6 Smart Moves First-Time Car Buyers Must Make To Save Money
Buying your first car is a rite of passage. You’ve been grinding away at work, perhaps even taking on some side hustles, so you could afford your inaugural set of wheels. While you’re revved up to hit the dealerships, you should slow down and get smart about this major purchase — it’s unfortunately too easy for first-time car buyers to be taken for a ride (and not in a good way).
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To hit the fast lane of savings when purchasing a car, first-time buyers should have a clear strategy. MoneyLion spoke with a few experts who shared advice about what new car buyers should do to save money.
1. Get Your Credit in Good Shape
According to Daniel Gigante, brand manager and e-commerce director at Cuescreens, the first thing any first-time car buyer must do is learn their credit score. It may not be fun. They may not like what they see. But they can’t fix what they don’t know.
Gigante encourages buyers to get their credit reports before shopping. He cautioned that many first-time buyers walk into a dealership blind, leaving them vulnerable to believing what the dealer tells them their credit means.
“Pull your own report, know your score, dispute anything inaccurate and give yourself a few months to improve it if needed,” Gigante said. “A 40-point swing in your credit score can be the difference between a 6% and a 10% interest rate.”
2. Get Preapproved for Financing
Gigante called getting preapproved for financing “one of the highest-leverage things you can do,” while also lamenting that “very few people actually do it.”
Why is getting preapproved such a savvy move?
“When you walk in with a preapproval from your bank or credit union, you're a cash buyer in the dealer's eyes,” Gigante said. “You're not negotiating a monthly payment anymore, but a price.”
He’s hardly the only expert who emphasized the importance of getting financing preapproved. Roger Bible, director of operations at ATC Driveaway, also said preapprovals give buyers leverage and can keep them from accepting inflated dealer financing rates without considering alternatives.
“Just a point or two in interest rate could save a consumer thousands of dollars on a loan,” Bible said.
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3. Establish a Realistic Budget
To Bible, one of the most financially savvy things any first-time car buyer can do before heading to the dealership is “establish a total realistic budget — not what the dealer tells you can get a loan for.”
What should you include in your budget? Here’s what Bible suggested:
Insurance
Fuel costs
Registration, tax and titling fees
Potential repair costs
In particular, Bible emphasized understanding how much insurance can vary between different car models.
“Many younger car buyers do not take into account the variability of insurance costs from one vehicle to another,” Bible said.
4. Choose Models That Make Financial Sense
Though you might’ve cherished certain car models growing up, you should pick your first car based on financial pragmatism and how long you can keep it on the road — not how cool Vin Diesel looked while driving it.
“Based on what I've seen over the years, most first-time car buyers are usually better served by well-proven, less demanding vehicles instead of luxury makes or models with lots of options,” Bible said. “Simple, dependable sedans, smaller SUVs and vehicles with good residual values make more financial sense.”
Bible added that some of the most dependable choices are likely Toyotas, Hondas and Mazdas.
5. Just Say No to Unnecessary Add-Ons
As much as you’d like one, you don’t need a premium infotainment system in your first car — and you certainly don’t need the price tag that comes with it.
Bible cautioned against splurging on pricier add-ons and upgrades like 18-inch wheels, a panoramic roof, the aforementioned infotainment system and other cosmetic extras.
He said they “might look good in the dealership but do come at a cost.”
Gigante had a few additional items buyers should just say no to, including extended warranties from the finance office, paint protection, fabric guard and “dealer-installed accessories.” He said gap insurance can be worth considering if you're financing more than the car is worth. However, he encouraged buyers to purchase it through their insurance company, not the dealer.
6. Don’t Be Afraid To Negotiate
Ideally, you’ll be prepared with market-value research and have a walk-away number in mind before you set foot in a dealership. You’re ready with the facts — now it’s time to negotiate.
“When you're negotiating, focus only on the out-the-door price — I can't stress this enough — not the monthly payment, not the trade-in value, not the financing rate,” Gigante said.
Gigante also reminded buyers that they have more power than they might think — starting with the ability to make the dealer sweat a little.
“Most buyers feel pressure to fill every pause in a negotiation, and dealers know it. When a counteroffer comes back too high, you don't have to respond immediately,” Gigante said. “You can say, ‘Let me think about that,’ and mean it. You can sit quietly. You can physically start gathering your things. Discomfort is a sales tool used against buyers constantly.”
The Bottom Line
So, you’re buying your first car — congratulations. By following a few smart moves, you can potentially save money and enjoy your first set of wheels.
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This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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