Your Guide to Buying a Car for the First Time

Determine how much you can afford, what to test drive, and how to get a good deal.

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Buying a car for the first time can seem like a challenge. While purchasing a vehicle can be time-consuming and expensive, you can help make the process easier with research. This guide will walk you through some of the important steps of the process, including figuring out how much you can afford, identifying car models to test drive, and getting a good deal on your purchase. Even if you've bought a car before, maybe it's been a while. In that case, this guide may be a useful refresher.

Step 1: Determine Your Budget

There's a lot more to the cost of a car than its asking price. Though shrewd negotiators can save thousands, there are additional necessary costs that pop up beyond what you see on the listed price. These include state and local taxes, registration fees, insurance, and even parking permits, which can slice into your budget.

Few car buyers pay in full. Most finance or lease instead, which spreads payments out for easier monthly budgeting. Financing typically incurs interest payments, while leasing means you will have to return the car at a set date. What you can afford will depend on your budget and your comfort level. You'll want to consider both your current and future finances.

Some questions to ask yourself include:

  • How much can I afford now?
  • How much of a down payment can I comfortably afford?
  • How stable is my income and can it likely sustain the course of a loan or lease?
  • What interest payment rate am I comfortable paying?
  • How much more will I owe in taxes, registration, gas, maintenance, and insurance on an annual basis?

When buying a car for the first time, only you can determine what you're comfortable with spending. Consider doing a bit of math to make sure you can afford both a car and your living expenses over the life of the loan.

Step 2: Check Your Credit Score and Get Pre-Qualified

If you plan to finance your first car, you'll want to check that your credit score will qualify for a low financing rate. Many banks provide credit score reports for you, though you can also use online resources to obtain your report for free. Next, you may be able to get pre-qualified to finance a car based on your self-reported income and credit score. Getting pre-qualified usually does not impact your credit score, so you can safely and quickly confirm the type of loan offered to you.

Step 3: Narrow Your Search

There are may different kinds of cars out there, whether you're shopping for a new or used model. With your budget set, you can hone your shopping list. Some shoppers gravitate toward SUVs, though a sedan, hatchback, wagon, or minivan can offer better fuel economy, a lower price point, and even more driving fun.

Ask yourself:

  • Do you truly need something with four-wheel drive?
  • Is the increased utility of an SUV or a pickup truck something you'll use often?
  • A convertible or sports car sounds fun, but is it practical for your needs?

Consider where you live and the typical weather you deal with. You also may want to find a balance between fun and practical. It's generally best to cast a wide net, so even if there's one particular model that piques your interest, looking at its competitors may open up more possibilities.

Step 4: Start Shopping

With a stronger sense of what you're looking for and how it can fit into your budget, it's time to start shopping. You can call car dealers, find information online, or walk directly into dealerships that sell the car models you're seeking. It's often best to contact more than one dealer to compare prices. You definitely don't have to buy your first car from the dealer closest to where you live or work. Some shoppers will even look in different cities or states.

Visiting a dealer is typically less stressful if you work out a few details ahead of time online or over the phone. Sharing basic information about what you're seeking (the model and any must-have features) can save you time before you go for a test drive. Some dealers will even bring a vehicle to you for an extended, all-day test drive. Once you're behind the wheel, make sure you feel comfortable in the seat and have good outward visibility.

From there, you'll want to ask yourself the following questions:

  • Are the controls easy to operate?
  • Is the car easy to drive?Is it comfortable to drive on the highway?
  • How confident do you feel in traffic or on a winding road?

If you're looking at a used car, it's a good idea to have an independent pre-purchase inspection performed to help ensure that the car is in good shape, with no pressing needs or evidence of major prior repairs. A local garage or another car dealer can provide this service, which may cost an hour or two in labor fees.

Additionally, a vehicle history report can show you where the car was registered and whether it was previously wrecked or damaged. If you're buying a used car from a private party, you'll likely want to consider a pre-purchase inspection. Take ample time to consider your car purchase before agreeing to buy a new vehicle. It's a big financial commitment that you may not want to rush.

Step 5: Negotiate

Once you've picked the car you want, you can get an idea of what you should actually pay for it by searching for similar listings online and comparing prices, mileage, and so on. Dealers and shoppers sometimes prefer to look at payments rather than the final price, though it's worth remembering that low monthly payments spread out over a long time can be a steeper commitment than you think. Look closely at the paperwork prepared by the dealership's finance department. Some dealers will charge extra fees to cover paperwork or as a "market adjustment" for certain in-demand models. Dealers are required to disclose every fee or add-on, so read closely, don't be afraid to ask for discounts, or consider visiting another dealership for a better deal.

This site is for educational purposes only. The third parties listed are not affiliated with Capital One and are solely responsible for their opinions, products and services. Capital One does not provide, endorse or guarantee any third-party product, service, information or recommendation listed above. The information presented in this article is believed to be accurate at the time of publication, but is subject to change. The images shown are for illustration purposes only and may not be an exact representation of the product. The material provided on this site is not intended to provide legal, investment, or financial advice or to indicate the availability or suitability of any Capital One product or service to your unique circumstances. For specific advice about your unique circumstances, you may wish to consult a qualified professional.
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Andrew Ganz
Andrew Ganz has had cars in his blood ever since he gnawed the paint off of a diecast model as a toddler. After growing up in Dallas, Texas, he earned a journalism degree, worked in public relations for two manufacturers, and served as an editor for a luxury-lifestyle print publication and several well-known automotive websites. In his free time, Andrew loves exploring the Rocky Mountains' best back roads—when he’s not browsing ads for his next car purchase.