Tips on Buying Your First Car

AIADA has compiled a list of some of the main components of purchasing or leasing a new or used vehicle. We encourage you to utilize these tips and to share them with others.

Buying a new car can be an overwhelming experience for many reasons, but equipping yourself with the necessary knowledge regarding the process can help you come away from the dealership with all that you bargained for and more.

Gain knowledge about the process of buying a car

There are a number of free resources available today for individuals thinking about purchasing a car, whether new or used. Most of these resources break down the process into three main components: the price of the vehicle, the dealership’s finance and insurance policies, and the value of your trade-in. It is important to remember as a consumer that all three of these components are negotiable.

Shop and negotiate the price. Always try and negotiate your price, never stop with the price listed on the car’s window sticker. Go to several dealerships and spend some time looking at, sitting in and test-driving the car makes and models you are interested in to ensure you get the best deal possible before committing yourself to a particular vehicle. Understand the F&I process. Dealership finance and insurance processes can be very complex and difficult to understand. It is essential that buyers become well-acquainted with these procedures to ensure their equal and adequate participation in negotiating the terms of the purchase. Many automakers offer generous incentives for first-time car buyers so if you fall under this category it may be of interest to you to discover which nameplates offer which incentives. Cars.com provides a comprehensive listing of some of these incentive programs as well as accompanying links to the automakers’ websites. Research trade-in values. Trade-in values vary from one dealership to the next depending on a variety of factors. To obtain an estimate on the retail price of your trade-in consult ACTUAL USED CAR PRICE GUIDE; Kelly Blue Book or Edmunds.com, which are industry stand-bys that can tell you quite nearly what your vehicle is worth based on the make, model, year, and vehicle maintenance history.

Choose a car that’s right for you

Before making a big investment like buying a car, you should fully shop the price in addition to determining how the car will be used and the options you would like included with the vehicle. There are scores of vehicles to choose from, don’t stop your search with the first one that catches your eye.

Know the vehicle’s fuel economy

Always look at the vehicle’s fuel economy. Today’s wide-selection of vehicles run the gamut from “gas-guzzling” to emissions free. Do a thorough read-through of the literature on the vehicle’s gas mileage during city and highway driving, depending on where you plan on driving most often. Larger pickups and SUVs tend to have lower gas mileage, while hybrids and electric cars running at least in part with alternative fuel sources tend to have higher gas mileage. Diesel-powered engines are also starting to make a comeback. In the U.S., Volkswagen and Mercedes both sell diesel versions of their vehicles which claim to have higher fuel economy and cleaner burning engines than diesels of the past. Because gas prices have reached record highs recently it is a good idea to research this factor thoroughly if you are on a restricted budget. Many automakers, due to recent market pressures, have released or plan to release hybrid versions of cars, trucks and SUV models in the near future.

Examine your budget

Owning a car comes with many additional financial responsibilities. In addition to the amount you are required to put down at the time of purchase you must take into account monthly payments with interest, the cost of car insurance, regular maintenance and gas – which has most recently reached record levels – parking fees, state registration fees, and in some cases car tax. All these factors should be taken into consideration ahead of time so you are well aware of what you can and can’t afford. Ask yourself – will the vehicle be used primarily for business or personal travel? According to the IRS, if you use a car for business purposes, you are entitled to a tax deduction either for the standard mileage rate or the actual expenses incurred while on business, such as gas, repairs, tires, insurance, registration fees, licenses, and lease payments.

Choosing between new or used

There is usually a big difference in price between new and used vehicles. The ultimate decision rests with you based on the kind of car you are looking for and the price range you have to work within. When thinking used, it is important to make sure the vehicle you are purchasing is in good condition. Most dealerships, if they sell new models of the nameplate, will have the used car certified, usually noted by a sticker in the vehicle’s window with the words “certified pre-owned,” meaning it has passed the automaker’s seal of approval for quality care inspection. In addition, if the vehicle is “certified” and breaks down while it is still under the warranty repairs will be done free of charge. If buying a used vehicle away from the lot, then do a check on past maintenance records to make sure the seller isn’t hiding any major defects – these records are available at Carfax.com by entering the vehicle’s VIN number, usually located on the front dashboard.

