For many Millennials looking to buy a vehicle, this will be their first time seriously breaking into the car market. Data shows that Millennials are happiest in cities, as opposed to smaller towns. A car typically isn’t a necessity in these locations. But people in every generation tend to need vehicles for different reasons.
Here’s what Millennials need to know when they’re going to get their first car:
- You should shop around and compare prices online. Millennials have a big advantage here because they tend to be one of the most tech-literate groups. It’s easy for them to quickly find and navigate various online resource for spec and price comparisons.
- Create a realistic, firm budget. No matter who you are, you have some form of budget. This is especially true for younger people who tend to have less money in savings. Determine what you’re comfortable paying every month, and don’t get persuaded into paying more than that. Even if you find your dream car, it will become a nightmare if it’s beyond your means. It’s important to think about the monthly payment, interest, down payment, and loan duration. These things will all determine the affordability of the purchase.
- Get a preapproval for a car loan. People who have never made a major purchase before might not understand how the preapproval process works. Essentially, you get in contact with a lender to determine a maximum amount they’re willing to loan you for a car. You’ll want to do this before going to the dealership, even if they offer on-site financing. While that sounds more convenient, the dealer is going to tack on extra percentage points to the interest rate, so they can make money.
- You should know your credit score before going into the financing process. This will allow you to get the best possible rate. If you have no credit, it’s also possible to get no credit history car loans through companies like RoadLoans. Be sure to check out online reviews of organizations specializing in these types of loans.
- You’ll need to insure your vehicle. Car insurance can vary drastically in price based on your history, the vehicle, and the company. Talk to a few insurance providers before you pull the trigger on buying anything.
What Should You Do When at the Dealership?
If you’re at the dealership, you should have already done a decent amount of preliminary research and have a pretty good idea about potential makes and models. Don’t just go aimlessly looking at cars if you haven’t done your homework. You’re going to end up with a bad deal, and something that doesn’t really fit your needs. Plus, a lot of model years have notorious issues. You won’t know about these unless you’ve done work ahead of time.
But once you’ve gotten these things out of the way, here’s what to do at the dealership:
- Thoroughly test drive the vehicle. You’ll want to take a test drive for several reasons. First, you’re going to be spending a lot of time in this car. Make sure it’s comfortable for you and has necessary features. But you also want to ensure the vehicle is in good shape. Give it some gas and test the brakes. If the salesperson is trying to rush you, that’s a red flag.
- Negotiate on the price. The dealer wants to make money. They do this by selling cars. It’s typically better for them to get you to buy a car at a slightly lower price than to miss out on a sale.
- Let the salesperson control your decisions. The person working at the car dealership has an agenda. They want to get rid of vehicles that have been sitting on their lot. This is why it’s important to have a solid plan before you show up to the dealership. Make sure you’re clear about the cars you want to see, and don’t agree to stray from that course.
- Drive off with a vehicle if you haven’t finalized financing. If a dealer lets you take home a car before you’ve secured your financing, it’s likely that you’ve just been had by a yo-yo financing scam. Shady dealers will say you’re approved at a certain rate, give you the car, then call up a few days later and say you need to bring it back and pay more or else face repossession. Getting pre-approval is the best way to avoid this.
There’s a lot to think about when in the market for a vehicle. But the process can seem even more confusing for people who’ve never done it before. As long as you take your time, and don’t let salespeople talk you into something you don’t really want, you’ll end up with a great vehicle.