Tips for Purchasing Your First Vehicle

Most young adults work and ride public transportation, while others use their family car during their first years of driving. In either case, this means that people are usually well into their twenties before deciding to buy their own vehicle for the first time.

Buying your first car is an exciting milestone, but it can also be a daunting task. With so many options and factors to consider, plus some research, planning, and financial decisions to make – it’s essential to be guided to make a well-informed decision. Here are some tips for buying your first car:

Determine your budget

Before you start shopping for cars, you need to determine how much you can afford to spend. Consider all the costs associated with car ownership, such as insurance, fuel, maintenance, and repairs, in addition to the purchase price.

The amount is generally based on what you can afford per month. Your credit score, monthly income, and the type of car you’re considering should factor into this decision. The idea is to pay in cash, but in most instances, the nature of the transaction often needs some financing leverage.

Check your cost of living, especially the more important ones like food, shelter, utilities, bills, insurance, savings, and the things that make you happy. Once you have calculated these, whatever remains is what you can afford to spend on car payments, fuel, car insurance, and maintenance. Yes, budgeting for car ownership is not just about the payments – it comes with many other associated costs, too.

Setting a budget sets a limit, narrowing the field from hundreds of cars to a handful. When budgeting, consider the out-the-door price, not just the sticker price that you see advertised. You’ll be expected to pay this entire cost, including taxes and dealer fees.

Given the cost of fuel, insurance, and in many cities, monthly parking – do not buy what you don’t need. Perhaps if you know you’ll need a different kind of vehicle from time to time (like a pickup truck or a van), just rent it only when you need it.

Consider your needs and wants

Think about what you need from a car. Do you need a vehicle with good fuel economy for long commutes? Do you require a lot of cargo space for work or hobbies? Do you need a vehicle with more seating capacity to accommodate your growing family? Make a list of your must-haves and nice-to-haves to help narrow down your options – bearing in mind the options that your budget can afford. Here are some factors you might consider:

  • Your location (city, suburbs, rural area, etc.)
  • Your region’s weather to determine if you need an all-wheel drive
  • The number of passengers you’ll be carrying
  • Cargo space for loading and hauling items
  • Purpose of buying a car (for work, school, everyday use, or weekend adventures)
  • Parking space at your house and place of work
  • Comfortable size that can safely fit your stature, whether you’re tall, short, or somewhere in between

Your first car may not have all the bells and whistles of your dream car, but it should at least check off the things on your needs list.

Also, make sure the car ticks something off of your wants list. It’s better to stretch a bit for things in a car that satisfies you than to have buyer’s remorse even before emptying the first gas tank.

Do your research

Take the time to research different car models and their features, reliability ratings, and price points. You should have a concrete idea about what you need before going to a car dealership, or else the dealer will decide for you (and usually, it’s for their benefit). At this point, there’s a fantastic amount of information about car models that you can read online.

Here are also some sources to consider when doing your research:

  • Consult trustworthy resources like Consumer Reports, NADA Guides, and Kelly Blue Book to help determine how much the car costs based on mileage and wear.
  • Read online reviews and auto repair forums to see truthful, first-hand reviews from owners on the vehicle you like best.
  • Find seasoned car owners who can tell you what parts break first, how it rides, and whether that gas mileage number really stacks up to daily use.
  • Read about reviews and ratings about which brands and models are more or less likely to run into costly repairs in the future. If you’re a non-European, some European cars will be expensive to maintain for you.

Once you’ve read and digested these all, balance them with your gut instincts, or the instincts of a car owner you trust.

Save for a down payment

The down payment is the initial lump sum that you pay for a car. Aim to cover at least 20% of the car’s overall purchase price, which may take some time. Being patient to save up for a large down payment is worthwhile – it will lower your monthly car-related expenses and save you money in the long run.

If you need a car soon, you can make a lower down payment, but you may not get a reasonable rate with the lender. In this case, choosing a less expensive car is best. The less you pay overall, the less you’ll need to save for a down payment.

Find a good dealer

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Don’t rush into buying the first car you see. Visit different dealerships, compare prices, and take other cars for test drives. This will help you get a feel for what you like and don’t want in a car.

When weighing a couple of choices, compare dealer locations. As much as possible, choose one closest to you so you can quickly go back for routine maintenance. If all other things are equal, choose the one with the best showroom environment. Avoid dealerships where the majority of the salespeople are sitting or standing at the front entrance.

