One of the hardest things to do is to buy a new car as a first time buyer. You likely can’t pay for the whole thing out of pocket, you need to have a car to get to work and be independent, and the auto dealerships are just full of people who want to make a buck off of your ignorance. No one likes to be upselled while buying a lemon after all!
Thankfully, that is why we have a simple guide for first time car buyers. While it won’t walk you through the various tricks that auto dealers use, it will showcase some common scenarios to make sure that you know what you are getting into whenever you are buying a car for the first time.
I’m here to help you understand about how to manage your money when buying your car because I love helping people with their finances.
As you might know, I am a bestselling personal development author with about 2 million books sold globally.
Plus I founded a groundbreaking and therapist recommended video course called The Anxiety Cure.
I love sharing insights and strategies to empower people to be more happy and successful. (I even offer private business consulting!)
Coming up below are some running costs to keep in mind when you purchase a car.
Car Financing is often the normal way for first time car buyers to buy a car. A financial institution lends you the money you need to pay for the car, and in exchange, you pay the lender interest and fees to borrow that money over a number of months.
You can get the money from banks, credit unions, and even from some car dealerships (although the interest at the car dealership is much more expensive than other lenders). Still, once you have the car loan approved, you can make monthly payments until the car is paid off, paying back both the loan and any interest on it.
It’s in your best interest to get preapproved for a car loan, so you’ll know exactly what you can afford. However, every insurer will calculate wildly different preapproval amounts, meaning you’ll have to shop around for the best rate. On the other hand, you could use loan comparison sites, like MarketWatch, to estimate your potential preapproval amount based on your credit score and annual income.
Leasing a car lets you drive a car without buying it, which is useful if you need a car for a certain few tasks, but don’t plan to drive it everywhere. A lease is a long term rental, where you drive the car for a few years and then return the car to the dealership, all while paying a monthly lease payment as well as a down payment.
However, you will need excellent credit to justify being able to lease a car, which leads us to an all too common scenario that people get into when getting a car for the first time.
If you have no credit history, you might wonder how you can ever buy a car! The amount of credit score needed to qualify for a car loan is going to vary based on the lender and your financing, and different lenders may accept you with different scores.
If you have no credit history, you might want to spend some time building your credit score up to at least a score in the “fair” range. That score isn’t the greatest, and you will have to pay higher interest rates, but it can still put you in the driver’s seat and get you driving off the lot in a new car.
Learning how car financing works is another great way to build your credit and pay for your car at the same time, but if you have no credit history you might want to work on raising it before you look to make a big car purchase.
A lot of the questions you have about buying a car can be answered before you even step foot on the ground. Your research can help you create a game plan and then you can walk into a dealership with the ability to get the exact car and car insurance that you want. Then you will be able to hop behind the driver’s seat and experience all the benefits of owning a new car!
Plus I founded a groundbreaking and therapist recommended video course called The Anxiety Cure.
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