Thinking about buying your first car? If you're new to the car buying process you might be a bit worried about what you can expect. Here is a suggested process to follow when buying a car.
Step 1: Look at your budget (or, make a budget if you don't have one.)
Before you even head to the car lot, you'll need to do some homework to make sure you can afford the car payment. If you don't already have a budget, now is the time to create one. List all of your income at the top, followed by all your expenses. Everything you spend money on during the course of an average month should be included, even "fun" expenses like money for evenings out or your morning coffee. You may find it helpful to also journal all of your expenses for a month or two, if you're not really sure where your money goes.
Step 2: Research the car.
Once you have an idea of your budget, the next step is to research your car. Keep in mind how you will be using the car, how many people on average will be travelling with you, and what features are important to you. Remember that when you budget for your car, you'll need to not only allot money for the car loan payments, but you'll also need to budget for gas and regular maintenance, such as oil changes.
Step 3: Shop for the car loan.
Now that you have an idea of what kind of car you want, and what price you can afford, you should begin shopping for car loans. Most dealers have onsite financial departments, but by no means is this your only option. You may also find options for financing through your local bank or credit union. Interest rates can vary greatly among lenders, so it's worth it to shop around and get a few different options for your car loan.
Step 4: Visit the car lot.
You might be surprised at the amount of research that should be done before going to the car lot, but this is so that you get the best deal possible. Car salesmen are quite good at turning car buying into an emotional process. By doing your homework in advance, you'll be able to lead with your head rather than your heart.