Purchasing your first car is an exciting time. However, you have to do some research before walking into the dealership. Inexperienced buyers often find less than ideal terms on their car. These tips will help ensure that you remain comfortable financially while enjoying your vehicle.
- Create a Budget
Before you start shopping around, make sure you have set up a budget. A sound financial strategy is purchasing a vehicle that only takes up 30% to 35% of your income. If your monthly premium costs more than 15% of your income, it’s likely too expensive. Look for a vehicle that aligns with your income level.
- Avoid Purchasing a Brand New Car, Especially the Latest Model
Brand new cars depreciate fast, and they are expensive to insure. A brand new car is also unlikely to fit the budget of a first-time car buyer. Used cars that are only a year or two old have similar value to new cars. There are very few differences between a new model and the previous version in most cases. Consider a lease trade-in. Lease trade-ins are great because the previous owner had to care for the vehicle and had a mileage limit. You could purchase a used car with low mileage and good maintenance.
- Look For a More Reasonable Car Insurance Rate
Once you purchase your first car, it is a good idea to assess your insurance options in a few months. If you have established a track record of continuous coverage, your insurance costs may decrease. Repeat the process and watch your rates continue to decline. Some variables that impact auto insurance coverage are the type of car you have, your neighborhood, and your driving record.
- Learn About Financing
Car dealerships make money through financing and insurance. If you go to the dealership with a good knowledge of financing, you can help the process run smoothly. Car dealerships generally add markups to financing, increasing your interest rate. Don’t rely on the dealership’s financing.
Consult with different banks and lenders. Get multiple offers and compare them. Analyze the interest rates and the duration of the loans carefully. This will help you figure out which interest rates you qualify for. If you purchase insurance from the dealership, it may be more expensive than if you shopped around and received quotes from multiple carriers in your area. Never go with the first option.
While purchasing a car is exciting, you must do your research. These tips can help you stay within your budget and avoid financial debt. If you have any questions or are looking to get auto insurance, our insurance experts at Young Insurance will assist you. Contact us today!