Determining whether to lease or buy

There are many free resources you can use to help find a vehicle, such as Edmunds.com or Cars.com. At both sites you will find a lot of information on vehicles in your price range, both new and used. You can even locate vehicles on sale in your area by doing a simple location search. Leasing is different than owning. Owning means that when your payments end, you own property. Leasing is renting a vehicle for a long time, and then deciding whether or not to purchase the vehicle for which you have already paid thousands of dollars, lease again, or buy another vehicle. If you don’t keep vehicles long, or you like to have a vehicle you can’t afford, you should lease; if you like to hold on to your car for 5-10 years, you should buy.

Obtain a copy of your personal credit report and driving record

Much of what determines your interest rate on a new or used vehicle as well as your rate of insurance relies on a positive credit history and clean driving record. It is to your advantage to establish and maintain a positive personal credit rating and a clean driving record. Before negotiating a price for a vehicle, you should be well aware of your credit standing. This information is accessible online via any of the national credit bureaus including Equifax, Experian, and TransUnion. In addition, you should be well aware of any driving violations you may have accrued over the years. Driving records can be obtained from your local police station or state-of- residence government website. These materials will better help you predict any possible obstacles lying in the way of purchasing a new car under a specified budget.

Research costs of maintaining the vehicle

Maintaining a car is very expensive. Aside from the regular routine maintenance, parts on some vehicles can be extremely costly in addition to the high hourly labor fees. Before purchasing a car, you should find out costs of typical repairs for your particular vehicle of interest.

Locate a trusting and cost-effective insurance agency Insurance can be a very costly expenditure depending on your age, driving record and personal credit report. Whatever company you decide to go with, you should make sure you obtain quality coverage. Recently, some of the nation’s largest auto insurance agencies have expanded the list of factors that go into determining a driver’s insurance rate. Being aware of these factors, makes it easier to expect the rate a particular insurance company is willing to offer you. Doing so, will help you keep your costs down in the future in case you decide to change insurance companies for any reason. A highly competitive component, the insurance agency should be well shopped. Washington Consumers’ Checkbook, a Washington D.C. magazine that surveys goods and services in the area, conducted a survey recently of auto insurers in and around Washington. After doing some comparison-shopping at over twelve active insurance carriers in the Washington area, and presenting them with four combinations of vehicles and drivers, the magazine found wide differences in prices quoted for virtually the same drivers in exactly the same situation. The results demonstrated that in some instances, the highest price quote was quadruple the lowest.

Make sure the car you purchase has been checked over thoroughly

Before you leave the dealership with your new ride, make sure that you are getting what you paid for. If you paid for a sun roof and power windows and locks, make certain they are properly installed in your vehicle. Always have a used car inspected by the dealership or if not from the lot, a qualified mechanic you can trust, before deciding to purchase it. As aforementioned, “certified pre-owned” vehicles have passed rigid quality care inspections and are covered if any breakdowns occur while under warranty.

Use the resources available to you

There exists a plethora of information on how to purchase a car and what to know before visiting the dealership. Edmunds.com, Carfax.com, and Motor Trend magazine are just a few examples of sources that can direct you to helpful tips on choosing the car that’s right for you, predicting total costs, and locating good deals. One can never know too much prior to making a decision on purchasing a car.

Examine the vehicle’s safety features

Safety has become a vital issue for motorists as America’s roadways are becoming increasingly more populated every year. Investing in added vehicle safety features can save your life as well as reduce the price of insurance for your vehicle. Nowadays automobiles come equipped with a variety of safety features including, child safety seats and head restraints that extend from the vehicle’s seats, advanced safety belts, dual airbags, side-curtains, and high-tech mechanical systems such as anti-lock brakes, day-time running lights, and tire traction control systems.

Don’t be intimidated; Ask plenty of questions

Like buying a home or choosing a university, purchasing a car can be an overwhelming step involving many important decisions. As long as you take the opportunity to educate yourself on the process, you should not fear taking this step. Most dealers understand your needs when you make them known and will do what they can to help you make an appropriate decision based on your needs. Be sure to ask plenty of questions so you are fully aware of what your package involves, and remember to shop around.