Buying that first car can be very exciting, but it can also feel very overwhelming. From financing to to insurance to hoping that your research has helped you find the right vehicle, there are several decisions to make. We made this guide to try and break everything down step-by-step for first-time buyers in Goldsboro and Eastern North Carolina.
Determine Your Budget.
One of the first things you need to figure out as a first-time buyer is your monthly budget. This important step is often at least partially overlooked.
Your monthly budget isn’t just your vehicle’s monthly payment. It’s a bit more.
- Monthly Payment
- Insurance
- Gas
- Maintenance
- Registration/Taxes
A good rule of thumb is to try and keep your total car expenses under 15-20% of your monthly income. So when you are looking around for that first vehicle, don’t just shop on monthly payment alone. Keep those other factors like insurance, gas, and maintenance in mind.
Decide Between New vs Used.
Which vehicle makes the most sense for your budget and needs?
New Vehicle
- Warranty
- Newest Technology
- Lower Maintenance Early On
Used Vehicle
- Lower Payments
- Lower Insurance
- Slower Depreciation
Besides looking at new vs used, as a first-time buyer you also need to think about what vehicle type makes the most sense for you. A reliable used SUV, a fuel-efficient sedan, or maybe a practical truck. Every person is different and every person’s vehicle needs are different. Find what works best for you.
Understanding Credit Scores & Financing.
Can You Buy a Car with No Credit?
Yes, it is possible to purchase a vehicle with limited or no credit. The finance terms you receive will be reflective of your credit score/file. Your credit score is basically a numerical representation of how likely you are to repay a loan.
Your score, along with your credit file, can affect your interest rate (APR), down payment amount, loan term, and need for co-signer. All of these items play into that monthly budget we mentioned early. A 9.99% rate on a vehicle will give you a lower payment than a 19.99% rate on the same vehicle.
Choosing the Right Vehicle
The right vehicle for your neighbor, might not be the right vehicle for you. Your lifestyle and needs help to guide you in the direction.
Are You a Student?
- Compact Sedans
- Small SUVs
- affordable used cars
Family?
- SUVs
- Safety-Focused Vehicles
Are You a Commuter?
- Fuel-Efficient Models
- High Reliability
- Comfort
What to Look for During a Test Drive
During your test drive you want to make sure that the vehicle is comfortable to you but you also want to make sure it is safe.
Can you easily see out of it? Is the technology easy to use? Does it accelerate well? How are the brakes? Is it overly noisy? All of these little things help make up the big picture.
Ask your sales rep if the test drive will include highway speeds or just city/town speeds. Knowing how the vehicle will react in both situations is great information to have.
Don’t Forget the Vehicle History Report
Ask for that CARFAX report! If you are looking at a used vehicle there is a chance it has been involved in an accident. Honestly, most accidents are minor damage, which is usually cosmetic including dents or scratches to the vehicle body.
Common First-Time Buyer Mistakes
Nobody is perfect, and we all make mistakes. Some of the most common ones for first-time buyers are ones that can turn that first car into a less than perfect experience.
- Buying too much car
- Skipping the test drive
- Focusing just on the car payment
- Ignoring insurance costs
- Not researching
- Extending your loan term longer than needed
Every purchase cannot be perfect, but you can do your best to make sure you make the best decision for yourself, or your family.
FAQ
How much should I put down?
There is no perfect amount, but many lenders do like to see 10-20% of the amount financed as a down payment. If that is not something you can do, you can always plan to put down enough to cover your taxes and fees. (This varies depending on your state, and amount you are financing)
Can I buy with no credit?
Yes, though your terms and selection may be limited based on your credit profile.
How long should my loan term be?
This is partly determined by your credit profile and vehicle selection. However, you shouldn’t choose a term that puts you in a bind financially, or take a longer term when its really not needed.
Should I buy new or used first?
This really depends on the terms provided by the lender. Sometimes new vehicles can have factory sponsored rebates that can help a first-time buyer. However, many newer vehicles can carry a higher sales price and a larger depreciation at time of purchase. Used vehicles will depreciate as well, but their biggest depreciation happened when they were purchased for the first time. So it really depends on what fits your budget and needs the best.
Conclusion
We hope our first-time car buyer guide has helped shine a little bit of light on what you can expect buying your first car. The first-time auto loan can be a scary thing no matter if you are a first-time car buyer here in NC or if you have stumbled upon us from elsewhere, but, it doesn’t have to be.
If you are local to Goldsboro NC (or Eastern NC) and are looking for auto financing for your first vehicle, be sure to give us the opportunity to assist you.
