Buying Your First Car: Learn the Five C’s of Car Buying Comments39 Comments

There comes a time when every young adult will inevitably have to return their parents’ car keys and decide whether to buy their own set of wheels or not. Whether that time comes in high school, during college or sometime after grad school graduation, there’s no doubt that eventually you’ll need to think about buying a car of your own before you start your career. But how do you go about buying your first car when your future seems uncertain and your current cash flow may be lower than you’d like? Keep reading to find out what you should consider before buying your first car.

  • Cash flow. Your financial situation can play a big part in what kind of car you can afford. Are you a full-time student living off of a stipend from your parents? Or, do you have a job that can help you pay for your new car purchase? Depending on what your financial situation, you may be able to set a realistic car buying budget with that income information.
  • Condition. Before you go car shopping, you should consider what condition of car you can afford. For example, you may have your eye on a new car, but a gently used pre-owned car would likely be more affordable.
  • Credit. A good credit score goes a long way in securing an attractive interest rate, and may even be a good bargaining tool when negotiating the price of a car. However, if you have little or no credit, you may either need a co-signer to make a car purchase or you’ll need to build some good credit before you try to get financing for a car loan.
  • Coverage. Even before driving your new car off the dealer’s lot you’ll want to make sure that you have the car insurance coverage you need to keep you protected. Even if you can’t afford comprehensive coverage, make sure you understand your options and choose the plan that fits your needs best, as well as what kind of insurance is required in your state.
  • Cash or loan. One of the most important factors to consider when buying a car is how you will pay for it. Whether you’ve saved up enough cash, or are researching your options when it comes to auto loans, make sure you do your homework in order to find the right borrowing solution for you.

Buying your first car is an exciting step into adulthood. So whether you’ve just started the search for a car of your own or are trying to find the financing you need to make the purchase a reality, you’re sure to find what you’re looking for with a little bit of research. Also, if you’re trying to find a way to save money on a car you recently bought, auto refinance loans can help you make the most of the money you work hard for by reducing your interest rate or the overall amount of interest you pay over the life of the loan.

Editor’s Note: Thank you for the guest post. I wish I had taken more time to think about what kind of car I could truly afford when I bought my current car. How was your experience buying your first car?

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By : Adam | 30 May 2012
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39 thoughts on “Buying Your First Car: Learn the Five C’s of Car Buying

  1. WorkSaveLive

    I’ve always been pretty lucky as I’ve never had a car payment. I always had beaters and I guess if there is one thing my parents taught me about managing money it was not to buy a car with debt.

    It has always been a hard pill to swallow driving around pieces of junk, but I got over it a few years ago.

    Reply
    1. Jeremy

      I wish I had that mentality. I’ve always been too self conscious worrying about what other people think of my car. So I’ve already paid off 2 car loans. That would be a nice chunk of savings if I had been content driving a beater.

      Reply
    1. Jeremy

      Good point about considering actual operating cost rather than just the car’s sticker price. If you’re not careful you can end up with a car that wastes a ton of gas or requires a lot of expensive maintenance and repairs.

      Reply
  2. femmefrugality

    My first four cars lasted an average of six months each. No big shocker…I had gotten what I paid for. Then I decided it was worth it to me to take on a loan so my car wouldn’t suck quite so bad. Monthly payments took the place of weekly repairs, and I’ve never looked back!

    Reply
    1. Jeremy

      Ouch, sounds like my ex-girlfriend’s luck with cars. She had tried going the cheap, used route, but kept getting burned with cars that had too many problems. Eventually she just got a loan for a quality slightly used car and has been much happier.

      Reply
  3. John | Married (with Debt)

    When I bought my last car, I had such a long commute that it was actually cheaper to buy a new car than continue with my dying V6 big body sedan.

    I would just urge young people buying their first car to think about their car purchase as a financial, not a social/status based decision.

    Reply
    1. Jeremy

      I totally agree. My last 2 cars definitely were more about a social status thing and wanting to drive a car that other people would like. As a result I completely ignored the whole financial part of it…how much I was spending and how much that car would be worth down the road. When it comes time to replace my current car, it will be quite interesting to see what approach I take this time around.

      Reply
  4. Liquid

    I considered these things as well when I bought my first car a long time ago. It cost me $3K back then. Then more recently I switched to a newer but still used car for $10K. Slowly moving my way up lol. I think for most people buying used is a better long term decision for their first car purchase.

