A graduate’s guide to buying a car

Buying your first vehicle can be one of the most expensive purchases you make in the first years of adulthood. So before you head to the dealership to pick out the perfect ride, research and get preapproved for an auto loan so you can shop confidently.

Choose the car that’s right for your lifestyle post-graduation

The thought of purchasing your own car is exciting. However, you must avoid getting sidetracked by a flashy brand name. You could end up with a vehicle that fits your style but isn’t practical.

Commute

Consider the primary use of your vehicle when deciding how it’ll fit into your lifestyle. If your job requires a long commute, you may want to narrow your search down to cars with good fuel economy ratings.

Even without a long commute, saving money on gas is important. Driving the speed limit, joining a rewards program and using apps to find cheap gas can help you save on prices averaging at $3.80 as of September, according to AAA.

Size and add-ons

When deciding the right size for your vehicle, consider its day-to-day uses. Post-grad housing often comes with limited parking, which can make a compact a perfect option. If you intend to tow or transport items, you likely require something bigger, like a crossover or pickup truck.

Safety features

As a young driver, keeping yourself and your passengers safe should be top-of-mind. When shopping used, request a copy of the vehicle history report. It includes maintenance records and discloses if the car has been involved in accidents.

Finding a safe vehicle doesn’t always have to cost more money. Instead, search safety ratings online and check for recalls to find the most reliable car.

Decide between new and used

There is a lot to love about a new car. It’s shiny, in tip-top shape and smells good. But the reality is some used vehicles are just as reliable. Plus, you could purchase an extended warranty for around $1,500 and have added peace of mind knowing you’re protected in the event of a major mechanical breakdown.

Consider the following when deciding between a new and used ride:

• New cars come with a manufacturer’s warranty. This coverage could save you a lot of money if your car breaks down and requires major repairs in the first few years of ownership.
• New cars often have all the latest technology. However, you may find a slightly used car with your desired features.
• Some used cars can have low mileage. So, you shouldn’t have many mechanical issues for some time, maintenance costs will likely be lower and you’ll get a better deal.
• Some used cars are certified pre-owned (CPO). These are given the manufacturer’s seal of approval after being brought up to a set standard mechanically and have a limited factory warranty.

Think about the whole cost of car ownership

Beyond the monthly payment, fuel costs and auto insurance premiums, you should also factor in maintenance and repair costs. In 2022, the average cost of maintenance, repairs and tires was around 9.68 cents per mile, according to AAA.

Annual registration renewal expenses, which generally range from under $20 to a little over $200 per year, are also a factor to keep in mind. Some states assess a flat fee, while others use your vehicle’s age, fuel efficiency or weight to calculate registration fees.

Research cars and get financed before going to a dealership

Most dealerships offer in-house financing, but it’s wiser to get preapproved for an auto loan before you start shopping for a car. You want to have a concrete idea of what you can actually afford, and quotes from your bank or credit union will help you decide on a purchase price that works.

You’ll also have more leverage when negotiating the purchase price. The deal won’t depend on your ability to secure financing through the dealership, and you can behave like a cash buyer.

Understand the benefits of buying vs. leasing

There is no one-size-fits-all answer when deciding between buying or leasing your vehicle. Leasing tends to cost less on a month-to-month basis, while buying carries fewer restrictions. Consider the benefits of both options before deciding:

• Lease payments on newer cars are typically more affordable. If your eyes are set on a particular vehicle that is a bit pricey, you may be able to afford the monthly payments if you get a lease.
• You’ll get a manufacturer’s warranty when you lease a new car. It typically covers you for up to 36,000 miles or three years, so you won’t have to worry about spending a fortune on repairs if a mechanical issue comes up.
• There are no mileage restrictions if you buy a car. But if you decide to lease, you will be limited to 10,000 and 15,000 miles per year or risk racking up excessive mileage fees. They can cost you between 10 cents and 25 cents per mile or more, depending on the lease agreement’s terms.
• You’ll own the car once the loan is paid in full. Lease agreements operate a bit differently, though. You’ll have to return the vehicle to the dealer when the lease ends unless you opt to buy it out.

Next steps

Ultimately, buying a car in college is one of the biggest purchases you will make. To ensure you get the best deal, you want to do your research to find a ride that complements both your lifestyle and your budget. It is equally important to get preapproved for financing before you visit any dealerships and weigh the benefits of buying versus leasing to decide which option is best.