8 Tips For First-Time Car Buyers
Buying a car for the first time is an exciting but intimidating experience. As a first-time car buyer, you might be asking yourself: Do I want a plug-in hybrid or another type of EV? Should I get a sedan or an SUV? What is MSRP? The long and short of it is, to make the best car-buying decision, it’s crucial to conduct a thorough research.
To help you along your car-buying journey, Mazda is sharing our favorite first-time car buyer tips to boost your confidence and readiness.
1. Determine your budget for monthly car payments and insurance and use that to establish your MSRP budget
Most people need to finance a new or new-to-you vehicle, and you want to ensure you don’t take on more debt than you can realistically manage. Creating a budget can help you understand what kind of monthly car payments you can afford in context with your other bills.
Determine what you can realistically afford every month — remembering that some of your budget will need to go toward insurance and maintenance in addition to the car payment. Then, use a car payment estimator to estimate what a realistic MSRP price is.
A good rule of thumb to help you budget for a new car is the 20/4/10 rule. This rule suggests that you should:
● Aim for a 20% down payment
● Opt for a repayment period of no more than four years
● Stick with a cost that’s less than 10% of your total income
Keep in mind that your prospective vehicle’s out-the-door price might include dealer fees and taxes. Here are a few cost factors to keep in mind when landing on your budget:
● Cost of monthly car payments
● Cost of insurance
● Cost of fuel
● Cost of maintenance & repairs
● Taxes, document fees, dealer fees
Note that you also have the option to lease vs. buy; provided you pay off a car you bought, the latter can help you keep costs down long-term, but leasing can be ideal for those who prefer to drive new cars and upgrade their vehicles every few years.
2. Decide which vehicle is right for you
Now, onto the fun part: deciding which car you’ll buy. With budget prohibiting some, to further narrow down your choices, you’ll need to think about what features are most important to you. Do you see yourself needing a vehicle with the cargo flexibility of a hatchback? Do you need a three-row SUV to bring along friends or family? Will you regularly go off-roading?
Whatever your needs are, it’s important to make a list of your must-haves so you can better evaluate the options available to you.
Here are a few questions to ask yourself when narrowing down your search:
● Do you prefer a new or a used car?
● How many people will ride in the car on a regular basis?
● How much interior space for passengers and cargo do you need?
● Are there any special features, including safety features, that are especially important to you?
● What will your regular driving conditions be, and will they be best served with AWD, 4WD, or 2WD?
● What are your towing needs?
● How long is your commute — does it fit within the range of a PHEV?
● Do you want a gas-powered vehicle or an EV?
Say you’ve narrowed down your options to two vehicles, a minivan vs. an SUV, or a sedan vs. a hatchback. You can then compare features and performance, (e.g., research how much cargo space is defined for different vehicle classes) before making your choice. You will also want to check out safety ratings from the Insurance Institute for Highway Safety (IIHS) and NHTSA (National Highway Traffic Safety Administration).
3. Save for a down payment
If you’re not planning on buying a car with cash, it’s important to save up for a down payment. Experts typically recommend that your down payment should cover at least 20% of the vehicle’s purchase price. But, if you can save up the money to make a larger down payment upfront, you can lower your monthly vehicle costs and save money overall.
Everyone’s financial situation is different, and you should always prioritize what works best for you and your immediate needs.
4. Check your credit score
The next thing you should do as a first-time car buyer is check your credit score. Generally speaking, a good credit score is 690 and up. The better your credit history, the more likely lenders will issue you a loan because you have an established record of creditworthiness. It’s important to ensure your credit history is in good shape before contacting a dealership. If you need to improve your credit score, here are a few ways you can do so:
● Pay down existing debt
● Check your credit reports for any errors and dispute them
● Make a habit of paying your bills on time each month
● Open a small-balance credit card you can pay off each month
Fixing a bad credit score will take time, but it’s possible with patience and effort.
If you don’t have a credit history yet, there are first-time car buyer programs that might help you finance a car. You can still get a car loan if your credit is less than stellar. Try shopping around with different lenders and credit unions to help you find the best loan for your budget.
5. Get pre-qualified for financing
Getting pre-qualified for financing before you visit the dealership allows you to gain an understanding of how much you can spend and removes the pressure of taking the dealership’s offer. You can also get a rough estimate of what your loan amount and interest rate will be.
To apply, here’s what you’ll need:
● Your address, name, and phone number
● Income documentation and housing costs
● How much you want to borrow
Having a pre-qualified rate also strengthens your negotiating power once you reach the dealership. You can typically apply on a lender’s website.