    Reply
    1. Jeremy

      Sounds like you’ve been making wise choices with your car purchases. People don’t need to rush out and get the best car that they think they can afford. It is much better to settle for something that is well within your budget and can be paid off quickly.

      Reply
  5. My canuck buck

    Mine wasn’t too bad but Mr. Canuck Buck got a rude awakening on his insurance rates when he got his first brand new car!

    Reply
    1. Jeremy

      Yeah I remember how high my insurance rates initially were for my new car. I didn’t really factor that into deciding how much car I thought I could afford. So it sure put a strain on my budget when my income dropped. Luckily my insurance is more reasonable these days.

      Reply
  6. Jacob @ iHeartBudgets

    I do agree with a few of those C’s above, but I do not believe in financing a depreciating asset. Why pay interest on something that is falling in value like a rock? The only good financial advice I got from my parents (who were horrible with their finances) was to never have a car loan. I have definitely saved thousands by following that advice.

    Reply
    1. Jeremy

      I think it depends on people’s personal needs. Some people can get by with a low cost used vehicle, but for others they really need a dependable vehicle right away. I don’t have a problem with financing a car provided that you don’t use that as an excuse to get a more expensive vehicle than you really need…like I did. It may be a depreciating asset, but it is an invaluable one that can you to your workplace and provide you with substantial freedom.

      Reply
      1. Jacob @ iHeartBudgets

        “Really Dependable” is based on a person’s comfort with car care, I guess. I know that my $1000 hondas are really dependable (over 250k miles each), but I am also comfortable to change an alternator or tune up the car if needed. I feel like people are motivated by fear of a vehicle breaking down and end up shelling out more cash because of it. Most people should be able to afford a $2500 car to get them to work and back and even if they finance that amount they can pay it off pretty quick.

        I just find that too many people pay $8k or $10k for a “reliable car” when they can find a $2k or $3k car on Craigslist that is just as reliable.

        Reply
        1. Jeremy

          Yes Hondas are very reliable. While growing up my mom always seemed to have a Honda. It is pretty convenient to know how to do mechanic work yourself. Most people don’t have those skills though. I personally don’t recommend hitting up craigslist for a $2500 car. My ex had a lot of bad experiences with that. Unless you have mechanic knowledge, it is far too easy to get stuck with a lousy car that has all kinds of problems. With the amount of time and money that she wasted on crappy used cars, she would’ve been far better off just buying a $8-10k car right off the bat.

          Reply
          1. Jacob @ iHeartBudgets

            I agree, don’t buy a used car if you don’t know what you are getting in to. I recommend finding a mechanically inclined friend if you don’t have the skills yourself. I do agree with you that finding a reliable car is VERY important, and for most people, a 2 or 3 year old lightly used car would fit that bill. I’m just bringing up the fact that most people buy cars out of fear and you can easily curb that fear with some research and someone who knows cars to help.

            Most people shy away from used cars because of a bad experience, or a friend’s bad experience, but many a thousand dollars can be saved with a little research and discretion.

            BUT, as you said, I also don’t recommend people go out and buy a $2500 car on Craigslist if they don’t feel comfortable doing that.

            Reply
  7. From Shopping to Saving

    The 5 Cs. I like that! My friend just bought a new car and put just less than 50% down. Not sure if that was what I would have done, but she likes “luxury” vehicles. She would have benefited from this post!

    Reply
    1. Jeremy

      I personally think aiming to put 50% down is a bit ambitious. I know I’ve never put that much money down on a car. I think your friend just needs to get over her obsession with luxury vehicles. Depending on the company she keeps that can be tough.

      Reply
    1. Jeremy

      If you can afford it, buying a car with cash would be pretty awesome. Not only does it save you on all the financing interest, but I’m sure most dealers would be more flexible with negotiating for cash payment.

      Reply
  8. Miss T @ Prairie Eco-Thrifter

    Condition has always been a factor for me. I am not going to spend money on junk, even if it’s cheap.

    I always like buying cars a few years old so that you aren’t paying for depreciation. Cars are so inflated when it comes to price.

    Reply
    1. Jeremy

      Cars that are a few years old are usually the best deals. You just have to make sure you find a car that has been taken care of and not abused during those few years.

