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Step 1: Do your research
Step 2: Get your finances in order
Step 3: Pre-establish an insurance policy
Step 4: Visit your local dealership(s)
Step 5: Purchase the car
Step 6: Enjoy your new car
Interested in applying for an auto loan with Spero?
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Buying a car by yourself for the first time can be super intimidating – from applying for an auto loan to choosing the right vehicle for you, there are a lot of factors to consider.
To help make purchasing a car less overwhelming, we have put together a step-by-step guide to the entire process.
Step 1: Do your research.
Once you make the decision to purchase a car, you will want to do some research. Local car dealerships’ websites can be a great resource for that.
Figure out:
- What do new versus pre-owned cars cost in your area?
- What types of cars might fit your needs? How many people (including kids) will be riding with you each week? Are there weather conditions in your area that might impact the kind of car you need?
Before you move forward in the process, you want to have a rough idea of the amount of money you will need to buy a car and the type of cars you are interested in.
Step 2: Get your finances in order.
Before you begin shopping for a car, you will need to get your money in order.
In most cases, you won’t be able to purchase a vehicle in cash – you will need to finance the expense.
What does it mean to finance a car?
When you finance a car, you take out a loan from financial institution to cover the cost. You’ll pay that loan back with monthly payments - that’s your car payment or car note.
Once you pay off the loan, you will be the official owner of the car!
How do I apply for an auto loan?
You can apply online or take a trip to your local credit union branch to sit down with a staff member who can walk you through the application/preapproval process. They can also help you determine if you can afford to contribute any of your own money to reduce the amount you need to borrow.
Keep your earlier research in mind – you’ll want to apply for a loan amount that will cover the price of a car in your area.
During this process, you will provide your social security number to have your credit pulled. This will be a hard inquiry and could have a small impact on your overall credit score.
Pro-Tip: Financing through your local credit union may save you some money! The warranties and GAP insurance policies offered by dealerships are often more expensive than what credit unions offer.
Step 3: Pre-establish an insurance policy.
If you don’t already have an auto insurance policy, you will need to open one.
A quick online search can help you find insurance options whose monthly costs make sense for you. Contact your chosen company to open a policy; because you don’t have a specific car you’re trying to buy yet, you will start off with a general policy.
Step 4: Visit your local dealership(s).
It’s time to visit the dealership!
When you go, bring a trusted friend or loved one with you (bonus points if they’re knowledgeable about cars!). They can help you think through your options and avoid feeling overwhelmed.
As you shop, keep your pre-approved loan amount in mind and stick to it. Don’t let anyone pressure you into spending more money than you intend to.
You don’t have to choose a car at the first dealership you visit. If there aren’t any good fits in one location, try somewhere else in town.
Once you’ve found a car you like, ask to take it for a test drive. That way, you can see if you like how the car feels when you drive it.
It’s also totally okay to ask the dealer for a pre-purchase inspection. This may cost some money upfront (typically less than $100), but it could save you from making the wrong decision.
Step 5: Purchase the car.
Once you decide on the car you want, contact your insurance company with its details. They can update your coverage to be specific to that vehicle as you fill out the rest of the dealership paperwork.
Make sure to take your time to fill everything out correctly and don’t hesitate to ask questions if anything seems confusing.
Step 6: Enjoy your new car.
Congratulations! You did it – you bought a car!
Enjoy your new wheels, but don’t forget that there’s more to owning a car than just driving it. Make sure to set aside a budget for common expenses like gasoline, insurance, property taxes, maintenance, and repairs – a good rule of thumb for a used vehicle is typically double your car payment!
Interested in applying for an auto loan with Spero?
Members can apply for auto loans with Spero online at https://spero.financial/auto-loan/ or in person at any branch location.
This material is for educational purposes only and is not intended to provide specific advice or recommendations for any individual.
