Buying your first car might pose an expensive challenge, especially with car prices rising to record levels.

Indeed, the average sale price for a light vehicle in August 2020 was $38,635, as estimated by Kelley Blue
Book analysts. As such, it's more important than ever to understand what you can afford, how to improve your credit, and explore all your financing options, including first-time buyer auto loans.

In this article, our car loan experts from the Credit Union of Southern California (CU SoCal) have put together a collection of excellent first-time car buyer tips to guide you through the entire car buying process.

And when it’s time to buy, we hope you consider CU SoCal!

CU SoCal offers competitive rates on auto loans with flexible terms stretching up to 84 months and financing up to 120%, and accessing first-time buyer auto loans is simple when applying online.

Please call us today at 866.287.6225 for an expert, no-obligation consultation.

#1. Determine How Much You Can Afford

What to know before buying your first car starts with figuring out what you can afford. Don’t buy without preparing a budget. Having a clear budget keeps you from overspending and getting tempted by unnecessary upgrades.  

Your budget should calculate the monthly payment you can handle. Determine this by calculating your monthly auto loan repayments from the purchase price of the car. You’ll need to consider the annual interest rate on the auto loan and the loan repayment period. Beyond the car payment, you should also factor in insurance and fuel costs.

Plugging the numbers into our vehicle loan calculator can simplify this calculation for you.
Making a substantial cash down payment is also one of the most important things to consider when buying your first car.

Indeed, a hefty down payment will lower the amount of financing you’ll need for the car purchase, and a lower loan amount will translate to lower monthly payments.

You can also consider incentives, rebates, or a trade-in allowance that reduces the overall cost.

#2. Build and Improve Your Credit

Your credit score follows you everywhere and can either improve or hurt your financing options. One of the more complicated but rewarding tips for buying your first car is improving your credit score.

A good credit score qualifies you for better financing terms like lower interest rates, and lower interest rates save money because your monthly repayments will be lower. 

To improve your credit, start by monitoring your credit report and dispute any errors. You’re entitled to a free credit report once a year from each of the three major credit bureaus (i.e., TransUnion, Equifax, and Experian).

Pay your bills on time, open only the credit accounts you need, and try a secured credit card.

#3. Explore Different Lenders

Having worked on your credit score, you’re now ready for financing. There are pros and cons to getting financing from credit unions, banks, or dealerships.

Banks are easily accessible, have flexible repayment plans, and issue pre-approvals for auto loans. They can charge acquisition or bank fees during the approval process. Dealership financing offers the convenience of a one-stop shop but usually at a higher cost than banks or credit unions.

Credit unions typically have lower interest rates, lower fees, and help even if you don’t have a great credit score.

Shop around for lenders with the lowest rates and most favorable auto loan terms.

#4. Shop Different Cars

Figuring out the type of car you want will narrow down what to look for when buying your first car. Are you driving mostly in a city or do you plan to go off-roading? Do you need a flatbed truck to transport a mountain bike, or would you rather have an SUV to fit a growing family? Do you want a brand new car or would a used one work just fine?

Once you decide whether you’ll opt for a car, truck, or SUV, you might want to compare performance, speed, and crash test results. Online car reviews are a great way to navigate how to buy your first car.

If you decide on a used car instead of a new one, take a look at the vehicle history report. You’ll find out about previous owners, accidents, mileage covered, and whether the vehicle was commercial or personal.

#5. Negotiate The Price Of The Car

One of the most underrated first-time car buyer tips is that you can probably get a significant car discount with the right negotiation strategy.

To negotiate successfully, you’ll need to do your research first. Demonstrate to the dealer that you’re knowledgeable about the vehicle you’d like to purchase. Get quotes from more than one dealership, in case they offer you different deals.

Having a pre-approved loan makes it possible to hold meaningful negotiations with car sellers. They’ll appreciate that you’re serious since you’ve already worked out financing. Remember that everything is negotiable, especially on a big-ticket item like a car.

#6. Title & Register Your Car

Another key step in buying your first car is getting your vehicle title and registration. The title proves ownership of the vehicle. You’ll need it to use the vehicle as collateral for a loan or when you sell the car and transfer ownership. Store the car title in a secure place.

You’ll also need to register your vehicle with the state Department of Motor Vehicles. The registration granted by the state allows you to use the car, though it needs to be renewed regularly. Have it in the car at all times.

#7. Consider Paying With Cash

If you have enough cash, paying for the car entirely upfront might be good advice for buying your first car.
Paying cash eliminates the interest cost associated with financing.

The average interest rate for financing new cars is 5.61%, while for used cars, it’s 9.65%. That additional cost could run to a couple of thousand dollars over the lifetime of the loan. Without a loan, you won’t need to make monthly payments.

There are a few other perks to paying 100% in cash. First off, you’re more likely to negotiate the price successfully. The dealer knows there’s no risk of defaulted payments. Some sellers have sales incentives like discounts and rebates with cash purchases. Secondly, a car that’s financed may require full collision insurance coverage. Otherwise, on a cash-purchased vehicle, you might be able to buy cheaper liability-only insurance (if your state permits it).

Alternatively, if your funds cannot cover the entire purchase price, consider making a larger down-payment. This reduces the debt proportion on your car purchase.

Why Do Drivers In Southern California Choose CU SoCal?

CU SoCal has over 60 years of experience funding competitively priced auto loans with flexible lending terms and low monthly repayments.

Financing Up To 120%

Financing of up to 120% is available for buyers of new and used vehicles. Extra financing funds the car, pays for insurance and fuel, and could even provide leftover money.

Competitive Rates

Our rates currently run as low as 2.89% APR. Use the vehicle loan calculator to determine how much you’ll pay over the loan period. 

Quick Pre-Approvals

Pre-approvals make it easy to shop around for a car and effectively negotiate with dealerships.

Flexible Terms Up To 84 Months

A longer loan term spreads out the monthly payments, giving you more time for repayment.

CU SoCal Auto Loans

CU SoCal funds new and pre-owned vehicles for several types of buyers. New vehicles are defined as vehicle models from 2019 to 2020 below 10,000 miles. Pre-owned vehicles include models from 2010 to 2018 with less than 100,000 miles.

You can access loans even without a great credit score. Auto loans cover cars, trucks, and even recreational vehicles. 

Auto Loans

Having a current government ID, registration, and proof of insurance handy will speed up the application process for auto loans. Instead of focusing purely on credit scores, CU SoCal listens to your story and lends based on character, especially for first-time buyer auto loans.

There’s optional loan protection and even an auto expert concierge who can help navigate what to look for when buying a first car, negotiate pricing, and complete paperwork.

Recreational Vehicle Loans

Recreational vehicle loans finance recreational vehicles such as RVs, motorbikes, personal watercraft, boats, motor home trailers, and quads/side by side. There are flexible terms, quick pre-approvals and funding, no pre-payment penalties, and no application fees.

Apply For A CU SoCal Auto Loan Today!

At CU SoCal, our goal is to help you get your new car without financial stress. With our competitive rates, long term loans of up to 84 months, and financing options up to 120%, we’re proud to serve those who live, work, or attend school in Orange County, Los Angeles County, Riverside County, and San Bernardino County.

Please give us a call today at 866.287.6225 for an expert, no-obligation consultation.