Buying your first car can be exciting, but there's a lot to manage—so we’ve assembled some advice that should make buying your first car a successful and satisfying adventure.
We can’t tell you exactly what kind of car to buy (everyone’s situation is different), but we know that planning ahead can help make the whole process easier—and help ensure you end up with a car that fits your needs and budget.
Here are some important things to keep in mind when buying your first car:
1. Be honest about your needs
A fancy sports car for very snowy weather? A big SUV for a train station commuter? Evaluate your lifestyle, the driving conditions you’ll face most often and your budget—doing so honestly is a great first step toward finding the right car.
2. Set a reasonable budget
When buying your first car, it’s easy to forget all the costs of ownership beyond the monthly payment itself. Be sure to factor maintenance, insurance, gas and repair costs into your budget (you can use the Bank of America car loan calculator to help you run the numbers). Knowing how much you will need every month for your new car will help you decide what to buy. Learn more about the true cost of owning a car
3. Know your credit score
Your credit score will help determine the interest rate you’ll pay on a car loan (better credit can help earn you a more favorable interest rate), which in turn will affect your overall car-buying budget. You can visit annualcreditreport.com for a free credit report layer and obtain your credit score by purchasing it from one of the big 3 credit reporting agencies: Experian layer, Equifax layer or TransUnion layer
4. Make a down payment
Buying a car typically doesn’t require a down payment, but making one is usually a good idea: You won’t have to borrow as much and your monthly payment will be lower (for every $1,000 you put down, your monthly car payment drops by about $20). Use our car payment calculator to see how a down payment can impact your monthly car loan payment.
5. Apply for a loan
Shopping for a car loan before shopping for a car may seem counterintuitive, but it's a great step to take. You'll have an idea of how much you can borrow (and at what interest rate), which means you won't need to make financing decisions on the fly at the dealership. Start at your bank or credit union, then shop around to make sure you get the best rate. You can apply online for an auto loan (with no application fee) and, if approved, receive loan information and an interest rate quote almost immediately.
6. Shop around
Buying your first car is a lot easier for you than it was for your parents. For example, online search tools will give you access to a broad range of cars in your price range that meet your needs. You may also find it helpful to search Bank of America’s dealer network.
7. Take a test drive
You wouldn’t buy a dress or a suit without trying it on, right? Same thing with a car: Once you've identified a few cars that look good on paper and on the lot, take them for test drives to see how they perform on the road and how you feel in the car.
8. Get the data
If you’re looking at new cars, ask multiple dealers to quote you a price. If you're looking at used cars, be sure to ask for a Carfax report, which provides detail on a used vehicle's history including any accidents it's been involved in.
9. Close the deal
You've done your research, you know what you want and you have your financing in place. When it comes time to negotiate the deal, you're in control. Before you sign, though, be sure you understand the terms of any financing or warranty agreement.
Ready to get started? Compare today's auto loan rates from Bank of America.