If your parents bought a car for you when iPad’s first came onto the scene (2010 to be exact), then it may be time to buy one of your own. But knowing what to look for, which tools to use and how to pay for it can be a little overwhelming. Here are five things leading Long Island auto lender Suffolk Federal says all millennials should know to make that first car purchase no big deal (or NBD).
- Set a (realistic) budget. Sit down and figure out the following:
- Your monthly income
- Your monthly bills
- How much car insurance will be
- An estimate of monthly gas consumption
- Monthly groceries
And remember to be honest with yourself about “Happy Hour” tabs, weekend outings and occasional shopping sprees. A good rule of thumb? Your car payment should equal no more than 25 percent of your monthly income.
- Do your research. If you thought research was only for college or your workplace, you were wrong. Check out different cars online and keep a list of how much each is, what the down payment may be and utilize different sites to compare potential car choices. Take a closer look at car safety ratings, different warranty offers, reliability and reviews by both experts and consumers.
- Get pre-approved for a loan. This will start your car-buying process on a good note: you’ll get a feel for what you can afford and you can compare your initial interest rate to the dealerships. This can also really boost your bargaining power.
- Leasing vs. Buying. Once you decide on a car, look into the differences between leasing and buying. Many times, insurance and car payments can change depending on which route you choose. And if you go over your mileage on a lease car, you may pay more in the end for those miles then if you were to buy it so that “great” leasing package may not be so great after all.
- Prioritize needs… then wants. Maybe in a few years’ time, you can get the tricked-out Jeep of your dreams, but for your first car purchase, check off what you need before worrying about heated seats and a sunroof. If you drive a lot, you’ll need a car that’s reliable, good on gas and maybe a hybrid (not only good for the environment, but a pass for the HOV lane). Live somewhere that gets a lot of snow? You may need a car that’s four-wheel drive.