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How to buy your first car and not regret it

CNET logo CNET 6/1/2017 Emme Hall
© Provided by CNET

This is part of CNET's #adulting series of stories to help you figure out how to live, work and play now that you're all grown up. 

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So you're done taking Lyfts and bumming rides off friends. It's time to buy a new car and that's a pretty big deal.

Besides a house, the purchase of a car is the biggest outpouring of money most of us will ever pay. Never fear, my friends. This guide will (hopefully) make the process a lot less stressful.

Related Video: Use these simple car-buying tips to get a good deal (Provided by Buzz60)

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Set your budget (and stick with it)

Before you do anything, decide on a budget. A good rule of thumb is to keep the purchase at or below 20 percent of your yearly salary. So, if you earn $65,000 per year, your max budget is $13,000. This number -- and what's important to you (that's next) will largely determine whether or not you buy a new or used car, which are two entirely different processes. 

Once you set your budget, stick with it. If you're purchasing a new car and financing it, many salespeople will justify you exceeding your budget by encouraging you to focus on monthly payments. For some buyers, the justification works. But you're prepared. You won't back down. You got this. 

What's important to you?

Maybe you want a car with excellent gas mileage for your long commute. Live in the mountains? You'll probably want something with four-wheel drive. If you know you'll be carpooling you'll want a car that seats at least four. Make a "must-have" and "nice-to-have" list. It might look like this:

Car needs vs. wants

Need Want
All-wheel drive Sunroof
Large trunk Adaptive cruise control
Low gas mileage Android Auto/Apple Carplay 

What's not important to you?

For folks living in warmer climates, all-wheel drive isn't really necessary. A navigation system might be cool, but you'll probably end up just using your phone anyway. And luxury features like massaging seats and a heated steering wheel? Super-nice, of course, but save the scratch for a more valuable purchase. These incremental, but expensive, features can quickly force you out of your budget. 

If you're shopping for new or preowned cars at a dealership, buying into unnecessary features is even easier, unfortunately. Here's why: Dealerships don't have every feature combo of every car. In fact, they might only stock models with features you don't need. If this happens, you have two options:

  • Have the dealership order the model with the configurations you actually want.
  • Find out if the dealership can transfer the right car to their lot.

These options often mean you'll have to wait a few days to a week to get your car, so be prepared for the wait. You might get excited while you're on the lot, which could tempt you to drive away with a model that exceeds your needs. 

Do some recon

Now that you've set your budget and needs, it's time to narrow down your choices using comparisons and reviews. Aim for a top-three list that includes configuration details. 

And before you go to a dealership, take the time to learn about the many features available, especially the non-mechanical ones. These new features are complicated and sometimes confusing. And while they can add a lot of value (especially with regard to safety) they're not always necessary. You don't have to know as much as a car salesperson, but you shouldn't be surprised by much on the lot.

There are plenty of great reviews right here on Roadshow. We've got plenty of words, videos and pictures for you to look through to help you narrow down your search. 

Test drive. And then test drive again

For the love of the clutch pedal, drive the car you are thinking about buying. It may have all the features you want but be incredibly uncomfortable and the only way to know for sure is to try before you buy. Most dealerships have predetermined routes they take customers on. If you know the area, don't hesitate to ask the dealer if you can choose your own route, especially one that combines highway and street driving. 

Find out what others are paying

Knowing how much others have paid for the car you want will make you a confident negotiator. True Car is a great website to see what folks have paid for a new car. It's easier to negotiate when you have context about what others are paying. To that end, don't be afraid to shop around with a few dealerships, then choose the one with the best deal. 

Consider financing

Unless you are buying the car outright, you'll likely have to finance your purchase. This means you'll spread the total cost of the vehicle across a long period of time, usually two to four years. Often, dealerships offer zero percent financing, which means don't have to pay interest on your loan. 

If zero percent financing deals aren't being offered and you're in a rush to buy, shop around for a good interest rate and read the fine print. Those great rates may only be for folks with great credit or may just be the introductory rate -- a loan that starts a 1.9 percent for the first year but then balloons to 13 percent is not a good deal. A loan with an interest rate at 3 percent or below is good, but since it's not zero percent interest, consider putting money down to decrease the total interest paid. Here's an example of how much you can save:

Car payment comparison

Car price ($) Down payment ($) Interest rate (%) Loan term (months) Total cost ($)
25,000 0 2.5 48 26,297
25,000 $10,000 2.5 48 25,778 

Don't be afraid to walk away

I was really close to buying a used Porsche Boxster from a dealership but was concerned about maintenance and insurance costs. When the salesman pushed the phone toward me and demanded I call Geico for a quote, I walked out. He was just too pushy. 

The dealership will try to sell you an extended warranty, but remember that new cars come with a bumper to bumper warranty already, usually three to five years or anywhere from 36,000 to 50,000 miles. Hyundai and Kia have 10-year/100,000 mile warranties on their powertrains, which includes the engine and transmission. I'm not a fan of extended warranties, but if you're planning on keeping your car a long time or putting a lot of miles on it, it may be worth it. And, in some cases, a warranty that exceeds your ownership of the car can add value when you resell it. 

Buying a used car

If your budget just doesn't allow you to get a new car within your price range, consider buying an, ahem, "preowned" car. Many are available at dealerships, so all the aforementioned tips still apply. 

As a car expert, I can tell you: used is often the best option. That's because, when you buy a new car, it depreciates significantly the moment your drive off the lot. When you buy used, someone else has taken the hit, even if the car is just a couple years old. 

I buy all my cars used. My most recent purchase was through Craigslist, but there are a lot of different sites. You can buy a car on Ebay or you can try CarsDirect or AutoTrader. Shift lets you browse cars on its site and will bring them to you to test drive, since, you know, you probably don't have a car to get there. There are also specialty sites like Bring a Trailer for classics or The Samba for all your vintage VW needs.

To get an idea of how much you should pay, try Kelley Blue Book or NADAGuides. Both allow you to search for a specific make and model and include variables like configurations and mileage.

Once you've found your dream used car and taken it for a test drive (because you've done that, right?) it's time to CYA or Cover Your Ass. Regardless of dealer or private party, the owner should be able to tell you the car's maintenance history, any mechanical problems or quirks, if the car was in an accident and the number of previous owners.

Be sure your mechanic takes a look at your new-to-you car within 30 days.

Getty Images

Then take that information and verify it. Get the CarFax report to find out the accident history, odometer readings and title history. It's the best $40 you can spend. 

Don't make the mistake of signing anything that says, "As-is." Even though you're buying used, you should have 30 days to return the car if anything goes drastically wrong or if your mechanic lets you know it's a money pit. 

An inspection from your mechanic is priced around $100 and should include at least: 

  • An overall visual inspection for rust and other body bugaboos.
  • Checking for worn suspension components and leaky seals.
  • Evaluating wear on belts.
  • Checking spark plug wires.
  • Brake inspection.
  • Giving the electrical system a visual once-over.
  • Checking the quality of the tires.

I can't emphasize that last bullet point enough. The tires may look fine but if they are more than five years old, the rubber components will have degraded, which could have deadly consequences. 

Despite all this practical advice, the best tip I can give is to buy what you love. Life is too short to drive something you don't absolutely adore. So what if it's not practical? If you want that convertible and you can afford it, go for it! Live in the city but if you've always wanted a Ford Raptor, I say hell to the yeah. Life is too short to drive a boring car.

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