Buying your first car is exciting, but it can also be challenging for a teen driver. If you can't pay cash for the car, you will have to figure out how to get financing. The following tips can help you when you are at the dealership trying to afford the car of your dreams.
Tip #1: Set a budget first
It's vital that you know your total budget when you walk into the dealership to look at cars. Unfortunately, this number isn't necessarily easy to figure out if you aren't paying cash for the vehicle. First, you need to determine how long you are willing to pay on a car. Generally, the shorter the loan term, the less overall interest you will pay. Also, if you are planning to start college in two years, you may want to have the car paid off before you start.
Once you have a general idea of the length of loan term you are willing to have, focus on the maximum amount of monthly payment you can afford after paying insurance and basic upkeep. Multiply this number by the number of months in the desired loan term. Now, check with your bank to see what the current average loan interest rate is on a car. Visit an online amortization calculator and punch in the loan term, monthly payment, and interest rate. The calculator will then provide you with the maximum car cost that you can afford.
Tip #2: Research your options
Now that you know how much car is in your budget, check local sources of car advertisements to see what types of cars fit within your cost criteria. You can check online classified sites, newspapers, and dealership advertisements to get an idea of what is available in your area. You may also want to check nearby cities and towns, since price can fluctuate depending on location and traveling a short distance from your hometown can sometimes result in better deals.
After assembling a list of possible cars by make, model and year, take some time to check a consumer guide to determine which of these options rate well for performance, safety, and gas mileage. You should also check with your insurance company to get advice on which ones are less expensive to ensure.
Tip #3: Ask for help
As a teen, you will most likely need a co-signer to get your auto loan. Parents or other family members are the best option. You want to choose a co-signer that has a good credit rating to ensure that you get the best loan rate. This person should also come to the dealership with you to help guide you through the negotiation and buying process, since their experience can be priceless.
Also, while dealerships can help you secure a loan, it's also a good idea to check with your own bank or your co-signer's bank. You can often get a lower interest rate or better loan terms by taking out a loan through a bank that you already do business with.
Contact a car dealership in your area to begin the process of buying your first car. To learn more, contact a company like Peterborough Chrysler Jeep Dodge dealership.