Buying your first car can be exciting and scary all at once. According to a survey from Cars.com, one in four millennials don’t feel they have the negotiating skills to buy a vehicle, and would rather have their parents help them. Whether millennials feel negotiating is stressful or they think they’ll be taken advantage of, it’s important that this generation of consumers knows how to prepare for the car buying process.
How to Buy Your First Car
Because many millennials are still adjusting to the real world, they’re opting to buy used rather than new as their first vehicle purchase. When you’re ready to buy a car, there are five steps you should take if you want to make the process as stress-free as possible:
- Do your research – Research the different makes, models, years, and trim levels you’re interested in before you head to any dealerships. Know what you need in a vehicle and what features are important to you. The more information you have, the easier the car buying process can be.
- View credit reports and score – Know where your credit stands and double check that your credit history is accurate. You’re entitled to a free copy of your credit report every 12 months from each of the three credit bureaus – Experian, Equifax, and TransUnion – at the website www.annualcreditreport.com. You can view your FICO credit score in a number of different. Certain credit card providers give cardholders access to their score for free, while you can buy it for a small fee from many different sources such as directly from the three national credit bureaus. Try to get your FICO credit score because it's the most common scoring model used by lenders.
- Calculate and budget – Using your personal finances, a calculator, or online tools like an auto loan calculator, budget and calculate how much vehicle you can afford. A good tip is to make multiple calculations using different loan terms so you can see how much interest you could be paying over each loan term.
- Prepare a down payment – On top of your car budget, make sure you have a reasonable down payment. Depending on the lender and your credit score, you may not be required to have one, but a down payment can make your monthly payment more affordable and reduce your interest expenses.
- Consider a cosigner – If you have little to no credit, you may be required to have a cosigner in order to get approved. Look up the requirements, and discuss this with the person you want as your cosigner.
Car Buying Negotiating Tips
Learning how to negotiate high-priced items like a vehicle can take some time to master. If you don’t have much experience, or are looking for some helpful tips, Edmunds has some advice that we think can help you:
- Have numbers ready – Print out a spreadsheet of the car you want with its wholesale and retail price from vehicle valuation sites such as NADA Guides. This gives you a leg up on the dealer if they try to negotiate a higher price than average.
- Choose your words wisely – Don’t just say what’s on your mind, think about what you’re going to say from the get-go. For example, open up negotiations by saying “I’m ready to buy a vehicle today if we’re able to reach an agreement on the price.” This is a confident and set opening that lets the dealership know you’re serious about the negotiation process.
- Start low – A great way to negotiate is by starting low on an asking price. This gives you the chance to negotiate closer to the lowest possible price and a better sense of control.
- Don’t stray from your word – The dealer is going to try and convince you to lean toward their deals and offers. If you know you aren’t interested, or don’t want to spend money on extras, don’t be afraid to say no. If the dealership is insistent or won’t come to an agreement you’re looking for, it’s okay to walk away.
- Nothing is binding until you sign – If you do come to an agreement, make sure you look at the sales contract closely. There are other fees the dealer won’t necessarily discuss such as sales tax, vehicle registration, and documentation fees. Remember, nothing is official until you sign the contract, so you can choose to walk away any time before then.
Ready to Find Financing?
Are you ready to start the car buying process, but aren’t sure where to start? Look no further than Auto Credit Express. We work with a nationwide network of special finance dealerships that are connected to lenders willing to help consumers dealing with credit issues, and we want to help connect you with a local dealer. To get started, simply fill out our free and secure auto loan request form.