Get Your Finances in Order

Buying a car can be expensive. To make sure you’re prepared, you should get your finances in order well before visiting the dealership.

Save Up

The more money you have in the bank when you buy your car, the better. Depending on the price of the car and how much you’ve saved up, you may be able to pay for the vehicle in cash, avoiding debt. If you do finance the purchase, making a sizeable down payment will lower your monthly obligation and possibly get you a better interest rate.

To beef up your car buying fund, stash away any money you receive as a gift or inheritance. If you have a job, automatically transfer a portion of each paycheck to your savings account. And, if you get a tax refund, earmark those funds for your mission.

Set a Budget

To make sure your new vehicle doesn’t break the bank, you need to determine a car buying budget based on your financial situation. Think about your:

• savings account balance
• income
• other bills

Buying the vehicle is just the beginning of your car ownership related expenses. That means you don’t want to spend every last cent you have at the dealership or take on a monthly payment that eats up most of your income. As a rule, your total cost to ride (car payment, insurance, fuel, maintenance, repairs, taxes, and other fees) should be less than 20% of your income.

Check Your Credit

If you plan on financing your car, good credit is your friend. A high credit score indicates a track record of financial responsibility. It can help you get approved for a lower-interest-rate loan, which will save you money over time.

To see where you stand, check your credit report and score before you go car shopping. You can see your credit report from the three credit bureaus for free. You may need to pay a nominal fee to get your credit score.

A Word on Co-Signers

As a college student, you may not have an extensive credit history. If you don’t have time to build one before buying your car, a parent or other trusted adult could co-sign the loan for you. The bank will take their credit history into consideration, which can increase your chances of getting approved for favorable loan terms. But - that also means they’re financially responsible if you don’t make your payments.

Do Your Homework

Getting your financial ducks in a row is important. But, so is knowing what you’re looking for. If you do your homework before car shopping, you can develop a shortlist of vehicles to explore in person.

Pick a Vehicle Type

What type of vehicle do you want to buy? It’s OK to daydream a little, but that $100,000 sports car probably isn’t going to happen! Instead, think about what you’ll be doing with the vehicle on a daily basis. If you haul around a lot of large, heavy stuff, maybe a truck makes sense. But, if you just need basic transportation to school and work, a coupe or sedan will work just fine.

Choose: New or Used

If you have the means, getting a brand new car has its perks. But for many people (not just college students!), a quality used vehicle fits into the budget better. Cars depreciate quickly, so you could buy a 3-year old car with low miles for a fraction of what it cost when it was new. And it will still be in great shape!

Pro Tip: Don’t shy away from older used vehicles. If they were properly cared for, you could get a reliable ride for a great price.

Research Everything

Now that you know what type of vehicle you want to buy, you can get into the nitty-gritty. Look at several different makes and models and compare features and pricing. When you find a model that you like, read reviews to see what other buyers and vehicle experts think. Check for safety recalls, average repair costs, and any other data you can get your hands on.



Shop Smart

Your money is in order, and you know what you’re looking for. It’s finally time to buy your car! But, even though it’s an exciting moment, you still need to shop smart.

Inspect Thoroughly

When you’re at the dealer (or private party’s residence), inspect everything on the car very carefully. Crawl all over it -- inside and out -- including underneath the vehicle. Do the electronics (lights, windows, locks, radio, heater, etc.) function as they should? Do you see anything obviously wrong (think leaks, excessive rust, broken parts, etc.)?

Test Drive Carefully

If the visual inspection goes well, test drive the car. As you do, pay close attention to how it feels and what sounds you hear. Does the vehicle run smoothly? Stop well? Turn with ease? Did you hear any suspicious noise coming from the brakes, suspension, or under the hood? Take note of everything.

Pro Tip: Have an experienced car buyer come with you when you check out vehicles. They can be an extra set of eyes and ears during this process. If you can bring a mechanic friend, even better!

Get a Vehicle Report

If the car performed well on the test drive, and you really think it’s the one for you, you’re in the home stretch. Ask the dealer for a vehicle report (sometimes referred to as a Carfax), so you can see if the car has been in any accidents. Inquire about service records (whether you’re at a dealer or private party) to get a sense of the vehicle’s maintenance and repair history. As long as there are no red flags, it’s time to make the purchase!

Make the Purchase

This is the moment you’ve been waiting for. You’re about to fork over your money, sign on the dotted line, and drive into the sunset. But, before you do, consider these additional points.

Lease with Caution

Leasing a car can be appealing because you can drive a new car for a smaller monthly payment than if you financed it. But, at the end of the lease (usually three years), you have to give it back. And, if you drive more miles than your lease contract allows, you’ll have to pay for those when you return the car. You could purchase the vehicle after the lease, but chances are you won’t, which means you shelled out thousands of dollars to essentially rent a car with mileage restrictions.

Negotiate

Always negotiate! If the dealer really wants to move that car off of their lot, you may be able to get them to come down on the price. Private party seller deals are usually negotiable  -- especially if they’ve been trying to sell the car for a while. Having cash in hand definitely helps your position!

Final Thoughts

Getting your first vehicle is a rite of passage. It gives you an increased level of independence and helps you truly live life as a young adult. By following these car buying tips for college students and the advice of trusted family and friends, you’ll be able to buy the vehicle you need with confidence -- and without breaking the bank!

Laura Gariepy

Contributor

Laura Gariepy is a freelance writer that specializes in personal finance, careers, and small business. She owns  Every Day by the Lake , a written content creation company that helps busy business owners connect with their target audience. You can follow her on Twitter  @EverydayLake.