How to choose and finance your first car |

learn how to choose the right car for your budget and needs

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What better way to adult than by buying your first car?

Adulting and freedom often go hand-in-hand and one surefire way to ramp up your freedom is by getting your own set of wheels. It doesn't matter if it's a Lexus or your nan's 1990 Toyota Corolla, you need to know how to find your car and how to finance it. This guide will take you through everything you should know about finding you buying your first car.

Where should I buy my first car from?

There are a surprising number of places where you can buy a car:

  • New car dealership. If you're in the market for a new car this is where you'll need to head.
  • Used car dealership. The benefit of going to a used car dealership is that you can be sure of the vehicle's quality. The drawback is you may not get as good a deal.
  • Online private sale. There are a number of sites where people buy and sell cars online.
  • In-person private sale. You could purchase a car from a family or friend or find a car advertised through more traditional means, such as newspapers.
  • At an auction. You can sometimes snag a great deal on ex-government vehicles and used cars from fleet operators and finance companies at an auction. But remember that you can't test drive before you buy.
  • A dealership selling demonstrator vehicles. Dealerships sell cars that have been used for test drives for a lower price. Demonstrator vehicles may also comprise of old stock.

How do I choose the right car?

Choosing the right car can be difficult, but here are a few points to keep in mind:

  • Define your budget. Once you know your budget you can start shopping around and get an idea of what you can afford. If your budget is less than $10,000, for example, then it's likely you'll need to opt for a used car.
  • Compare vehicles from a range of places. Even if you've decided where you want to buy your car from, shop around first. You might find that one website or dealership has much lower prices or a better range than where you were originally planning to go.
  • Decide what you need. Do you have a dog? How many people will need to use the car? Will you have someone riding in the car that may have trouble if it's a tall car with no step? Consider your needs and those of your passengers so that you can make sure your car has the right features for you.

How do I pay for my car?

You have two choices: apply for credit or save up to pay for the vehicle yourself.

  • Save. If you don't need the car right away then this is the better option. Work out how much you will need to buy the car and how much you can save each month. Open a high interest savings account if you don't already have one to maximise your savings.
  • Credit. You have a few options for credit. The first, a car loan, is the most common type of financing for vehicle purchases. The car will be used as security for the loan and in return you will receive a lower interest rate. Car loans are available for new and used vehicles. You can also consider an unsecured personal loan or a credit card.

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