Some of us get lucky, and our daddies give us really nice cars, because we’re their favorite daughter, or because we made straight A’s until we graduated, or just because that’s what daddies do, because it’s something they can connect to us with. Some of us buy $600 cars and drive them until the engine is practically empty from all the pieces falling out on the road when we failed to change the oil. Regardless, at some point, everyone has to buy their own car, unless you live in New York City or are just really that into riding a bicycle. And while it’s simple to say, “Ooh, I like that one,” and sign your name a dozen times before you drive it off the lot, there’s a lot more to it than that.
1. Bigger down payment = better loans and interest.
Unless you have money to throw away, buying a car should never be a spur of the moment decision. If you walk in with a few thousand dollars in your pocket, you have three thousand more bargaining chips than if you walk in looking only to make payments. They don’t mind, per se, because the more money you take a loan on, the more money they make interest off of, but if you’re offering them a few grand instead of just asking for money and a car, you’re going to get a better deal. Plus, you won’t be paying interest on quite as much money. Saving up also makes you more attached to your money, which means you won’t settle for just any old car. And you shouldn’t! Take your time to pick the one you really want.
2. There’s more than one way to get a loan.
I tried to get a loan from the bank before I went to a car dealership. I was hoping for a better interest rate and better opportunities. My credit cards were paid off, I didn’t have a mortgage or previous car payments.
They laughed at me.
Even though I wasn’t paying on my student loans yet, they still made up way more than the requisite percent of my income. The car dealership, however, went out of their way to work with me, and I walked out with less than a 4% interest rate and feeling like a badass. Peer to peer lending is an option for some people, too. So don’t get depressed if the bank looks at you like you’re an idiot, too.
3. It’s never going away…except by tow truck.
Just because you lose your job or some new payment comes up doesn’t mean you can stop paying on your car. The only way you get to give that back is if you sell it to someone or if it’s repossessed. And if it’s repossessed, it doesn’t really go away — it goes on your credit score. If you aren’t going to be able to pay for it once you have it, then buy something with the money you have in your pocket, not the imaginary money you’ll being paying for the next six years.
4. Buying a car used is better 99.9% of the time.
Unless you’re making more money than you can spend in a lifetime, there’s basically no reason to buy a brand new car. Ever. Within two years, they’ve depreciated in value so much that you can get a 2-year-old car that still looks and feels brand new for about half the price. You do want it to be one that has less than 20,000 miles on it if possible. There’s still enough room to break it in for you, rather than a crazy person having ragged the engine out before you get to do it yourself. Once it’s been driven into the ground for more than a few thousand miles, there’s no going back.
Now, that’s not to say you should buy any old car off of Craigslist. The thing with used cars is that they’re used, and the previous owner won’t always tell you what’s gone wrong and Carfax isn’t always as accurate or clear as you might hope. While you can usually get a better deal buying from a person than a used car dealership, you can’t get a loan from individuals, and you certainly don’t get a 30-day warranty. Have a mechanic you trust (not one that is in the seller’s pocket) look at anything you plan on buying if you don’t know anything about engines other than that they’re the thing in the front that makes the car go.