Telling your friends and family "I'm buying my first car!" is one of life’s most memorable moments. Being a first time car buyer gives you countless options to consider and sometimes it's hard to know where to start. To help make the process a little easier we have put together this list of 10 tips for buying your first car.

Important Tips for Buying Your First Car

1. Determine Your Budget

When you decide to look for a car having a realistic budget is very important. The budget should be centered on what you can afford per month. When determining the amount that you can spend each month, consider all your expenses throughout the month. Also, don't forget to consider the additional cost of owning a vehicle, such as insurance premiums, fuel costs, and regular maintenance.

2. Know Your Affordability Level

Although this may seem similar to determining your budget, the matter of how much debt you already have compared to your income is different; this is known as your debt-to-income ratio. Understanding where you are at with this will help you in knowing what you can spend monthly on a car payment. Most experts agree that a 36% debt-to-income ratio is an affordable level of debt. You determine your ratio by dividing your total monthly debt payments (such as credit cards) by your total monthly income. For example, if you make $1,000 per month and your total debt payments every month are about $200, your debt-to-income ratio is 20%. 

Looking for a car loan? Find out what you can afford.

3. Narrow Your List to a Few Cars

Many cars have probably caught your attention so you should start out by researching each of them to see if they will fit your needs and your budget. Take note of the suggested retail prices and the invoice prices of those cars you think would be a good fit for you. Keep in mind that by choosing a less expensive car you can have some leeway within your budget for other monthly expenses.

4. The ‘Wants’ vs. The ‘Needs’

When purchasing your first car you should take note of your wants as well as your needs. The extra attention you pay to these details will help you fulfill those needs and wants. Prioritizing your needs and wants will help you find a car that best fits you. Consider what situations you will be in when driving your car:

• Do you drive long distances every day to work or school?
• Do you like to drive your friends around or take your dog to the dog park?
• Do you have to drive in winter weather? 
• Do you drive in heavy traffic frequently?

Your answers to these questions will make a difference in the type of vehicle that will fit into your life style best. For example, if you commute a long way to school or work every day you will want to keep fuel efficiency in mind. Just because you can afford the payment, doesn't mean you can afford the gas too. You might want a big truck with four-wheel drive, but those types of vehicles aren't known to be great on gas and could cost you more money than anticipated overall. 

5. Do Your Research

Take the time to do your research. The internet is a great place to start to gain insightful information on everything ranging from the price, to consumer opinion regarding a particular model. This can help you narrow down your choices and single out exactly what you are looking for. Car dealerships can also be helpful when doing research, however they are trying to sell their vehicles, so take their advice with a grain of salt, and fact check what they tell you.

6. Finding A Dealership

Dealing with a local dealership can be beneficial especially if they hold a good reputation and you can easily take advantage of the car care services they may have to offer. Although, sometimes prices can be lower in areas outside the city you live in. You will have to do some pricing comparisons to know for sure.

7. Test Drive

While you might think that you have found the perfect car, taking a test drive can change your perspective beyond what the online reviews or comments have disclosed. You will want to take the car for a test drive in the conditions that are similar to your daily routine to determine whether or not to purchase the vehicle. Some dealerships will even let you take the vehicle for an extended test drive, where you take the car overnight and return it the next day. 

8. Determining the Price 

Once you have chosen the car that fits your criteria now is the time to negotiate the purchase price. Some lending institutions can help you in gaining perspective for an appropriate purchase price and may even have a contact at the dealership. Also keep in mind, when negotiating not to reveal what you can pay each month but rather stick to talking about the total purchase price. This will help you stick to your budgeted amount.

9. Secure Financing First

It is also important to have financing lined up before you speak to any one at a dealership; this is known as getting pre-approved. Talking with your financial institution before you go to the dealership and having your financing ready to go is in your best interest.  You would hate to fall in love with a car, only to find out you cannot get the financing you need! Getting pre-approved will also allow you to have more control over the final price when you do visit the dealer.

10. Enjoy Buying Your First Car

Buying your first car is big step and it only happens once, have fun with it! Taking your time and understanding the process will make your first car buying experience an enjoyable one. 

Summary

If you are planning on buying your first car, the car buying tips listed here can help you be prepared for the car buying process and give some guidance on how to best approach the journey of becoming a first time car buyer.  

Bonus tip: Don't forget to test drive a sports car, just for fun.