Last Updated on September 7, 2022 by John K. Clifford
The average price of a first car can be found at approximately $4000. Especially, this budget is more than appropriate for those people who must buy their cars with their job. Even this budget allows you to buy a car that can be very old and more than enough to learn how to drive properly.
Average First Car Price – Main Facts
|$4000 On Average||Most finance experts recommend having an average budget of $4,000 for the first car.|
|Method Of Purchase||This average budget can vary depending on the type of financing or the cash payment method.|
|Living Expenses||Maintenance costs tend to increase as the car becomes more expensive, such as insurance coverage.|
|Parental Assistance||Those who have parental help can afford to exceed the average budget of $4000|
|Type Of Vehicle||A subcompact, sedan, or sport utility vehicle has different average price ranges.|
What Is A Good Price For A First Car?
One of the important steps in a large number of people starting their adult life is the purchase of an automobile. The basic decision is usually a car or a new home other than the parents’ home. However, the purchase of the first car is usually a much simpler task because of the much lower cost involved.
So, choosing the first car is not so simple as it is necessary to consider a wide range of important aspects. Here, it is important to take into account the budget as well as the maintenance costs required for certain models and types of cars. So, the following points are very important to make the best decision.
1. Good Price
Of course, the first consideration that must be analyzed are the two main payment methods that exist in the purchase of any vehicle. So, here the person should consider having all the money in cash or see the possibility of accessing a car loan and along with it a vehicle financing.
When applying for a loan it is necessary to know the credit score or reputation of each person. In some cases, young people do not have sufficient credit to be able to access vehicle financing. It is a key feature to have an excellent credit score to be able to avoid buying the car only with cash.
Even this way you can get a much more favorable interest rate with the car loan. Also, an excellent score that is at a higher average level makes the loan application procedure easier. Here, it is highly recommended to make a down payment of 20%. The interest rates are too high for low credit scores.
So, in the latter case, it would be necessary to avoid financing and opt for cash purchase. Those used vehicles that are functional and safe can count on a starting price of $2500. An additional $1000 is also required for a car with fewer miles and better features.
2. Pre-Approval For The Loan
A pre-approval for a car loan is a smart step in the purchase of a new or used car. This pre-approval is necessary before even visiting the dealership. Thus, this is what allows you to negotiate with the dealer on better terms and access much more favorable financing.
It is even possible to get a better interest rate this way since the dealer will try to provide a more convenient financing offer for the buyer. Pre-approval for a loan is requested by phone, in person, or online depending on the lender. Upon qualification, the lender provides proof of financing such as a certificate or check.
If this works with only one lender, it is advisable to get pre-approval from two other lenders. This increases the chances of getting the best interest rate. When a lender conducts a credit inquiry, the credit score may be lowered somewhat. Therefore, it would be advisable to get pre-approvals within 14 days to reduce this damage.
3. Buying A New Or Used Car
The decision between buying a new car or a used car is essentially based on each person’s budget. Buying a used car requires more time in research to locate the best option. However, a used car is what allows saving money and applying more efficient maintenance during the use of the vehicle.
In this case, it is highly recommended for young adults on a limited budget to purchase a used car. New cars usually have a high depreciation cost after the first year of use. Therefore, for those who wish to purchase a new car, a used car with only one or two years of use is recommended.
In this way, the car will be almost as good as new but at a much more conventional cost. When choosing a used car, it is recommended to check the vehicle’s history. Besides, a trusted mechanic’s inspection of the vehicle together with the vehicle’s history report will help determine if the mechanics are in good condition.
On the other hand, buying a new car may be more expensive, but everything is simpler. There is simply no verification of the vehicle’s mechanics required since it is a new car. Along with that, interest rates on new car loans are usually more convenient than used car loans.
4. Choosing The Right Model
Another important aspect is to choose the best model in a used car. To choose the best option, it is advisable to analyze what will be the main use of the vehicle. It is not the same as a car for a long trip, a vehicle to drive around the city, or one to commute to work.
Some options would be more convenient: a sport utility vehicle, a sedan, a subcompact, or other options. Once the person has decided on the type of vehicle they want to get they should read some online reviews.
In this way, it is possible to get a more complete understanding of the results provided by each vehicle model. In turn, this also makes it possible to calculate maintenance costs, as well as general fuel costs in the city or on the highway.
Some websites have search tools to facilitate the decision. Here you can find filters according to brand, price, body type, and other important aspects. Knowing more about the vehicle that each person needs allows them to make a better decision, instead of choosing any type of vehicle.
5. Negotiation Process
The negotiation process is one of the most important steps to get a good price on a vehicle. Of course, people who want to buy their first vehicle may make some mistakes due to a lack of experience in negotiation. However, some aspects are important to avoid closing a bad deal and an inappropriate price.
At no time is it advisable to indicate the amount of money you want to pay per month. Here, dealership employees may simply offer lower monthly amounts in exchange for a longer-term loan. This simply increases the total price of the vehicle and incorporates additional interest. Therefore, it is always recommended to negotiate the total price of the vehicle.
It is also recommended not to give in to pressure from dealership employees. The advantage here lies specifically in understanding how a dealership works. On the one hand, they are in too much of a hurry to close a sale as quickly as possible.
On the other hand, a buyer does not have a specific urgency that determines him to buy a car in any kind of condition. So, as a buyer waits long enough to analyze an offer, it is much more convenient. As some time passes, a dealer’s employees may offer a much more favorable offer or a loan with better terms.
6. Closing The Purchase And Sale
When the purchase of a used car is made with a private seller, the whole procedure can be much simpler. Private sellers are not usually overly experienced sellers looking to take a big advantage over any sale. On the contrary, these types of sellers are only looking to make some profit to purchase a superior vehicle.
Also, to close a sale or purchase with a private seller, it is necessary to check with each state’s department of motor vehicles to verify the necessary documentation. Closing a vehicle purchase at a dealership can be a bit more complicated even though the finance and insurance manager handles the paperwork.
Some dealerships will even insist on incorporating an extended warranty that may not be necessary. This means that a buyer will be paying for something they will use for 3 years. So, there is no need to continue to strain a limited budget with these additional costs.
Along with this, it is highly recommended to ask for explanations about each of the additional costs that may be added to the purchase of a car. This is one of the most efficient ways to avoid paying unnecessary additional costs.