Consider buying used

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On average, a new car loses 9-11% of its value the moment you drive it out of the lot. And for every following year for the next five years, its value depreciates by 15-25%. After five years, the car is worth around 37% of the amount you paid for it.

So, if you take out a loan to buy your first car, depreciation means you’re likely to owe more than it’s worth as soon as you start the ignition and drive it home. But with a used car, you’ll be paying for a car that has already undergone depreciation. Assuming that it’s hard-earned money (not excess wealth) that you’ll be using to pay for the vehicle, used models will offer the best value for your money.

After all, the reliability of used cars these days is remarkable. There’s an endless number of vehicles coming off two to three-year leases that are still in excellent shape. Even cars that are older than that are worth considering.

Now, if you’re considering buying a used car, make sure to check its history. Look for any accidents or damage reported on the vehicle’s history report, and have a trusted mechanic inspect the car before making an offer.

Negotiate the price

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Once you have decided what you like and established what you can afford, it’s time to arrive at a purchase price. You can check the Kelley Blue Book to give you an idea of how much people have paid in your area for the car you’re interested in.

Don’t be afraid to negotiate the price of the car. Dealerships are often willing to negotiate to make a sale, so do your research and come prepared with a reasonable offer.

Also, never tell a salesperson how much you plan to pay each month for your car. If you do, they may manipulate the cost of a car that’s out of your price range to fit your budget. Salespeople can do this by adjusting the interest rate, offering you a longer loan term, or restructuring financing to create a payment plan that fits your budget.

You may see that you can afford it now, but in the end, it can add hundreds to thousands of dollars and years of extra payments to your loan. So instead of giving a monthly amount, stick to the total price in the negotiation, plus its taxes, title, and registration.

It helps to bring an experienced buddy or family member to help you negotiate, especially an older person who has purchased enough cars that lasted for years.

Consider financing options

If you’re not able to pay for the car outright, consider financing options. Before buying, better talk with your bank, credit union, or insurance provider and line up your financing in advance. They can give you an idea of how much you can borrow and at what interest rate, enabling you to avoid making unplanned financing decisions at the dealership. It’s best to start with your bank or credit union, then get quotes from dealerships and other lenders. Shop around for the best interest rates and loan terms, and make sure you understand the terms and conditions of the loan.

Before signing any paperwork, make sure to read and understand all the terms and conditions. Pay attention to any hidden fees, such as dealer fees or add-ons, and don’t be afraid to ask questions.

Take a test drive

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So if you have done your research, picked a dealership, and planned how you would pay, don’t underestimate the importance of a test drive. All of these won’t matter if the car doesn’t feel right behind the wheel. Consider seat height, wheel adjustment, steering wheel, outward visibility, throttle tip-in, control layouts, and more. Since you’re the one who will be driving it, you must learn how the car performs and how you feel about it.

Taking a test drive allows you to compare vehicles and the quality of customer service at each dealership. Take at least half an hour trying to stop and go, merge, and turn. If your sales representative can’t spare some 30 minutes to accommodate you for a test drive, find the time when they can do it, or take the time to find another dealership.

Get car insurance

You will need to be covered by the law, and some companies may not offer the best insurance deals for first-time car buyers. Insurance providers like stable, experienced, and predictable drivers because they pose less risk of a costly accident and payout. So it’s critical to shop around for the one that gives the best rates available to you before deciding on an auto insurance policy. It’s best to get as much liability coverage as you can afford.

If you’re financing the car with a dealership or credit union, you’ll also need comprehensive coverage and collision coverage, in most cases. Comprehensive coverage pays for damages caused by threats like hail, windshield breaks, vandalism, etc., while collision coverage pays for physical damage to the car after an accident.

Do not buy add-ons at the dealership

After sealing the deal, your dealership will try to sell you add-ons, like extended warranties, paint protection plans, tire protection plans, rustproofing, key protection, fabric protection, and a lot of other stuff. Dealerships make a lot of money on this stuff, and it’s often overpriced. Most people don’t have an idea of how to figure out a fair price for these.

No matter how convincing they may sound, always say no to everything, especially if you’ve haggled so hard to get a sweet deal. They may try to tell you that it’s just a bit more money per month, but that will add up, and you’ll end up overpaying for that add-on. You can always get these things just before it goes out of warranty.


Buying your first car can be an overwhelming experience, but taking the time to do your research and make an informed decision can save you time, money, and headaches down the road. With these tips in mind, you’ll be well on your way to finding the perfect car for your needs and budget.