What to Know Before Buying Your First Vehicle

Buying a car is often one of the largest financial commitments a person can make and coupled with a market that can be tricky to navigate this can make buying your first vehicle particularly overwhelming. With prices rising for both used and new cars, it’s crucial to take a clear-eyed approach before taking the plunge.

If you’re unsure of where to start, some careful planning and brutally realistic budgeting can go a long way toward helping you secure your first vehicle without any second-thoughts.

Assessing your overall budget and affordability

Before dedicating your heart, and all of your money, to the car of your dreams, you should take a step back and brutally evaluate your current financial situation. To understand how much disposable income you can realistically set aside to cover the cost of a car, you should calculate your monthly income and subtract your essential expenses.

Be sure to stick to only your exact income, don’t stretch your finances too thin in the hope that your circumstances will change. A general rule of thumb is that your total vehicle costs, including outgoings such as insurance and maintenance, shouldn’t exceed 15% of your monthly income in order to avoid them becoming a strain on your finances.

Understanding the true cost of owning a car

If it’s your first time on a forecourt, it can be easy to focus solely on the sticker price and be swept away by, what seem to be, fantastic deals. Unfortunately, the reality is that ownership costs stretch far beyond the initial purchase and hidden fees or optional extras can quickly land you with a vehicle you can’t afford.

Used cars are a cheaper option upfront, though it’s important that you factor in the cost of maintenance and insurance. On the other hand, new cars might come with warranties and fewer immediate repairs, but can have significantly higher insurance premiums and cost more to purchase right out the gate.

When estimating your total monthly costs, research what vehicles from the same manufacturer and vehicles of a similar stature typically cost to insure and maintain. To help get a more accurate picture of potential costs, try seeking out local car groups or online message boards filled with experienced drivers.

Exploring finance options and current market conditions

If you’re not paying upfront in cash, you’ll likely consider financing options. Dealerships usually offer a range of finance plans, including personal loans, hire purchase agreements, and leasing options.

Whilst each option has it’s benefits and drawbacks, the best choice for yourself will depend on a combination of things including your vehicle choice, circumstances and financial standing. Consider each option carefully before locking yourself into any contractual agreement and don’t let yourself feel pressured into making any decisions you don’t feel confident in or ready for. Be sure to look beyond the sticker price, as more often than not a higher initial payment may save you money in the long run, as lower interest rates can help to reduce the overall cost- allowing you to allocate extra money towards repairs or servicing.

Before committing to a deal, check the current rate trends to make sure you’re not locking yourself into an agreement that may rise in cost further down the line. Enquire, and get it writing, whether the interest rate is locked or flexible, as a flexible rate could lead to you paying more than initially expected in the long run.

Planning for deposits, savings, and timing your purchase

It’s not just negotiating that can bring down the price of your vehicle, putting down a large upfront sum as a deposit can help lower your monthly payments, reducing the total amount you’ll pay over the term.

Planning for the timing of your purchase can lower the overall cost too. Car dealers may offer better deals at the end of the financial year or at the end of sales quarters when targets need to be met. Taking advantage of these windows can allow you secure the best possible deal. If you’re after a specific model, be sure to research when any newer ones are due to release, as dealerships often run deals to reduce levels of ‘older’ models.