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Tips for Buying Your First Car

A few months ago, I had secured my first full-time job and it was time to look into a car. While I was extremely excited for this next stage of adulthood, I was stressed over what type of car to get and how much I should pay for it. After much research and price comparison, I ended up deciding on a Honda Civic. It was lightly used and about 3 years old, but was in great condition and while it’s not my absolute dream car, I know it’ll last me for a long time.

Having your own vehicle is both the most liberating and stressful thing you can ever experience in your adult life. Especially when buying your first car, it can be hard to know whether you’re making the best decision.

You don’t want to buy something that will have a major issue or even die within a few months. But you also don’t want to pour a bunch of money you don’t really have into something that is only depreciating every single day. A car is not an investment that will benefit you in the future, like real estate. A car will only lose its value with each passing second and will be worth nothing at the end of its life.

So understanding how to navigate car dealerships and their finance office will benefit not only your financial, but also your emotional, well-being.

Here are some simple tips and tricks for buying your first car.

1. Set a realistic budget

Before you can even dream about picking what car you want, you first have to set a strict budget. Here are some simple questions you need to ask yourself:

  • What do I need this car for?- Think about why you need this vehicle. If you need something reliable to get back and forth to work everyday, then maybe you need to consider a higher budget. If you only need this car to get groceries around town, then you could likely spend less.
  • What is the minimum amount you are willing to spend?- Going too low can mean you are buying a piece of garbage.
  • What is the maximum amount you are willing to spend?- This is probably the most important question to ask yourself and make sure you are very strict with this number.
  • Am I willing/able to negotiate?- It can be hard to negotiate car prices with a dealership these days. With technology, we can now price compare for virtually any commodity, meaning that most dealerships have already set the lowest price they can for that vehicle. But if you are able to negotiate, then you might be able to select a car with a slightly higher price than your budget allows.

Deciding on the price range for a vehicle is the first step and will dictate what kind of car you can buy and the quality of the vehicle.

2. Decide how you’ll pay for the car

There are a lot of different options for buying a vehicle. This can be one of the most expensive and largest purchases in a young person’s life- therefore car dealerships are willing to provide people with flexible options for payment. These options can include:

  • Leasing- This means you are essentially renting to use a brand new car for a specified period of time. If you agree on a lease, you will pay around 20% of the car’s value upfront and then will pay a monthly fee. After the 2 years are over, you can either renew the lease, or give the car back to the dealership. While this can be a great way to try out a new car before purchasing it, there are often restrictions to the lease. Usually, they will limit the total kilometres you can drive in a year with the vehicle, which can be restrictive if you commute.
  • Financing- This means you are slowly paying for the vehicle, with the intent to own it in the end. Financing requires you to have a loan with a bank and pay-off the car each month through an agreed upon payment amount. This can be a great way to own a car, without paying a large lump-sum upfront. However, this can also mean you are paying off the car in a longer period of time and will pay a larger price in the end, as interest is added to the fee each month.
  • Paying in full- Obviously, this method of payment means you’re buying the car in full price up-front. This saves you from large interest rates, but can leave your bank account lacking.

I personally paid a large sum upfront, financed the car for about two months and then paid the rest of the car off.

I didn’t want to part with such a large sum right off the bat, but once I had some more income saved up, I wanted to be done with paying the car. This saved me a lot on interest and also increased my credit score significantly.

3. Do research on makes, models and years

Once you have an idea on how you’ll likely pay for the car, it’s time for the fun part- picking the car you’ll buy.

Make sure to research what certain car brands are known for in terms of quality, reliability and safety. Just because a car company makes nice looking vehicles, doesn’t mean the car will fit your needs.

Look through consumer ratings as well- there are a large number of forums and consumer sites that can provide you with first-hand experiences other people have had with certain cars. This way, you can learn what others like and dislike about a certain make or model.

Finally, look through recall reports that you can find about specific makes, models and years that these vehicles were manufactured in. A Honda Civic manufactured in 2016 might be newer, but may also be known for the emergency brake malfunctioning. However, an older 2015 Honda Civic doesn’t have these problems.

Overall, try to keep an open mind and don’t be too quick to become loyal to a specific make or model. I thought a Chevrolet Cruze would be the best option for me and when I found poor reviews about used models, I was reluctant to change my mind on these cars. But I’m glad that I sucked it up and kept looking, as it saved me from any possible regret and heartache.

4. Price compare

Now that you’ve decided on a specific vehicle, it’s time to shop around for the best deal.

