting a net outside of your region. Always get quotes in writing via email before you go to the dealership."

9. The test drive

The big moment! The one you've been waiting for! This is where you can finally meet the car you've been reading about and turning over in your head. Test drives are the place where you can physically evaluate the car that you'll be potentially spending a lot of money on and time with.

As mentioned above, make sure to ask for a test drive — and one of good length at that, if you can swing it. See if you can try the car out on both local roads and highways. Places where you'd typically spend a lot of time in your car.

Also know that a test drive doesn't just evaluate how a car drives, but also how it fits with you. Before even leaving the lot, take some time to sit in the car, move the seat to your driving position, and see if you are comfortable. Can you see out of the windows easily? Can you fit all of your stuff in it? Does your family fit comfortably in it? Sometimes a car can seem perfect on paper and then the whole idea falls apart as soon as you get into the driver's seat.

When it comes to a used car, this evaluation is even more important, because you are also looking out for potential wear and tear. Make sure the electronics work, check the condition of the body, see what condition the tires are in. Obtain a vehicle history report and maybe even ask an independent mechanic to examine it. It's a small price to pay to potentially avoid a big mechanical issue in the future.

And once you go for that test drive, listen for any irregular noises and be on the lookout for any abnormal vibrations coming from either the wheels or the steering wheel. That could indicate a mechanical problem or issues with the wheels or tires.

10. Negotiate

Now, it's time to negotiate.

"Remember, the margin for negotiation on used cars is very different than new," says McParland. "Used cars might have a few hundred bucks worth of wiggle and often dealers will have a 'no haggle' price, [but] this doesn't always mean they are ripping you off. With the online marketplace, often dealers need to price their cars to sell quickly."

If you notice an issue with the used car but it's not a dealbreaker, maybe use this as a reason for the seller to bring the price down a bit. If you've shopped around and know of another seller that's offering a competitive price, perhaps it's worth mentioning that, too.

And if you're paying cash: "Cash typically does not give you any leverage when buying from a dealer, as they want to give you a loan. They also can't upsell cash buyers so if you say you are paying cash and they know that back-end revenue stream is closed they may be less likely to wiggle on the price of the car," McParland says. "Private sellers are a different story."

At the end of all of it, though, be ready to walk away if the deal doesn't suit you.

11. Understand that cars need to be maintained

Admittedly, this isn't a car-buying-specific tip, but it's a bit of advice every car owner ought to know: maintain your car!

Your car isn't some magical machine that will run perfectly forever and ever and you don't ever need to think about it once you buy it. They also need maintenance and service. If you can get a warranty for the first few years, that's ideal, but after that, you need to be on top of keeping it maintained.

Consumer Reports has a great guide on how to maintain your car, which you can read here, but it includes checking the oil, tire pressure, brakes, battery, and tire tread. Don't ignore any weird noises if they develop, and definitely don't ignore the check engine light. This can protect you from costly repairs in the future.

Washing your car helps, too. The paint is what protects the body from rust, so it's a good idea to keep the paint nice, especially if you live in a place where the roads get salted often during the winter. Opt for undercarriage spray during these months, as salt can accumulate there and cause problems.

A well-maintained car will last longer and you'll get more out of it. And it's safer.