Buying Your First New Car? There’s a Lot to Ponder

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Well, look at you, moving up in the world. You’re doing well, life is pretty stable, and now’s the time to upgrade your ride. Trading up and buying your first new car is a big step in everyone’s life, and sometimes the entire process, from deciding what to buy to the dealership experience, seems daunting.

Buying Your First New Car: The Nitty Gritty

Research and knowledge goes a long way in smoothing the road ahead, and lucky for you, we’re here to help. Buying your first new car doesn’t have to be the challenge or stressful experience it’s made out to be. All you have to know is where to start.

Financing Your New Vehicle

Let’s get the most boring, yet necessary, step out of the way first. Unless you find yourself with tens of thousands in cold, hard cash burning a hole in your pocket, financing is a must when purchasing a new car.

You’ll need to take an honest assessment of your current finances (income, debt, bills) as well as costs for the foreseeable future. If a new house or dream vacation is in the cards sometime over the course of the car loan, you’ll want to consider those costs into the equation.

There are a couple of sources that will finance your ride: banks and credit unions and the dealership you purchase from. By and large, credit unions and banks will offer the best rates with the best terms. The ability to shop around for different loan offers also makes them the more attractive option.

You may find a hidden gem in dealership financing though. Maybe past credit issues make banks and credit unions unwilling to lend to you or luck is on your side and the dealer has a better offer.

It’s best to check out all financing options, whether it’s through a bank, credit union, or dealership to find the best deal. It could end up saving you thousands of dollars in the long run by putting in some legwork now.

Trading In the Past

This is the point where that old junker, with the clouded headlights, streaky wipers, and 112,000 abusive miles you’ve cursed for the past half-decade of daily commuting becomes the greatest, most reliable vehicle on the road that’ll fetch a premium price any day of the week.

It really shouldn’t be like that, but when evaluating your trade-in, sometimes the rose-tinted glasses do too much of the appraising. While it’d be great if the dealer saw the value in your car the way you do, approach your trade-in calculations with a level head.

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Using Kelley Blue Book, NADA guides, and the ads of similar cars on the used car market will give you a decent idea of what you can expect to get on your trade-in. However, these are only ballpark estimates. As every used car is different, your final number may be a shade higher or a bit lower than what the books suggest.

There’s also the option to take your chances on the open market and sell it on your own. But that’s a different article for a different time.

Whatever your trade-in may be worth, you’ll be able to use that money to contribute toward the cost of your new ride, which means less financing and more money under the mattress.

Choosing the Right Ride

Now that you have a good handle on what you can spend, the next step is to find out what’s available.

Fortunately, and unfortunately, there are a more options out there than you can shake a stick at. This catch-22 means there’s a vehicle just for you waiting on the dealer lot, but it also means there are thousands of other vehicles creating clutter.

To drown out the noise, first figure out what you need. By focusing on what matters most to you, the best choices will stand out, while the others fade into the background.

Example A: Here we have an active family of five with three kids younger than 6 years old. They prefer road trips to airports and expect to have their new vehicle around for a while. In this case, a vehicle with four doors, plenty of back seat room (maybe even a third row),  and great reliability is what they should be looking for.

Example B: After a few years of work experience, a 20-something is looking to trade their college jalopy in for something a little nicer. With a short commute, most shopping and hangouts nearby, and a few friends to haul around on weekends, a small crossover, like the Mazda CX-3, or a sporty sedan (Volvo S60, especially in Polestar trim) is the way to go.

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Example C: Just looking for a weekday commuter? Take a serious look at motorcycles. With excellent fuel mileage, low initial investment costs, and cheap maintenance (unless you’re buying Italian), motorcycles are great for this job. And biking in the rain or snow builds character. Just like walking to school uphill, both ways.

If a motorcycle isn’t an option, look to small, fuel efficient cars. The lack of size will let you squeeze into traffic and parking spaces otherwise unavailable (hooray compact spaces!), and the benefits of fuel efficiency are obvious.

With each of these examples, we narrowed down the list of available cars significantly. You’ll be able to focus on the details of a few different options instead of shopping the entire car market. Don’t be pricing out Corvettes if you need a 15-passenger Express or looking at the convertible when you need a hatchback.

These tips seem obvious, and they are, but the fundamentals are important and will set you up for a positive experience going forward. It’s also amazing that many car buyers skip these steps, focusing on big wheels and what the Jones’ bought the other day.

OK. You’re ready for financing, have an accurate expectation of what your trade-in is worth, and narrowed your search down to a few good vehicles. Next time, we’ll focus on the dealer experience, test drives, and purchasing your new car.