Buying Your First Car: What New Drivers Should Know

by Jim on December 31, 2022

Buying a new car can be a difficult process, especially for first-time car buyers who don’t have much knowledge about cars in general. With the right information, however, your car-buying journey can be made easier. What should you know and do as a new driver to avoid unnecessary mistakes and make the best choices?

To make the best car choices as an inexperienced car buyer, you need to do a lot of research, ask questions and plan strategically. Ask questions about car dealerships, car insurance costs, and maintenance, read online reviews, and plan strategically while putting your budget, personal preferences, and other costs in perspective. Below are step-by-step tips you must know.

Important Considerations And Steps For First-Time Car Buyers

Consider these tips as you plan to buy your first car from the planning phase to the first few months of driving.

Car Buying Budget

Whether you have money saved up for your car purchase or you are financing, setting an affordable budget is an essential first step that will guide your choices and save you a lot of stress. Budgeting for car ownership is more than just making the car payment. Things like gas, insurance cost, maintenance, repairs, and registration should be put into consideration.

If you’re financing, whether or not a bank or credit union offers you a car loan depends largely on your credit history or score. Keeping a good credit score makes you more likely to be eligible for higher loan amounts. However, being eligible for higher loan amounts does not mean you can afford it. It is important that you can comfortably make a monthly payment (scout for car loans with a low-interest rate).

Also, before you approach a credit union for financing, check with the dealership. They sometimes have better financing options if you are purchasing the car from them.

There is a 20% rule that suggests that your car payments and automobile expenses should not exceed 20% of your monthly income.

Car Insurance

Getting insurance is another important step to buying your first car. Insurance is often required by the law. It pays for damages to the car, passengers, and/or public infrastructure in a car accident.

There are different types of insurance; liability insurance/coverage, collision insurance, comprehensive insurance, etc. You should purchase insurance before getting your car because you need to present proof of insurance to drive your car off the dealer’s lot.

Every state has its minimum requirements for each type of insurance. According to forbes.com, "It’s better to buy more than your state’s minimum. That’s because state minimums can be woefully inadequate if you cause an accident with multiple injuries."

It might be a bit difficult to get the best deal as insurance rates are often higher for drivers buying their first car. This is because insurance providers prefer experienced and stable drivers because there is less risk of a costly accident.

Expensive cars like electric cars have high insurance costs. It costs about $1,700 - $4,500 to insure electric cars per year. Conventional and older cars are cheaper to insure. Other factors that influence insurance prices are: marital status, type of car, education, occupation, age (teen drivers pay more), and where you park your car over night.

New Car Vs. Used Car

Used cars are your best bet if you want to work with a cheaper price (they are cheaper to buy and insure) and can put up with some cons, such as the high cost of repairs and low life span.

You can, however, go for a brand new vehicle if you can comfortably afford to pay for the vehicle and insurance, if you are big on new and updated safety features and are fine with the quick depreciation associated with new vehicles.

Car Dealer Vs. Private Seller

If you are buying a used car, it is advisable to buy from a reliable car dealer. Although it costs a little more, it saves you the risk of buying a problem. You could end up with insistent and annoying vehicle problems or a vehicle with an poor record. If you ever have to buy from private sellers, ask the right questions, do a test drive, and ensure adequate service records.

Buying from a dealer offers you a wider range of selections and options; you are sure to find one that suits your budget. Also, most banks and credit unions do not finance used vehicles from private sellers because they do not have a solid or reliable reputation.

Get A Carfax Report

Do not purchase a vehicle without first checking its CarFax report. A vehicle’s CarFax report is a vehicle history report which provides essential information about a vehicle’s history, history of previous owners, title information, service records, and accident reports.

Finding The Perfect Car Dealership For You

You can search for great dealerships by asking for referrals from friends, making searches online, etc. You might want to go with an experienced friend or family member when you find a good one.

Test Driving

Test drives are critical. Pick a day and drive the vehicle and as many different kinds of terrains as you can. This simple step can save you from making a huge mistake.

Common Mistakes New Drivers Should Avoid When Buying A Car

Not Shopping Around: Shopping around allows you to weigh different options and choose a better deal.
Not Negotiating For Better Prices: Do not be shy or afraid to haggle prices before you pay.
Allowing Pressure From Sellers: Most dealers try to put subtle pressure on you when they sense that you are inexperienced. It’s okay to walk away in such situations.
Emotional Buying: Remember to consider the more important things when making a choice; your needs, financial capacity, environment, etc. Avoid unnecessary debt.