      Reply
  9. Shannon-ReadyForZero

    I think another thing they may need to think about is their commute to whatever job they secure after college. You certainly wouldn’t want to mess up a first job by always being late just because your car broke down again. In this case, an inexpensive, reliable model could be a good way to invest in your career. However, if they live close enough to bike or can take public transportation, then a beater might make more sense.

    Either way, I say if you are going to by a car, always go used. You can save tons of money by purchasing a car even if it’s only less than one year old. The markup for a new car isn’t worth it when you consider how much value drops the minute you drive off the lot.

    Reply
    1. Jeremy

      Good points about the importance of a reliable car and taking into consideration your commute distance. I just wouldn’t want to deal with the uncertainty of a car that might break down on me. So if I did buy a used car, it would have to be a reliable model without too much mileage. Preferably it would just be a year or two old.

      Reply
      1. Shannon-ReadyForZero

        Yeah, I totally agree. One or two years old is pretty close to new, and someone could always check the carfax before buying. I’m not sure if there’s anything more stressful than car troubles if that’s the only way to get to work!

        Reply
  10. Katie

    The first car I bought was piece of junk. I didn’t have anybody look at, I just thought it was pretty and bought it. Luckily it was relatively inexpensive because it only lasted about two years.

    Reply
    1. Jeremy

      lol it’s funny how many women just worry about how ‘pretty’ or ‘cute’ a car is. Those are usually the same ones that when you ask what kind of car they drive, they say ‘a white one’. It’s understandable if cars aren’t a priority to them, but still kinda funny.

      Reply
  11. Edward Antrobus

    My first car was a classic Beetle. There was never really any other option for me. I couldn’t afford the fully restored one for $5000, so I got one it a bit rougher condition for $1000. I was slowly working towards restoring it when I crashed it.
    Not counting my wife’s car, which we did finance used for ~$10,000, I’ve bought a total of 4 cars for a total of $4000. I’ve probably put another $6,000 in repairs for those, putting my car-related costs (beyond registration, insurance, gas, etc) at $10000 over a period of 14 years. That works out to a car payment of about $60/month.

    Reply
    1. Jeremy

      Sounds like a pretty reasonable expense over 14 years. $6k does sound like a lot for repairs though. So hopefully none of those cases were too inconvenient or time consuming. My first car alone was about $10k and my second car was significantly more than that.

      Reply
      1. Edward Antrobus

        A good chunk of that was for the Beetle restoration. And I did replace the radiator in my Camry three(!) times.

        There was only one repair that was truly a pain. My alternator died 100 miles from home on my way to a wedding. By the time I got it repaired and got there, the reception was already winding down.

        Reply
  12. Anthony Thompson

    Very nice! The five Cs of car buying should certainly be learned by those purchasing their first car. Of course, these points should be considered for most big purchases. In fact, they would work even for first-time home buyers.

    Reply
    1. Jeremy

      Yep you’re right that these points could be considered for other big purchases too. You also want to take the time to properly think things through when spending a large sum of money.

      Reply
  13. Justin @ The Family Finances

    My first car buying experience was one that I learned a lot from, though later on in life. My father and I went to a lot and picked out a car. I had no clue how to buy a car, and my father simply asked the salesman how low he could go on it. The salesman gave us a number, and that’s what we paid. Boy did we do it wrong. That was a long time ago, and now I know better.

    Reply
    1. Jeremy

      That must have been a happy car salesman. I did a pretty bad job negotiating my last car too. I thought I knew a thing or two about negotiating at the time, but I was wrong. It is an art that takes some practice to really master.

      Reply
  14. Crystal

    Good point on the insurance. Many people forget to take that into account and it can sometimes end up being an extra 100 dollars a month.

    Reply
  15. Canadianbudgetbinder

    I bought my first car and paid cash for it, mind you it wasn’t anything special but lasted me many many years. When I moved to Canada I paid cash for my truck and am thankful I didn’t get a new vehicle. I just didn’t want the monthly expense that came along with it and besides I had no credit score here yet. Great Post!

    Reply
    1. Jeremy

      It would be pretty nice to not have those monthly payments. It’s a huge drain on the finances to be paying so much each month. I guess you didn’t have much choice if you didn’t have credit history here. I hadn’t really thought about that issue for immigrants.

      Reply

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