Skip to main content
_FB_2018-Icons-finalized-cleaned-up_new_FB_2018-Icons-finalized-cleaned-up_newGroup 9
Back
Scroll to top

Buying Your First New Car: What to Know


It’s a moment to savor: getting your first vehicle, enjoying the new-car smell, taking pride in ownership.

But unless you paid cash, the lender who financed your car will generally hold the vehicle’s title until the loan is paid off. In all likelihood, we are talking many miles down the road.

So here are some things to consider before you sign on the dotted line and become obliged to make those payments.

Get a sense of the landscape. Car-buying trends—what buyers want (a low price, but not at any cost), how they shop (increasingly on mobile phones), how many test-drives (usually 2)—change every year.

Taking a moment at the outset of your search to learn what’s going on has 2 benefits: you see what other shoppers consider important, and you see what the dealer “knows” about you before you walk on the lot.

Choosing your car. Probably nothing is more important than selecting the right vehicle. In addition to budget considerations and style preferences, consider the model’s typical fuel costs and repair history.

A good, impartial resource for ratings and reliability is Consumer Reports.

Pricing information. Check online for resources to identify what the dealer paid—or what consumers in your area paid for the car you’re considering.

One such tool is the True Market Value feature at Edmunds.com.

Leasing vs. buying. You walk away with a new car either way, though there are pros and cons to each. For example, leasing means your payments and maintenance costs will likely be lower, but when the lease is done you own nothing.

Here’s a handy calculator you can experiment with.

Car-buying services. A reputable third party can handle negotiations on your behalf if you’d rather avoid the stress of dealing with the retail sales staff.

Two nonprofit organizations with strong bona fides are Consumer Reports and Consumers’ Checkbook.

If you choose to bargain for yourself, be prepared to walk away if the price exceeds what you can realistically afford or if you don’t trust the salespeople.

Financing. As a first-time new-car buyer, there’s a possibility you might not have a high credit score. Credit scores typically go a long way toward determining a lender’s terms—the higher your credit score, the kinder the terms, and vice versa.

If your credit score is low (all three of the credit bureaus off your score for free annually), consider holding off until you can build it up and qualify for better terms.

Length of the loan. The big plus of stretching out a loan is that your monthly payments will be lower. The big minus is that you are seriously adding to the total cost of the car by paying more in interest.

So it really pays to do the calculations upfront.

Insurance. Virtually every state obliges you to buy car insurance, so you will need to factor that outlay into overall costs of ownership. The actual amount will vary with the type of car as well as your age, gender, accident history and credit score, among other factors.

This is a pretty good time to buy a car: the price of gas is lower than it’s been in years, and interest rates remain low as well. When you decide it’s time, knowing the basics and doing your homework will help you make the best purchase.

Peter Lewis, NerdWallet

© Copyright 2016 NerdWallet, Inc. All Rights Reserved

Trending Topics

Personal Loan Rates in South Carolina

If you live in South Carolina and are looking for competitive personal loan rates,* visit a local First Bank for highly competitive rates and flexible terms. We’re dedicated to serving our customers and providing a variety...

NC Bank

If you are looking for one of the best North Carolina banks, consider a visit to your local First Bank. First Bank is an NC bank that is small enough to know you by name, but large enough to meet all of your banking needs....

Lowest Mortgage Rates High Point NC

Getting the lowest mortgage rate in High Point, North Carolina involves more than just shopping around. First, you need to know how to shop for the best rate. Shopping for Lowest Mortgage Rate in High Point, NC There are...

High Yield Savings Account – Lillington, NC

When the unexpected happens, it can help to have a little extra money put away. If you aren’t prepared, unexpected medical bills, job loss, or repairs can put a dent into your bank account and cause financial stress. First...

Small Business Loans in Wilmington, NC

Growing a business can be difficult but rewarding. Whether you are looking to build a new building for your business, move into an existing space, or purchase equipment, First Bank has the right small business loans in...

List of Banks Headquartered in North Carolina

The fact that North Carolina is home to a large number of banks might surprise you. Over the years, the Tar Heel state has become a hub for banks of all sizes. Many community banks, like First Bank,* are headquartered in...

Starting Small Business Loans For Women – South Carolina

If you are a women looking to open a business in South Carolina, First Bank can help you with your financial needs. We provide small business loans for women entrepreneurs looking to contribute to South Carolina’s growing...

Best Small Business Bank – Florence, SC

Florence, South Carolina boasts one of the best business climates in the southeast. The city of Florence is bustling with shops, restaurants, festivals, farmers markets, and much more. If you’re looking for a great place...

Small Business Loans Made Easy – First Bank of North Carolina

North Carolina is a smart choice for any entrepreneur looking to start a business. The state encourages its residents and visitors to shop local. Organizations like Shop Local Raleigh and Got To Be NC have popped up all...

Your Community Bank

If you live in North Carolina or South Carolina, you have a ton of banking options right outside your door. Large financial institutions may seem like your best option for banking services at first, but community banks...