Congratulations on considering purchasing your first car! This can be a very exciting time in anyone's life, whether you are just starting out in life or have postponed purchasing a vehicle for any number of reasons. However, it is important during this time not to let the excitement of vehicle ownership cloud or overwhelm your good judgment. Doing so can inadvertently saddle you with a monthly payment that is misaligned with your ability to reasonably repay your financial obligation, leading to stress and future complications.
When it comes time to select your very first car, truck, or SUV, it's critical to think about your source of income. If you plan on paying for it outright in cash, then you have a clear understanding of exactly how much you can afford and know to stay within those parameters. However, it is still important to remember about things like vehicle registration, insurance, the cost of gas and tolls, and regular maintenance to keep things running smoothly and safely. In addition, you will want to put some money away in the event that something breaks down in the future so it will not place an undue strain on your budget. However, unless you have a substantial amount of money saved up, you may be limiting the type or quality of car you are able to purchase if you are only willing to consider purchasing one outright with cash.
If you plan on financing your car, your options expand significantly. However, obtaining car loans brings a number of other questions into play. The first may be your creditworthiness. If you are a younger person, you may not have your credit fully established yet, meaning you may have to rely on a parent as a cosigner. It's important to pull a copy of your official credit reports from the credit bureaus to know your credit score and have an understanding of how lenders will view you as a credit risk. From there, you are ready to head to the dealership and discuss financing options on the new ride of your dreams!
