- When I bought my first car after using my high school car for nearly a decade, I used some of the lessons my parents had taught me to make the process easier and cheaper.
- For one thing, I bought an affordable new car with the lowest financing rate I could get, and I put an extra $25 toward my car payment every month.
- I also bought a car that’s basically theft-proof in this day and age (not to mention cheaper) — it’s a manual transmission.
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A few years ago I purchased my first new vehicle entirely on my own after using the one I got in high school for nearly a decade.
Though I’d never navigated a car dealership on my own before, I had watched my dad handle it like a champion a few times before, and I was excited to give it a spin for myself. My dad, a practical man who always taught me that it is worth it to pay a little more for good shoes and good tires, had prepared me well for success.
I’m happy to say that I put off my dreams for a luxury vehicle and opted for an economic and reliable option that cost around $12,000. My car is exactly what I need right now, and I have Pops to thank.
While I could have qualified for a more expensive option, here are the lessons that echoed in my mind and helped me dodge the salespeople’s tactics to advocate for a car that truly suited my needs:
1. Sometimes a new car makes more sense
A low monthly payment on an affordable car, financed with a low interest rate, is more predictable than an older car that needs surprise emergency maintenance.
There are two kinds of car buyers — new car buyers (who value predictability) and used car buyers (who save for unpredictability). Either strategy is legitimate, but Pops opts to buy new, yet economical, cars that come with a maintenance warranty in lieu of paying cash for used cars with unknown histories. Of course, there are benefits to both, so ask yourself which one you are and prepare accordingly.
2. When you can, use other people’s money
By this my dad meant finance with 0%, if you qualify. Though my credit was in decent shape, the best interest rate I could qualify for just out of college was 7.42%.
Now that I’ve been paying on the car loan, increasing my income, and paying down my debts for the past few years, I receive regular offers to refinance my car loan for as low as 2.99%, and I am considering them.
My parents, who have excellent credit, often qualify for 0% financing on their cars. In fact, that is how they bought me my first car in high school that I used throughout college.
3. You can have a luxury car when you’re older
Until then, your Hyundai suits your needs.
4. Go with the hatchback
They are more versatile. Even though my car is small, I have used it to move furniture, transport bicycles, and even deliver a bridal gown to a friend’s wedding. I take advantage of the affordability of a small car and the utility of a larger cargo space. It’s a win-win.
5. Manual transmissions are cheaper to buy
But — they have built-in millennial anti-theft devices. Seriously, nobody will ever steal my car because fewer and fewer people can drive it!
However, with the new technology available, they’re not necessarily better on fuel economy anymore.
6. Pay $25 more than your minimum payment
Okay, so this piece of advice came from the loan officer at my car dealership, but when I ran it by my parents they confirmed that they do it, too. A measly $25 is so small an amount that I don’t even notice it’s gone, but I will notice when my car is paid off a year sooner than I expected!
7. Once your car is paid off, every month you go without buying a new one is the same as putting money in the bank
I kept my first car for almost 10 years even though it was financed for five. Once I pay this car off, I’ll be so used to making my payment that until I need to buy a new one, I’ll simply deposit the amount I pay now into a savings account, or, even better, invest it.
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