The Thrill of That First Car

There is nothing quite as monumental as your first car purchase ...Well, maybe your wedding day or the birth of your children or your first home purchase. But, the first vehicle is pretty high atop the list of great firsts.

It is easy to get lost in the moment as you shop for your car. So, before you make an impulsive buying decision, there are several important matters to review to prepare you for the car buying process.

1. Budget Have you penciled out your budget (or worked it out on your personal financial manager)? Your first step in the car-shopping bonanza is your budget. Do not stretch your finances too thin.
2. Shop online You can get a good idea of what is available and the potential costs of the vehicles you are eyeing.
3. Outside Costs Consider the insurance and maintenance costs. High performance cars not only come with a higher sticker price, but high maintenance costs and insurance premiums, as well. Conduct your research before you buy so you are not stuck with unexpectedly astronomical expenses.
4. Pre-approved Loans vs Dealer Financing Understand the difference between a loan pre-approval and dealer financing. Every car dealership has a finance department that is the final stop in the purchase process. All new car buyers must understand this is not your only finance option. It is frequently more prudent to shop around to your credit union or other financial institution. In many instances, they will pre-approve you for a specific loan amount and rate. In addition to obtaining a competitive loan rate, you know exactly how much you can pay for your new car, giving you much more buying power.
5. Registration Most dealerships will handle your tags and title for you - but not all. You may need to visit your DMV to get the title in your name and to order the tags.
6. Counsel You may want to invite an experienced car buyer to help with the process. They may be able to fend off any high-pressure sales tactics and answer questions before they occur.
7. Warranty Almost all new and many used vehicles come with a standard warranty. The dealer's finance manager will likely offer you an extended warranty product. Similar products are available from various financial institutions -- often for a bit lower price.

The bottom line -- do your homework. Do not buy the first vehicle you see. The salesman does not want you to leave the dealership, but they know most consumers shop around.

Good luck — and happy car hunting.

Categories: First Car Loans Budget Goals Warranty