6. Locate a dealer
With your financials sorted, the next step is to search for a local dealership to begin the car-buying process. Dedicate some time to research the local dealers in your area by checking customer reviews and brand-forum websites. It’s a good idea to shop around at multiple dealerships to make sure you’re getting the best, most competitive price on your vehicle.
7. Take a test drive
Now that you’ve saved for a down payment, gotten prequalified for an auto loan, and located the dealer you’d like to visit, it’s time to test-drive vehicles you’re interested in.
Keep in mind that vehicles you may have picked out online might not meet all your expectations in real life, which is why it’s important to take at least 30 minutes to test-drive your prospective ride — preferably more, and multiple times. Check out our guide to test drives for a comprehensive list of what to check for.
At a minimum, try driving the vehicle through stop-and-go traffic, merging onto the highway, and cruising at highway speeds. This will not only give you a feel for how well the car handles, brakes, and accelerates, but also give you insight into any downsides you didn’t anticipate.
8. Negotiate the price
Though negotiating the price of a vehicle is a very common practice, it can still feel daunting. Use all the research you’ve done up to this point to advocate for the best possible deal. Sites like Kelley Blue Book can help you determine the value of the car you’re interested in, so you know ahead of time how flexible the price is. Online tutorials and car-shopping videos can help prepare you too.
When you head to the dealership for negotiations, make sure you have all the necessary paperwork, a clear grasp of your credit history, and be ready with pertinent questions. When negotiating, start with the price of the car. Only when that’s complete should you negotiate the out-the-door price that includes the sales tax, documentation fees, loan interest, down payment, and everything else. This puts you in a better position to stay within your budget.
When it's time to finalize the deal, stick to the agreed-upon amount firmly. It is important to get the car you want at a price you are happy with, so work with your dealer to ensure you walk away satisfied with the deal.
Takeaway tips for first-time car buyers
Here are a few more things to know before buying a car for the first time:
● Avoid telling the dealership what you’re looking to pay each month — doing so can put you at risk of accepting a seemingly low-cost deal with extended terms, resulting in excessively high interest payments throughout the loan’s duration.
● Don’t forget about other expenses beyond the out-the-door price, such as regular maintenance, insurance, and fuel costs.
● Consider paying for your vehicle in cash, if possible, if you have a low credit score as this can help you avoid high interest rates.
● Sometimes the best first car is a used car. If you’re taking the used car route, be sure to have the vehicle inspected by a trusted mechanic — especially if you’re purchasing it from a private party or it’s not Certified Pre-Owned (CPO).
● Take time to mull over your decision before signing — whether that’s taking 30 minutes or a whole day to deliberate the deal.
● As more vehicles offer advanced safety features and driver assistance technologies, go online and see how the vehicles you’re interested in score in the Insurance Institute for Highway Safety’s ratings.
● Research third-party extended warranties to see if they make sense to you. These can vary from dealer to dealer.
How Mazda makes it easy for first-time car buyers
Here at Mazda, we understand that buying a car for the first time is an important decision — that’s why we provide a suite of tools for first-time car buyers to shop with confidence. You can easily browse new and Certified Pre-Owned Mazda vehicles online from the comfort of your home.
To calculate costs associated with Mazda vehicles you’re interested in, simply enter the year, model, and trim package into our Payment Estimator. In addition to seeing monthly costs, first-time car buyers can view how much their down payment will be and their estimated APR, as well as other relevant variables.
If you’re ready to get behind the wheel, you can schedule a test drive using our digital scheduling tool by choosing the Mazda vehicle and package you’d like to test. After filling out your name, contact information, and desired test drive date, we put you in touch with a Mazda Dealer near you to get you on the road.
Finally, to find a dealer near you, simply input your zip code and radius and you’ll immediately see a list of the Mazda dealerships near you, simplifying your search process.
Shop new and Certified Pre-Owned Mazda vehicles
With a robust inventory of new and Certified Pre-Owned Mazda vehicles, first-time car buyers can easily find the perfect car for their needs.
Whether you’re interested in buying an EV or a traditional combustion engine vehicle, we have a wide range of models to fit your lifestyle. Find a dealer near you to begin your car-buying journey today.
This article is intended for general informational purposes only and is based on the latest competitive information available at the time of posting. Information herein is subject to change without notice and without Mazda incurring any obligations. Please review a variety of resources prior to making a purchasing decision. Visit Resource Center for more articles.