8 Things You Should Know Before Buying a Car


Buying a car can be an exciting but stressful journey. Before purchasing a vehicle, it’s crucial to arm yourself with details regarding the vehicles you’re interested in, your trade-ins value, if you have any, and your budget. With this information, you can effectively negotiate a car purchase. Research can also help you determine what to expect during and after purchasing. This article outlines eight things you should know before buying a car.

1. Insurance

Auto insurance is a legal agreement between you and the insurer. It safeguards you against financial loss should a theft or accident occur. The insurance company covers your losses as indicated in your policy in exchange for you paying your premiums. Auto insurance offers coverage for property, including theft or damage to your vehicle, your legal liability to others for property damage or bodily harm, and costs for injury treatment, rehabilitation, funeral expenses, and lost wages. It’s priced individually to enable you to personalize coverage amounts to fit your budget and needs. Most U.S states mandate personal car insurance, but the laws differ.

Find out what’s Included in auto insurance before committing to a specific policy. Car insurance requirements differ from one state to another. Consider other optional coverages, including collision, comprehensive, and glass coverage to protect your car. Comprehensive and collision policies only cover your car’s market value, not the amount you paid. If your vehicle is stolen or totaled, there’ll be a gap between your insurance coverage and what you owe on the car. Acquiring gap insurance can help cover the difference. For a leased car, the gap coverage is rolled into lease payments.

2. Look into financing

Car financing lets you spread your vehicle’s overall cost into monthly installments. It can be helpful when you can’t afford to pay for a car upfront and would like some flexibility concerning how you pay for it. You can finance your car with a loan or lease. When using a loan to finance your vehicle, consider the loan amount, the annual percentage rate, and the loan term. If you’re buying a used car, the interest rate will be higher. If you go the leasing way, you’ll only pay a part of the car’s cost, meaning you pay for using the vehicle, not the vehicle.

3. Consider your credit score

If you’re buying a car using an auto loan, your credit score will significantly impact your interest rate. Lenders, the bank, credit union, and the dealership want to determine the likelihood of you paying them back. They perform a risk-based assessment depending on your current finances and credit history, usually guided by your FICO credit score. Your credit score comprises payment history, outstanding debt, length of your credit history, account age, and credit type used. When assessing FICO scores, lenders use their own standards.

However, there are generally accepted standards across the board. A higher credit score implies better credit decisions, giving creditors the confidence that you’ll honor your debts as agreed. This means you can get lower interest rates. If you have bad credit, you can still get a car loan, but the interest rate will be too high. Look for ways to improve your credit score for favorable interest rates.

4. Know what you want

Knowing what to look for when buying a car streamlines the purchase process. List the features you’re interested in and consider the body style you want. Decide whether you want an automatic or a manual vehicle. Consider the gas mileage, total mileage, and year ranges you’d like to remain within. Factor in your style and driving patterns, including where and how often you travel, plus your cargo or passenger requirement. Be clear about the color too.

5. Research is key

There are multiple car brands today, making it difficult to choose. Each brand has various car subcategories, creating a broader list for you to pick from. Research various potential brands and understand the pros and cons of the different vehicles before settling on one. Research also helps you determine whether you can afford your dream car and maintenance costs, including spare parts, servicing, style, security, and auto insurance.

6. Do you want a new or used car?

Now that you know the kind of car you want, decide whether you want a new or used vehicle. Researching this can help you determine the vehicle that’s good for you. Note that cars depreciate, meaning when you buy a new auto, its value begins declining the moment you drive from the dealer. Buying a used car is cheaper than getting its brand-new version.

Before purchasing a used car, find out the miles it has done to avoid buying an older car, get it inspected to ensure it’s not junk, and cross-reference the ownership details. While used cars have less depreciation, their repair and maintenance costs might be higher. Buying a new vehicle means potentially low-interest rates on car loans and reduced repair and maintenance costs.

7. Find the right car dealership

While you can buy a car online, from an auction, or from a private party, purchasing from a dealership can be very beneficial. When purchasing a pre-owned vehicle from a dealership, you can rest assured that they’ve inspected it and considered it in good working condition while ensuring that they meet higher appearance, detailing, and mechanical standards than uncertified cars.

Dealerships also provide various financing options and can handle all the paperwork and help you get credit approval instantly. When choosing a car dealership, consider the financing options available, compare prices and look at their inventory, their perks, and find out what previous clients are saying about them.

8. Research the value of your trade-in

If you have a vehicle you want to trade-in, don’t wait until the salesperson tells you its worth. Research in advance to determine if you’re receiving a good offer. To assess your trade-in price, you can enter your vehicle’s details into Kelly Blue Book, including make, year, model, condition, and mileage. Consider making any minor cosmetic repairs to boost the auto’s net value. This equips you for negotiations with the dealership to get a reasonable price for your car.


Preparation and knowledge can simplify the process of purchasing a vehicle. Refer to these points for things you need to know when buying a car.

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