As a young adult fresh off the graduate school train, I understand how enticing it is to want to upgrade your wheels. For the past 4 years, I’ve been driving around in a boat – literally. My first car is a hand-me-down 2001 Buick La Sabre, also known as, the “Grandma Car.”
After graduating from college, many college graduates are eager to trade in for a new set of keys because it symbolizes a rite of passage into adulthood. However, whether you’ve landed a great entry level job, applied to graduate school, or are still unsure about your next step, it’s wise to sit down and consider your options before speeding off the lot.
Do your research.
Before you even consider visiting a dealership, write down your financial situation to understand it in full detail. Buying a car shouldn’t be a hasty decision. Visualize your current budget to see the full picture in writing.
Here are some questions to help lay out your financial standpoint:
- What’s your current income?
- What are your monthly expenses?
- How long will it take you to pay off your student loans?
- Do you have credit card debt? If yes, how much?
- After paying to live, eat, socialize, and repayment of debt, what car payment could you comfortably afford (if at all)?
- Is a new car a want or a need?
- Will you qualify for a loan?
- Can you afford car insurance?
- How much will you pay in gas per month?
- Can you budget for maintenance and repairs?
It’s vital to understand the full scope of your financial lifestyle before making a large purchase. Different scenarios need to be considered. For example, it may be possible that keeping your current car allows you to pay your student loans off earlier than if you bought a new car. All these options need to be mapped out and considered.
Look for Incentives.
You’ve decided you can take on the financial responsibility of a new car. Now what?
- Check your credit. You get one free credit report check a year, so you use it. Knowing your exact affordability will help your credit for the future because it will ensure you are able to make payments on time.
- Discover what deals are out there to help recent college graduates. Contact your bank and ask them what loans are provided for people in your situation.
- Visit various car brands websites to see if they have programs in place for recent college graduates. Ford Drives U offers recent graduates who qualify a $750 bonus cash for shopping with them.
Be Informed. Ask Questions
When you are finally ready to make trips to dealerships, be ready and informed. You need to know exactly what you’re getting yourself into. As juvenile as it may sound, take a parent with you. Or at least an older sibling or friend. Have someone with you that has been through the experience to help guide you.
When you’re talking with the car salesperson, ask questions. Here are list of good questions to ask:
- What is the term (length) of the loan and what is my interest rate?
- Where is the nearest dealer / authorized repair center to my house?
- What “mandatory” fees will I have to pay?
- Is that the best you can do? Push for the best deal possible.
- Can I have a test drive?
- What’s the warranty coverage? Are there any perks like free maintenance?
- How much is the car after fees and licensing?
This is a big decision. Although you may be able to afford the expense right now with graduation money or leftover savings, that account dwindles quickly when you factor in moving out of your college apartment or dorm and back to your hometown or new location.
The best piece of advice is to be informed, ask questions, and make financially wise decisions that will let you live a comfortable life without having to worry if you can pay your bills or not.