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Your first car

When going through the process of buying a car it’s important to take your time. Don’t be in a rush. That anticipation and excitement is what salespeople thrive on. It’s why they want you to test drive the car, so they can pitch you its features as you’re having an emotional experience. Be methodical, deliberate, and measured.

Use these tips to guide you through the process:

New vs. used

While used cars will obviously be less expensive than their new counterparts, here are a few key factors to help you decide:

Warranty: New cars typically offer a manufacturer’s warranty to provide peace of mind against major repairs and breakdowns

Repairs: While both new and used cars are susceptible to necessary repairs over time, generally the older a vehicle the more repairs it will need

Depreciation: A car loses value the minute it leaves the lot, so purchasing a model that is a few years old, may offer substantial cost savings


How to decide on which model to buy

Resale: Luxury brands and cars with a reputation for quality tend to depreciate slower than other models

Day-to-day usage: Buy the type of car based on how you actually plan to use it, rather than what you may do every once in a while (e.g. off-roading)

Buy vs. lease: When you buy, after the loan is paid off, the car becomes yours free and clear. However, if you plan on changing your car every few years, leasing could make that relatively affordable.


The 0% financing myth

Many dealers offer 0% financing specials to get potential buyers in the doors. However, the reality is that unless you have near perfect credit,most people won’t qualify for this. They can then turn around and offer an alternative financing package that may or may not be your best option. It’s best to do your research before hand and secure financing before you ever step onto the car lot.

These 0% financing loans are also usually short-term. If the dealer is offering 0% financing over the life of the loan, expect it to be no more than three years. This means a much higher payment than you’d have on a five- or seven-year loan. Additionally, many 0% financing offers only cover part of the life of the loan – usually six months. After that, you’ll be paying more in interest.


Financing tips

Dealerships: Although it may be more convenient to get financing through your dealership, it’s usually beneficial to shop around and also get rates from your local financial institution

Pre-approval: Unless you come in with a pre-approval, you’re almost always better off if you make financing the last part of your transaction with the dealership

Guaranteed Asset Protection (GAP): This insurance covers the difference between the total amount of the loan and the value of the car. This provides protection if your car is totaled and you owe more than it is worth.

Be sure to shop around: GAP and other insurance are available from brokers and financial institutions also.


Extended warranties

This type of insurance protects you in the event of major repairs your car may require. However, in the long run the price often exceeds the cost of most typical repairs. If you do decide to buy an extended warranty, here are two questions you should ask:

Am I getting the best deal I can? Read every line of the contract to make sure you’re getting your money’s worth.

Are you sure you’re not being scammed? Before you commit to making any purchase, ensure that the “insurance provider” you’re working with is legitimate and verifiable.


A vehicle is one of the largest purchases we make as consumers. Make the process and the maintenance of that loan a priority and you’ll be driving away happy.