If you're thinking about buying or leasing your first car, you may not know exactly where to start. While you may want to head straight for a dealership, that's typically not the best first move.
In this post, we'll cover ten things first-time car owners need to know about the pros and cons of buying versus leasing, how to get the best deal possible, and ways to pay for your new ride.
1. Never go car shopping until you know what you can afford.
Before you start shopping for a car, it's critical to decide how much car you can afford. A good rule of thumb is to keep your car payment at no more than 10% of your net pay. So, if your take-home pay is $3,800 per month, your car payment shouldn't exceed $380.
You can get help crunching the numbers by using a Car Loan Payment Calculator. Input different terms and loan amounts to see how it affects your payment. But remember that you'll also have other expenses to cover, such as fuel, power, insurance, and maintenance not covered by a warranty.
ALSO READ: 8 Best Budgeting and Personal Finance Tools
2. Your credit plays a significant role in your monthly payment.
Once you have a price range in mind for your vehicle, checking your credit is a good idea. Auto lenders rely on credit when setting your loan's interest rate offer. The better your credit, the lower your interest rate will be.
If you have no or poor credit, you may get turned down for a loan or get quoted a relatively high interest rate. With a higher interest rate, you'll have higher monthly payments. That means you may need to buy or lease a less expensive vehicle or save up enough cash to avoid taking out a loan altogether.
Auto lenders rely on credit when setting your loan's interest rate offer. The better your credit, the lower your interest rate will be.
And if you have good or excellent credit, you'll qualify for competitive interest rates and lower monthly payments. So, if your credit isn't in good shape right now, it's worth waiting to get a car loan or lease until you build or rebuild it.
3. Car reviews are critical to consider.
While you might be dreaming about buying or leasing the best-looking car, be sure to browse reviews on popular automotive sites. Vehicles have different ratings based on features such as safety, reliability, resale value, gas mileage, recalls, and handling.
Make sure a potential vehicle will fit your priorities, such...
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