When I was 22, I undertook what I perceived as extensive research before purchasing my first car. Earning a monthly income of $1600, I had scoped out my affordability notes. My aspiration was for a trendy, sporty, and luxurious choice, unlike the ’96 sea green Ford Escort, which I had been using since my high school days.
At that phase in my life, being young, inexperienced, and fresh out of college, I believed I was entitled to a high-quality car. Essentially, my so-called research was geared towards maximizing the value of the car my salary could afford.
However, counterintuitively, I ignored all the research I had conducted once I ventured out to make the purchase. Instead, I ended up using $3,000 from my hard earned savings as a down payment, resulting in a steep monthly payment of $434 for a period of six years.
Upon reflection, I realized my mistake and the imprudence of letting my desires overwhelm my financial capabilities. Consequently, I’d like to recommend some do’s and don’ts when purchasing your first car.
Take time to understand your financial capacity before making a purchase. Having a $3,000 down payment, which would only cover taxes in current times, does not equate to affording a $30,000 car. Being realistic about your financial capability can spare a lot of future distress.
Refrain from disclosing to the dealer your maximum monthly payment. The focus should be on the total cost of the car instead. Dealers might deceive you by suggesting adherence to your maximum monthly payment, all the while extending your payment plan to six years instead of a more manageable three years. Additionally, they might slap on some additional taxes at the end, escalating your total payment.
Consider the long-term implications. Choosing a two-door coupe because of its youthful feel, I never imagined that eight years later, I’d still be driving the same car. Currently at 30, the thought of driving the same car for several more years is daunting, especially as we plan to extend our family and require a more family-friendly car.
It’s not necessary to opt for a minivan, but considering a more versatile four-door model could ward off future worry about swapping cars.
Maintain a thrifty mindset. The urge to acquire top-notch, luxurious features might be overwhelming, especially with a steady income. However, in light of uncertain future events, it’s advisable to opt for moderation until more stability is achieved in your career.
