For many college students, buying a car is a right of passage, and it marks the first time you’re responsible for a large purchase, giving you a newfound sense of freedom and independence. But with that freedom comes responsibility—namely, the responsibility to choose a car that’s both affordable and reliable.
With that in mind, here are eight tips for college students buying their first car:
Do Your Research
This is the most crucial step in the process; albeit boring, it is indispensable. You need to know what kind of car you can afford, what kind of car is best for your needs, and what price you should expect to pay. You can do all this research online or talk to family and friends who have recently purchased cars. Either way, you must go into the process with as much information as possible.
Get Pre-Approved for a Loan
Once you know how much money you can realistically afford to spend on a car, it’s time to start shopping for financing. The best way to do this is to get pre-approved for an auto loan from your bank or credit union. This will give you a good idea of what interest rates you qualify for and give you some bargaining power when it comes time to negotiate with dealerships.
Set a Budget and Stick to It!
This may seem like a no-brainer, but it’s essential to set a budget for yourself before you start shopping for a car. Once you have your loan pre-approval, determine how much of a monthly payment you’re comfortable making. Then, Use an online payment calculator to estimate the car’s purchase price based on that payment. This will help keep you from overspending.
Don’t forget that the monthly payment for your car loan isn’t the only expense you must consider when purchasing a new car. You’ll need to set aside the funds for monthly payments on your insurance and roughly quarterly maintenance bills. Additionally, you should set aside a rainy day fund to cover significant repairs that aren’t paid for by insurance or the manufacturer’s warranty. Even if the majority of the repair is covered, you’ll still need to pay a deductible before the insurance kicks in.
Consider a Lease Instead of a Purchase.
If you’re not sure you’re ready to commit to owning a car outright, consider leasing instead. With leasing, you make monthly payments just like you would with a traditional loan, but at the end of the lease period—usually two or three years—you return the car to the dealership and start fresh with a new lease agreement.
Of course, leasing has some disadvantages (namely, higher monthly payments and mileage restrictions), but it’s still worth considering if you’re not ready to buy outright. Another benefit of leasing a car is that you can drive many vehicles before settling into one for good. This is great if you don’t want to deal with the long-term maintenance or depreciation associated with purchasing a car.
Shop Around and Compare Insurance Rates
Once you have financing and have decided whether to buy or lease, it’s time to start shopping around for insurance quotes. Be sure to compare rates from different insurers to get the best deal possible—especially if you’re a young driver with no prior insurance history. Auto insurance for college students tends to run higher than rates for older and more experienced drivers. Still, you can ask your agency about discounts and opportunities to reduce your rates.
Look for Manufacturer Incentives
Many manufacturers offer incentives on new car purchases, like cashback offers or low-interest financing, to sweeten the deal. These incentives can save thousands of dollars, so ask about them when negotiating with dealerships.
Don’t Be Afraid to Walk Away
If a dealer is giving you the runaround or trying to pressure you into a purchase, don’t be afraid to walk away. The power is in your hands and strengthened by your research. Plenty of other dealerships would be happy to have your business, so there’s no need to put up with poor treatment.
Test Drive Before You Buy
This should go without saying, but be sure to take any car you’re seriously considering for a test drive before you make a purchase. This will give you a good idea of how the car feels on the road and help you decide if it’s the right fit.
Follow these tips, and you’ll be sure to find the perfect car for your needs—and your budget.
Congrats on Your New Car
Purchasing your first car is a big decision that shouldn’t be taken lightly. By following these tips, you can rest assured that you’re making the best decision possible for your needs and budget. So enjoy the hunt—and good luck!