This week we bring you five Car Pro tips for first-time car buyers.
1. Research vehicles both online and offline.
Online research is a great way to start your car shopping, but remember, don’t take everything you read on the internet as gospel. Sure, reading through comments and reviews from peers can help, but it is not the whole story. You can find both good and bad things online about every vehicle out there.
We’re fans of Edmunds for research, but again, much of what you find is opinion, not fact. Some studies suggest most consumers spend five hours researching cars before they go look. Meanwhile, a 2013 Polk Automotive Study found that young people spent 17 hours researching before making a purchase decision.
2. Nothing can replace going to a dealership.
Ask questions and actually test drive cars on your list. Get a feel for the car and don’t rush through it. Assess whether it meets your needs. Another great place to go is to an auto show. You can check out our Guide to Auto Shows here.
3. Come up with a budget early on.
No more than 15 percent of your monthly net pay should go towards your car payment. Use a loan calculator to do the math on what you can afford. Also, realize too that first-time buyers typically pay a higher interest rate, especially those with credit issues. So take that into effect when doing your budget.
Also, understand that there could be optional maintenance plans and other optional add-on costs offered while finalizing your purchase, but it’s your choice whether to tack those on to the final price. So know your bottom line and stick to it. Don’t forget about insurance and other ownership costs.
4. Consider a co-signer.
It often gets first-time buyers a lower interest rate and payment. To be safe, figure a 5% APR interest rate on new, and 7% APR on used, which are fairly average rates for those without established credit. (You’ll want to know your credit score before you head to a dealer so there are no surprises.)
There are risks for the person who co-signs and you can read about those here.
5. Don’t get locked into an extremely long loan.
While it may be tempting for the lower payment, we don’t recommend loans longer than 60 months for a new car. Forty-eight months for used or certified pre-owned. Longer term loans are the norm these days, Ford is among automakers that now even stretches it out to a whopping 84-months. But remember, the longer the loan, the harder it is to get out of a car.