First Time Car Buying
Tips help you buy with confidence.
Buying a car is oftentimes a person's second most expensive purchase. Here are a few tips that will help ensure you get the vehicle you want at a price you can afford.
What is your Budget?
The first step in buying a car is to establish your budget. A budget will help you focus on the cars you can afford - before you fall in love with a car that will break your bank.
To create a budget, add up all your monthly income and all of your monthly expenses. It helps to categorize your expenses as either fixed (rent, mortgage, utilities, student loan payments, etc.) or discretionary (eating out, buying new clothes, that must-have coffee drink, etc.). Once you have an accurate idea of your expenses, you can see where you can cut back to leave you more money to put toward your monthly car payment. Remember, unless you pay 100% in cash, a car payment will be a new fixed expense.
Explore Your Financing
When you've narrowed down your dream car list, it's time to think about how you'll finance the purchase. Unless you have funds available to buy a car outright with cash, you'll likely need an auto loan to finance the purchase.
You also should consider the length of the loan and how much of a down payment you have. Auto loan terms generally range from 36 to 84 months. The longer the loan term, the smaller your monthly payment will be, but you will pay more in interest with a longer term loan. How much of a down payment you can afford also affects your monthly payments. The more you put down, the lower loan balance you will start with.
You can work with the auto dealership directly when you arrive or most dealerships have a website where you can apply online before you arrive. This will give you an idea of how much you can borrow.
Know Your Credit Score
Your credit report and scores are some of the most important factors in determining the rates a lender will offer you for an auto loan. In general, the lower your credit score, the more likely you’ll receive a higher interest rate, which would cost you more over the life of your loan. Find out what your credit score is before you start researching and negotiating. You can learn more about your credit report and how to get a copy at https://www.usa.gov/credit-reports.
Save for a Down Payment
How big does the down payment on a car need to be? Just as with buying a home, most lenders like to see a down payment that’s at least 20% of the car’s price.
The following reasons can help explain why a 20% down payment makes sense:
- The bigger the down payment, the smaller the loan you'll need.
- A bigger down payment generally earns you more favorable loan terms, which saves you money in the long run.
Many dealerships, automakers, and automotive services provide online payment calculators that you can use to arrive at the best down payment amount. By putting in various car prices and loan terms, you can estimate how different down payment amounts might affect your monthly payment and the amount of interest you'll ultimately pay.
Ancillary Products
As you are getting ready to sign the contract, the dealer may offer you additional products and services. Stellantis Financial Services does not require you to purchase these optional products or services for credit approval or a specific interest rate.
Read the Contract Carefully
Buying a new vehicle can sometimes be a lengthy process. Once you have a contract in hand, be sure to take as much time as you need to read the contract in full before you sign.
Make sure the paperwork matches the negotiated terms and do not be afraid to ask questions. You should only sign documents after you have read and understand the terms and price. When leaving the dealership, make sure you have a signed copy of the completed credit contract or lease agreement.
Fair Lending
Stellantis Financial Services, Inc. is committed to fair lending and treating consumers and customers with the respect. Under the Equal Credit Opportunity Act (ECOA), Stellantis Financial Services, Inc. is prohibited from discriminating in any aspect of the credit transaction. Prohibited bases are: sex (including sexual orientation and gender identification), marital status, race, color, religion, national origin, age (provided the applicant is of legal age), income derived from public assistance and the fact that the applicant has—in good faith—exercised any right under the Consumer Protection Act. The federal agency that administers compliance with this law concerning Stellantis Financial Services, Inc. is Federal Trade Commission, Equal Credit Opportunity, Washington, DC 20580. For more information, we encourage you to read the following material provided by the Federal Trade Commission https://consumer.ftc.gov/articles/financing-or-leasing-car and the Consumer Financial Protection Bureau https://www.consumerfinance.gov/consumer-tools/getting-an-auto-loan.