Buying a used car can be a smart way to get reliable transportation. If you’re a recent graduate in your second year at your job, you're likely looking to make your first big purchase—a car that reflects your success without breaking the bank. Take Monica, for example. She’s been working hard and has saved up for a car that’s both reliable and stylish, something that will make a statement as she progresses in her career. Like many first-time buyers, she wants to find a car that fits her lifestyle, but she’s new to the process and wants to make sure she’s making a smart decision.

This guide is designed for people like Monica—new to the car-buying process, eager to find a vehicle that suits both their professional and personal needs, all while staying financially secure.

1. How To Buy a Used Car: Determine Your Budget

Before you even start looking at cars, it’s essential to know the basics of a budget plan. Monica, for instance, has been saving diligently for a certified 2023 BMW i4 eDrive40. With $10,000 already saved and a plan to finance the rest through First Alliance Credit Union, she’s in a strong position to negotiate.

When determining your budget, consider the full cost of ownership, not just the sticker price. This includes insurance, registration, taxes, and ongoing maintenance. Aim to keep your monthly car expenses (including the loan payment, gas, and insurance) below 20% of your take-home pay. For Monica, this means planning her purchase around her monthly budget to ensure she can comfortably afford the BMW, including potential future expenses like new tires or brake pads.

Pro Tip: Use an online auto loan calculator to help you estimate what you can afford. This will give you a clear picture of what your monthly payments might look like and help you avoid overextending yourself.

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2. What to Look for in a Used Car: Features and Condition

Next, think about what you need from a car. Are you looking for something fuel-efficient for a long commute, or do you need extra space for a growing family? Monica chose the BMW i4 because of its reliability, safety features, and spacious interior—all important for her family’s needs.

When shopping, focus on vehicles known for their durability. Sites like Consumer Reports can help you identify models with a track record of longevity. Once you’ve identified a few options, start researching them online to compare prices and availability.

Must-Have Features Checklist:

• Safety features (e.g., airbags, anti-lock brakes)

• Fuel efficiency

• Sufficient seating and cargo space

• Low mileage

• Good resale value

Don’t forget to check the car’s condition. Look for signs of wear and tear, rust, or any unusual noises during a test drive. Even certified pre-owned (CPO) vehicles, like Monica’s BMW, should be inspected thoroughly. Just because a car is certified doesn’t mean it’s free of issues.

Get all the tips from First Alliance Expert Kayla when you check out our latest video.

3. The Art of Negotiation: Getting the Best Deal

Once you've found a car you like, it's time to negotiate. This can be intimidating, but going in prepared can make a big difference. Monica, for example, knows the BMW i4 she wants is priced at around $35,000, but with her $10,000 down payment, she’s hoping to negotiate the dealer down on the remaining balance.

Key Tips for Negotiation:

• Know the market value: Use resources like Kelley Blue Book or Edmunds to understand the car’s fair price.

• Start low, but reasonable: Offer slightly below the average market price, leaving room for the dealer to counter.

• Be ready to walk away: If the dealer isn’t budging, don’t be afraid to walk away. There are always other cars and other deals.

Monica also takes advantage of her pre-approved loan from First Alliance Credit Union, which gives her leverage during the negotiation. By being a “cash buyer” (thanks to her pre-approval), she can focus on negotiating the price of the car itself, rather than getting caught up in discussions about monthly payments.

4. Final Steps: Inspection, Financing, and Paperwork

Before signing anything, have the car inspected by an independent mechanic. Even with CPO vehicles, an extra set of eyes can catch potential issues that could cost you down the road. Monica, for example, requested an inspection of her BMW i4, which confirmed that everything was in good shape.

If the car passes the inspection, you’re almost there! Next, finalize your financing. Monica’s loan through First Alliance Credit Union not only offered her a competitive interest rate but also came with additional perks like GAP insurance, which can be a lifesaver if the car is totaled.

Lastly, review all the paperwork carefully before signing. Make sure everything matches what you agreed upon—especially the price and any additional fees. Once everything is signed, the car is yours!

Final Tip: Consider purchasing an extended warranty if available, but only if the terms are favorable and you plan on keeping the car for several years.

How to Buy a Used Car to Drive Away Confidently

Buying a used car doesn’t have to be stressful. With the right preparation, you can find a vehicle that meets your needs and fits your budget. Remember Monica’s story—she started with a plan, knew what to look for, negotiated smartly, and drove away in her dream car, all while staying within her financial limits. By following these steps, you can make your car-buying experience as smooth and rewarding as possible. For more personalized financial advice, visit First Alliance Credit Union and let us help you on your journey to buying the perfect used car.

Have more questions? Ask us!