Advice on buying my first car

[zaptearnh]

Hi, everyone. I want to buy my first car before the end of this year. I'm looking for a new economical car that can get me from point A to point B. Speaking from experiences in purchasing a car, I'd love to hear any advice that I can keep in mind.

Some questions I have:
1) Pre-approved loan through a bank or work through the dealership?
2) What are the total costs involved?
3) What does your monthly budget look like?
4) What is your recommended deposit percentage?
5) Your thoughts on a balloon payment?
6) What is a good general price for a new economical car?

Thanks in advance.

 

[cff13]

@zaptearnh I'm in the same situation, I've been doing my research.

I'd recommend a new preowed car with very low KMs but same applies for new cars.

1. Pre approve through bank (dealerships will try screw you over it's a conflict of interest for them not to try to squeeze every cent out of you and more) .
2. Sticker price + extras + interst + upfront deposit (if preapproved this way)+ "delivery" cost + licencing and registration + some more bs fees dealers charge like initial fuel .
3. Finance payments + insurance + tracker + fuel
4. Most recommend a minimum of 10%, imo as much as you can afford as it will go directly into the principle amount and lower your interest paid and monthly payments significantly, which enables a bit more financial flexibility.
5. Do not touch it with a ten foot pole
6. 199-300k is a sweet spot imo for a 2021-2023 nice economical car. Suzuki swift, Toyota/suzuki starlet/ baleno, the most recent Peugeot 208, preowed polo (crime red flag), opel corsa, i20

At the dealerships Always negotiate-remember they have targets to hit they need your sale, do not reveal how much you want to pay monthly just give your total number and leave it at that. Otherwise, they'll start adding more dealerships charges ontop of the sticker price, rather they give you discounts to fit your budget e.g the car you want costs 208k , when getting a quotation make sure they understand your budget is 210k and do not budge even if it means leaving your contact details and letting it simmer for two weeks while shopping around. Do not be apologetic, it's your money and choice, you'll be living with this car for the next foreseeable future and doing your salesman a favour only works against you

 

[coctien]

@cff13 Some things to add to this:

1. Always ask them to review the interest rate, never accept the first offer.
2. Don’t let them add anything extra, paint protection, tyre insurance, etc, it’s all rubbish. Ask for a break down of delivery/on the road costs or any general fee. Ask for discount, 2% is normal, but if the car is sitting on the floor a while they could give more.
3. I would not take a tracker, I don’t want a stolen car back. You might need shortfall insurance too, if no deposit and balloon and you are financially upside down. Don’t put yourself in that situation on the first place though.
4. Zero Deposit. Financing more gets you a better interest rate. You can pay in additional amounts whenever you like, so pay what you would have given as a deposit in month 1. This should be as much as possible.
5. If you’re using a balloon as a mechanism to buy a more expensive car than you can afford, it’s really bad, a debt trap. A balloon needs to be paid anytime before the end of the financing deal, not specifically at the end. If say you have a variable salary due to working on commission or owning a business or getting big bonuses you might want to have a low monthly instalment for when you bring home less money and be able pay the balloon when you have excess money. If you don’t pay a balloon by the end of the finance agreement you basically have to take out another loan to cover the balloon or you need to trade-in the car and do a new finance deal on a new car.