How to Buy a Car: A Step-by-Step Guide for First-Time Buyers
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Buying a car for the first time can seem overwhelming. There are many steps involved, and you’ll likely be parting with a chunk of money. Don’t let this scare you, though.
Our guide on how to buy a car will get you started on the right foot. Learn about how to buy a new car or used vehicle from dealers and private sellers, as well as the importance of researching car insurance before buying a car.
Research the Right Car Model for You
Consider many factors when choosing a car model, including:
- Lifestyle – How do you plan to use the car? Do you need a reliable commuter vehicle or something good for long-distance travel? How many people will typically be in the car?
- Location – Do you need a car with safety features for harsh winters? Should you prioritize fuel economy for city driving?
- Features – How much space do you need for seating and storage? Are you okay with the basics, or do you prefer comfortability and luxury features? What kinds of safety features do you want?
Set a Realistic Budget
Your budget will depend on your particular financial situation. Start by considering a vehicle's sale price and whether you can afford its monthly car payments, as well as other costs.
Budget for expenses such as sales tax, gas, maintenance, and annual fees, such as for registration and vehicle inspections. Do you have savings to use for emergency expenses? Should you prioritize a reliable car with affordable parts over a new car that will need more expensive repairs?
Car insurance is another primary expense. New car insurance is generally more expensive than used car insurance. However, safety features and economy models can reduce your rates.
Decide Between a New or Used Car
Decide whether you want to buy a new or used car.
New cars are likely to be more expensive, but used cars may be less reliable, especially if you can’t confirm the vehicle’s history. New cars are also more likely to have the latest features, while used cars may have less expensive repair costs.
Make the choice depending on your budget and personal preferences.
Explore Financing Options
If you don’t plan to buy a car with out-of-pocket funds, an auto loan or dealer financing may be an option. Dealers may be able to arrange financing for you through banks or other lenders. However, you can also compare options from banks yourself by getting quotes based on your credit score.
You can get a loan both when you’re buying from a dealer and when you’re buying from a private party. Either way, you’ll need to be sure you can afford the monthly payments for the entire loan term.
Tips for Negotiating with Dealerships
Dealers are usually experts on all things related to car buying and selling. Learning to negotiate with dealerships can help you reduce the purchase price or other expenses during the buying process. Use the following tips:
- Do plenty of research. Know the vehicle's market value. Look up a specific car’s vehicle identification number (VIN) to learn more about it.
- Start with a low but reasonable offer. The dealer is likely to come back with a high offer, which opens the door for finding a middle ground.
- Get pre-approved for financing. You won’t be relying on a specific dealer for financing, and you’ll be able to save on any dealer markups.
- Be prepared to walk away if you don’t get a deal that fits your budget.
Verifying Vehicle History and Condition for Used Cars
When learning how to buy a used car, you must know how to check the vehicle’s history and current condition. Start with a vehicle history report, which you can get with the car’s VIN. The report will let you see accident history, ownership history, odometer readings, and title information. The VIN can also help you search for recalls.
Consider asking the seller for maintenance records and bringing the car to a mechanic for a pre-purchase inspection.
Completing the Necessary Paperwork
Make the purchase official by filling out the required paperwork. Dealerships walk you through the process fairly easily and file paperwork on your behalf. You’ll need to sign the purchase agreement and paperwork related to title transfers.
When you buy a car from a private seller, you’ll need to sign the existing title after the seller has completed signing it over to you. You may also need to sign a bill of sale with all the details related to the transaction, such as vehicle information, buyer and seller information, odometer reading, and purchase price.
You can then bring your title, bill of sale, proof of insurance, and other required documents to your DMV, town clerk, or county office, depending on where you live.
How long does it take to buy a car? It could take as little as a couple of hours at a dealership to a few weeks doing research, looking for financing, or meeting with private sellers.
Compare Insurance Quotes for Best Rates and Coverage
It’s important to research insurance when buying a new car. Insurance options and rates can vary by location, driver profile, and vehicle information. Use EverQuote’s free online comparison tool to compare custom quotes today.