I knew how much I could comfortably afford on my $1600 a month salary at the time. I knew I wanted something cute, sporty, and more high-end than the ’96 sea green Ford Escort I had been driving around since high school.
At this point in my life—young, naïve, and with a freshly-inked diploma—I felt I deserved a nice car. So really, when I say I researched my car, what I really meant was I looked to see the maximum amount of car I could afford on my salary.
And then when I went to buy a car, I absolutely disregarded the little research I had done.
What I did do, was take $3,000 of my hard-earned savings, plunk it down for a down payment, and then ended up with a $434 monthly car payment for six years.
How could I be so stupid?
I let myself get carried away with buying what I thought I deserved, instead of what I could realistically afford. Here are some tips on things not to do when buying your first car.
Figure Out Your Budget Before You Buy
Just because you have a $3K down payment, which really only covers taxes these days, doesn’t mean you can afford a $30k car. Deciding how much you can realistically afford will save you lots of agony in the future.
Furthermore, don’t tell the dealer what your max monthly payment should be. Only talk about the total price of the car. Dealers will pull tricks by saying they can stick to your max monthly payment, but will then have you sign a six-year payment plan, rather than a more comfortable three-year plan. Or they’ll add taxes to the end, which can easily make your payment jump even more.
Think Into the Future
I bought a coupe, because I thought the four-door looked too “old-looking” for me. Now at 30, I never ever in my wildest dreams thought I would still be driving the same car eight years later. Yet here I am, and the worst thing is I would still be driving the car for several more years (haven’t had any issues) except we’re hoping to expand our family, and will need a family car.
I’m not saying you need to buy a minivan, but if I had just gone with the standard four-door model, I wouldn’t even need to be worrying about switching cars right now.
I know it’s so incredibly tempting to get all the high-end top-of-the-line additions you’ve been dreaming of, especially now that you have a job, but not knowing what the future holds, it’s best to be frugal until you are have more stability in your career.