Helpful tips for first-time car buyers

You've scrimped and saved, and you're finally ready to purchase your first car. Congratulations! 

Vehicle ownership is a huge step. While having your own set of wheels can make your life much more convenient, it also means there are things you have to consider that you may not have given thought to before. If you're even considering buying your own car, you'll need to learn a whole bunch of scary new words like "financing" and "credit check."

It's true that getting caught up in red tape can somewhat dampen the thrill of driving away in a car of your very own. But if you keep these tips in mind before you sign on the dotted line, you can drive away from the dealership feeling like an automotive authority.

You need credit
Unless you're paying in cash outright, you're going to need to borrow some money to make your car purchase. Car loans come from banks, and banks rely heavily on your credit history to decide whether and how much to approve you for a loan. If you don't have a credit history, your chances of getting approved for a loan may drop significantly.

When you first start thinking about car ownership, building your credit score should be one of your top early-stage priorities. Even if you have exactly zero credit history, you can still work toward building a score with things like a secured credit card, which requires a security deposit in lieu of a credit check. Keep in mind that it can take between six months to a year to build your credit score, so planning ahead is essential. 

Another option is to have your parents or someone with an established credit history cosign your loan, though that places extra pressure on you to keep up with your payments.

Plan carefully when making your budget.Plan carefully when making your budget.

Budget, budget, budget
If you've been saving up to this point, you're likely no stranger to budgeting. But now that you've got a shiny car in your driveway and a monthly car payment to match, you'll need to reexamine your financial situation. Kelley Blue Book noted that just because a car carries a high sticker price doesn't mean it's unattainable. Similarly, a car with a lower cost may still be out of your range due to larger monthly payments.

A good rule of thumb is to plan on spending around $25 a month for every $1,000 you finance if you're on a 48-month repayment plan. If you're financing your car over 60 months, that number shifts slightly to $20 a month per $1,000 borrowed. 

Set realistic expectations
As a first-time car buyer, chances are you're going to have to make compromises when choosing your vehicle. Your car is first and foremost a tool, and just like any other implement, you need to use the one that fits the job. The dealer may offer you a sweet deal on that little red convertible, but can you picture yourself lugging groceries home in it or enduring a multi-hour road trip to visit your parents?

Establishing your specific transportation needs can help you not only choose the right kind of car for you, but also how old or new your chosen model should be. For example, if you plan to use your car primarily to get around town, you should consider a pre-owned model that's a couple of years older, as it's likely to cost much less. Just be sure you look for manufacturer certified pre-owned cars to give you the extra peace of mind.

"A car is an investment, and should be treated as such."

Keep hidden costs in mind
Just because a car has a given price listed on its sticker doesn't mean that that's what you're going to be paying. In fact, there's a whole statistic that professionals use to measure how much cars actually cost. Referred to as total cost of ownership, it takes into account things like maintenance and repair history, gas, insurance and several other factors that can impact how much you end up spending on your car overall. 

Also keep in mind that not all dealerships are created equal. Excitement is understandable, but don't rush into signing the first contract you're presented with. A car is an investment, and should be treated as such. Do your research online before you start visiting lots. This can tell you useful information such as average value of a car of a given year and model, which can be invaluable when it comes time to negotiate the contract. Having a good idea of what you should be spending on your car based on several corroborated sources can help protect you from overzealous salespeople who may try to take advantage of your neophyte status.

If you're in the market for a pre-owned car, head to NJ State Auto Auction. There are hundreds of Carfax-certified vehicles on the lot, and a helpful sales staff ready and willing to work with you to find the perfect used vehicle for your needs.