How does buying your first car work?When it comes to buying your first car, you’ll want to start with research. A lot of research. Knowing what you want and how it will augment your life is essential. Buying a fuel-efficient car to commute to work compared to a minivan to shuttle kids to school are very different options — knowing what you’re looking for beforehand will help narrow your search when buying your first car and keep you focused when walking the lot with a car salesperson. The second thing to consider is how much you can afford and where you want to shop.
Buying your first car from a dealerBuying your first car from a dealer allows for on-site financing, vehicle options, and brand-specific support. Visiting a dealer will allow you to test drive the car and make sure you like how it handles, as well as how comfortable it is — this is essential if you'll be spending a lot of time behind the wheel.
Don’t hesitate to ask questions, and ensure you understand all the features as well — better safety ratings will give you peace of mind, as well as a better insurance rate. It’s important to factor in how much it will cost you to own and operate the car; how often you'll have to fill up the tank can come as a shock to some new drivers, so ask about fuel economy and factor in your daily commute.
Buying your first car through a private saleAnother option for a vehicle may be through a private sale, bypassing the dealer completely. You can find options through online marketplaces, or even through your network of friends and family. Choosing to purchase through a private sale may mean a lower price on a used vehicle if you’re familiar with the options you want.
Private sales do have an element of risk, as the purchase isn’t protected by the regulations that dealerships must abide by. However, there is certain documentation you can request to completely understand the history and condition of the vehicle — we detail more on that below.
Financing options for buying your first carBuying your first car is a significant purchase, and there are financing options that make it accessible if you don’t have the full purchase price up front. There are three routes you can take: lease, finance, or buy the vehicle outright.
Leasing a vehicle means that you don't own the vehicle but rather pay to use the car as it depreciates. Leasing offers more flexibility, newer vehicle options, and usually lower monthly payments. However, if you exceed your allotted kilometres or break your lease early, you may be penalized.
With financing, loans are obtained from the car dealership, your bank, or a credit union, covering the gap between your cash in hand and the actual purchase price. Here, you own the car, allowing you to do what you like (and drive as far as you’d like) while making payments on your loan.
Finally, if you have enough cash on hand you can buy the vehicle outright, making for a cheaper purchase as you won't have to pay interest on the transaction.