Tips for Buying a Car
Buying Your First Car
Check Your Credit History
- Experian, TransUnion, and Equifax allows one free credit report per year.
- Recent grads with no credit history should expect to pay a higher down payment or have a parent co-sign.
Create a Budget
- Recent grads should spend no more than 15% of their monthly income on a car payment.
- Car.com has financial calculators to calculate your potential car payment.
Should I Buy or Lease a Car?
- Buying a car gives you the chance to put equity into something that you will eventually own. A good first car option would be going with a late-model used car where the payments would be much smaller than a new car and you won’t be hit with the initial depreciation cost.
- Leasing a car is usually cheaper and most do not require a down payment. So for the graduate that is strapped for cash this might be the way to go, but purchasing a car is always the route to go if it fits into your budget.
- Look at multiple locations to acquire financing from lenders. A good place to start is your local bank and credit union. Take the offer you receive from the bank and use it as a negotiation tool for price when at the car dealership. Also certain dealerships may have incentives that are geared towards college graduates.
Source: College Grads Guide to Buying a Car