Tips for buying your first car on a budget

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Buying your first car can be as exciting as it is daunting. While the freedom a vehicle gives you is invaluable, it’s not a purchase to be taken lightly.

Used and new car prices are still high across Canada, according to reports from CTV News and AutoTrader.ca. That means you’ll have to search a bit more to find a good deal.

If you know what to look for, deals can always be found. However, if you are not informed, you may as well get scammed.

Whether you’re buying a car off the lot from a dealership or buying a car at a private sale, there are a few basic tips you should always keep in mind:

  • The seller is not your friend (don’t be afraid to negotiate!)
  • Always seek the advice of a mechanic before handing over any money
  • Don’t buy on a whim
  • Don’t be trapped by an unfavorable loan

Below, I’ll go over these key points and share some other handy tips for first-time car buyers on a budget so you can find the best deal.


1. Research the price ranges for the vehicle you want

If you’re shopping for your first car, you probably already have a few different vehicles in mind. Before heading to the dealership or checking out local private sales, I recommend visiting the Kelley Blue Book website to do some initial pricing research.

Just enter the year, make, and model of the car, and the website will tell you the average price range you should expect to pay. This is great information to have while shopping as it will help you determine if you are getting a good deal or not.


2. Look for minor imperfections in the vehicle

One of the best ways to convince a car salesperson or seller to lower the price of a vehicle is to point out small imperfections. Look for imperfections, such as:

  • paint chips
  • Small bumps or bumps
  • Grooves
  • Chipped clear coat
  • Scratches on the wheels

None of these affect the overall performance of the car, but they are a useful bargaining tool that can convince the seller to lower the price a bit.


3. Buy towards the end of the year (closing sales)

Have you ever realized how dealerships make the best sales during the holidays? Indeed, major dealers are trying to liquidate inventory from the previous year to make room for the latest models arriving in January.

If you’re considering buying a new or Certified Pre-Owned vehicle from a dealership, the holidays are the best time to shop. Private sellers may also lower their prices, as they may be looking for quick cash to buy gifts for friends and family.


4. Don’t be afraid to negotiate the price

Remember – salespeople are not your friends and family. Don’t let their golden smiles and friendly compliments tempt you into buying a car you wouldn’t otherwise buy.

The best way to save money on your first car is to negotiate the price down. It works better with private sellers than dealerships. However, most dealerships are also willing to negotiate (although you may need to speak directly to a sales manager to get the deal).


5. Ask for service reports and car history reports

Saving money up front doesn’t mean much if the vehicle breaks down a few months later. That’s why you should always ask the salesperson or dealership for the car’s maintenance records. In particular, you’ll want to make sure the oil has been changed regularly.

It can also show you whether or not the vehicle has had major work done to the engine block, transmission, or cooling system. Recent work is usually a good sign, as it shows major issues have been fixed, so you don’t have to worry about them.

A car will also have a history of any accidents it has been in that have resulted in insurance claims, so see if the vehicle owner has access to those records. If they don’t have one, you can purchase a report from a third-party provider.

If the vehicle has been in an accident, this can be a good bargaining tool to lower the price.


6. Inspect and drive the car with a mechanic

Even if the car is sold with impeccable service records, you should always get the opinion of a mechanic. If you have a friend or family member who is a mechanic, ask them to accompany you to the parking lot to do a quick check-up and accompany you on the test drive.

The trained eyes and ears of the mechanic should be able to identify any major issues before you hand over your money.

Many stores are also willing to perform a pre-purchase vehicle inspection for a nominal fee.


7. Negotiate your interest rates

Dealerships often entice first-time buyers with smart deals and perks, such as:

  • No payments for 60 days
  • Extremely low or non-existent down payments
  • Free oil changes for a year
  • Free satellite radio for one year

If you focus only on the benefits of the transaction, it can be easy to overlook the fact that your interest rate may not be the best. Interest rates can mean the difference between thousands of dollars over your loan. Not everyone knows this is something you can negotiate with a dealer, so do your best to negotiate it.

If you want to find the best deal for your first car, I recommend shopping around a bit. Don’t buy a car on a whim or let a salesperson pressure you into buying on the spot. Look at several options, weigh the pros and cons of each, and make an informed decision based on your budget and needs.


Christopher Liew is a CFA charterholder and former financial advisor. He writes personal finance advice for thousands of Canadian readers daily on his Wealth Awesome website.


Do you have a personal finance question, tip, or article idea? Please email us at dotcom@bellmedia.ca.

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