Don’t think you have to settle for cars within your geographic area. Be open to the idea that you might have to travel a couple of hours away to find the best price around. In the end, driving 2 hours there and back to get a new car will be worth it when you’ve just saved yourself $3,000.

There are a lot of great sites that you can use to find a great deal, or at least understand what a good deal might be for the specific car you want.

  • Kijiji– While I don’t always recommend buying a car from here (especially if you’re not confident in your ability to tell a scam apart from a deal), it can be a great place to understand what a reasonable price might be. Read descriptions to understand the condition of the car (has it been in an accident or not) and then you can learn how much your car should be based on the specific condition it’s in.
  • Autotrader– Use the tools on the left-hand side of the page to set the kilometres, age, and price range of the specific vehicle you’re searching for. This way, you can see exactly how many vehicles are available that meet your criteria and where you can purchase them from.

5. Shop from the right places

Private seller, dealership, independent dealership… there are a lot of different options for where you can purchase a car from. But really, when you’re new at buying cars and have little mechanical knowledge, buying from a dealership and getting a brand new or certified pre-owned vehicle is likely the best choice.

This way, you know exactly what you’re getting and you know the dealership isn’t trying to rip you off with a vehicle that is in poor condition. Obviously when it’s a new car, you know there is likely to be nothing wrong with the car. When you purchase certified pre-owned from a dealership, they also do everything in their power to restore the car to mint condition and they also know the entire history of the vehicle. That way, you’re getting great value for a reduced price.

Buying from an independent dealership may come with low prices, but it can also mean you’re leaving the lot with a pandora’s box of issues. Ever wonder why they’re selling a BMW for $6,000? It’s because that car has been in multiple accidents and likely will never drive the same. But they won’t tell you that.

Do yourself a favour, and either stick to a dealership, or bring your mechanically-savvy friend to check out a car you want to buy from a private seller.

6. Take your time and test drive

Once you contact a dealership about a specific car you’re interested in, it’s time to test-drive.

Take full advantage of the test-drive- drive it slow, drive it fast, take corners a little sharp, take a look at the outside and inside of the car while it’s parked in the lot. Do whatever you need to do to make sure this car is right for you and is in great condition.

Don’t be scared to bring up any imperfections you see on the car as well. If the paint is chipped on a specific spot but you’re otherwise very interested in the car, let the salesman know so they can do everything in their power to fix this issue before you pick the car up.

If you do test-drive the car and decide it’s not right for you, don’t be scared to ask about other inventory. You’re the one spending a small fortune for a car, so you have the right to take your time and try out multiple cars.

In the end, if you don’t like any of the cars that you test-drove, don’t feel pressured to buy any of them. The salesperson may contact you for a bit afterwards and ask whether you have come to a decision. Don’t be afraid to tell them that you’re taking your time or have found a better deal elsewhere. That’s just the nature of the business.

7. Stay strong in the finance office

Once you decide to buy your first car, now you have to brave the finance office. Unless you’re buying the car upfront, you will be required to go into the finance office and work out the deals of your financing contract.

From my personal experience, they will try to persuade you to take the longest financing period possible. Unless you fiscally cannot do anything shorter than the 52 months that they try to push, don’t fall into this trap.

It might seem really nice that you’re only paying $200 a month for your car, but when interest is an additional 5%, you’re paying way more for the car than you initially budgeted for. You’ve already set the maximum amount you’re willing to pay for your car, so keep that number in mind and be smart with financing. Do some calculations ahead of time and decide how long you need to finance your car for.

The finance office staffs people who are sweet-talkers- be strong and stand your ground.

8. Be smart with loan payments

Assuming you’re financing your vehicle and are facing monthly payments, it’s time to be smart with monthly loan payments.

A loan payment is something you should add into your budgeting plan as soon as possible. Keep this monthly amount in mind whenever you want to make discretionary payments and make it a priority when it comes to your finances. Missing a payment can be detrimental to your credit score and can set you further back.

As well, so long as your finance contract states this is okay, try to make lump-sum payments as often as possible.

Got a birthday cheque from grandma? Use it to make a car payment.

Nothing feels better than paying off your car earlier than planned and knowing that you owe the bank nothing!

In conclusion…

Buying your first car can be extremely rewarding. Having the skills and know-how to find a good deal and follow through with it is a valuable lifeskill that everyone should have.  Hopefully, this article gave you some helpful tips to navigate buying your first car and making it the most successful experience possible.

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  1. I’ve bought two cars in my life (one was my mom’s old car) and I would love to never have to relive the dealership experience. It wasn’t THAT bad, but I have to admit, I absolutely hate negotiating.

    • aleesha

      I feel that! I found it to be a little daunting…

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