- Buying & Selling New & Used Cars
College Car Buying
Buying a car in college is equally exciting and overwhelming. A car gives you personal freedom and an extra place to sleep in case you can’t pay rent, but it is also an additional expense and liability. This guide will help you navigate the pothole-riddled roads during your car buying journey so you drive away with a vehicle you’re sure to love.
Make a Real Budget and Learn How You’re Paying
Cars are ridiculously expensive, especially on a college student’s budget. We often have to balance whether we want a beer on Friday night at the cost of lunch on Monday. And such a cost-benefit decision is chump change compared to the thinking about a car.
Ideally you can save up a bit each money and pay for an affordable used car in cash, but that’s not always possible. You might have to consider taking financial help from a parent, bank or dealership. If you’re looking for a newer car, then leasing is also an option.
Financiers are typically looking for adults with a good credit score, steady employment history and strong financial assets. You’ll absolutely find lenders who will give you the money you’re looking for even without those qualifications, but if you use them you’ll generally be looking at an outrageous interest rate during repayment. As college students, our best bet is to find something within our budget so any additional loans we take are small and don’t add much more to our revolving student loan debt.
With that in mind, figure out how much of your income you can afford to spend monthly on car payments, fuel, car insurance and vehicle maintenance. Calculate how much money you spend on bills and what disposable income you have to clearly see the amount you are willing and able to commit to a monthly car budget. Budget tools like mint.com or goodbudget.com are really helpful for making new savings goals, like a down payment or emergency car funds.
Before you consider buying a car from the dealership, it is also important to think about how much an ideal down payment would cost you and then save toward that total sum. It may be reasonable to put 20 percent down toward the total sum to trim down either the monthly payments or the amount of payments. The interest rate is another important factor to consider in the amount of installments — the longer you take to pay back the financial assistance, the more finance charges you will incur and the more expensive your car will be in the long run.
At this point, the amount of debt you are willing to take on will be the main defining aspect for informing whether you will be driving a used car for the next five years or a new car for the next decade.
What Do You Need and Want from your Car?
When deciding on what car to buy there are a lot of questions ask yourself. It’s best to think critically about the non-negotiable features you require, and the ones you really want but can live without. Here are a few questions to get you started:
Will you frequently have passengers?
Do you have a parking space? If so, how big is it?
What safety features do you need?
Do you plan to listen to the radio or will you need Bluetooth?
Do you have a long commute between home and campus?
Do you need to drive in ice or snow?
Will you be taking the car off paved roads during the weekends?
Do you have pets that you’ll need to drive with?
How “future proof” do you want this car?
For example, if you have a long commute between satellite campuses then cars with good fuel economy are likely important to you. By establishing your transportation needs and wish list of features and specifications, you have a set of prioritized features to guide your first car purchase.
Research, Research and More Research
Now that you have those specific features and qualities in mind, it’s time to find out what cars have those qualities. College students often get fixated on the ideal car, but it may be more practical and affordable to start looking at other vehicles as well. We recommend having three different cars to choose from. Choosing additional car options will help give you an idea of what other vehicles compete in the same space. The Internet should be one of your starting points to begin making informed car buying decisions without the showroom distractions.
Now that you have a list of three car options and a good idea of your available financial choices, the next step is to determine how much you’ll actually need to pay for the car. The cost of your chosen three cars will often be different than the MSRP, and will vary among dealers and private sellers and whether the vehicle is new or used. The features you look for and what time of year you’re shopping in will also affect how much money you’ll likely need to spend.
To get this info, we advise you use research websites like Edmunds, Kelley Blue Book, AutoTrader, & CarMax.
Buying a Car: Dealership vs. Private Seller
If all options are equal, it comes down to checking the location and retail prices of local dealers, private sellers and the showroom. Dealerships have a lot of benefits — they might offer financing options that your financial institution doesn’t match, they will do all the paperwork for you and some dealerships will offer warranties on their used cars. However, when compared to private sellers, private parties have lower and may be more convenient in the short-term. Though, the trade-off with a private seller is doing all the paperwork and doing extra research on safety, taxes and vehicle history to figure out whether the you are getting your money’s worth. All methods have their merits — it’s up to personal preference to decide on which option is better for your first vehicle purchase.
Used cars can have very complicated and easily-hidden pasts; however, car history report and an inspection by a trained mechanic can reveal most potential issues that an untrained eye will miss. We find getting a privately-sold used vehicle inspected by a trained mechanic is the most frequently ignored advice out there, and it really shouldn’t be.
Inspections are typically efficient, available the same day and cost less than $100. That’s expensive if you discover the car has plenty of problems and you decide to pass on it. But it’s also significantly cheaper than unexpected repairs on top of the thousands of dollars you just spent on the car.
Most reputable mechanic shops can perform a same-day inspection if you call them, as can many car dealerships. Some places even have mobile inspection services in case the private seller doesn’t feel comfortable with you taking the car to a mechanic yourself.
The benefit of dealerships compared to private sellers is that most dealerships already perform inspections and maintenance upon buying the used car from a seller. So that eliminates this extra step.