5 Things Millennials need to know to about car shopping
1. New means “New” to you
2. Your credit score matters more than your income
3. Budget for car insurance while you’re car shopping
4. Do your research (Car, Incentives, and Dealers)
5. Don’t over buy
New means “New” to you
Buying a new does not have to mean that you have to buy a brand new car? A used car would still be your “new” car. A used car is going to be a lot less expensive than a comparable 2015 vehicle. One thing that many 20-somthings have learned from the recession – “ A penny saved is a penny earned.”
Your credit score matters more than your income
Your credit score has a big impact on how much car you can afford. Most Millennials have not been around long enough to build a great credit history, but most have been around long enough to build a bad one. It’s a good idea to check your credit well before you buy a new car. By doing this, you can uncover any issues and give yourself time to get them corrected before you apply for an auto loan.
Budget for car insurance while you’re car shopping
One of the biggest surprised in new car affordability is the price of car insurance. Millennials will pay more for car insurance as an adult (on their own) than when they lived with their parents, due to a combination of driving experience, accident history, credit score, and the absence of a homeowners insurance policy discount. The average Millennial will spend between 20% and 50% of their car ownership expenses on auto insurance. Take the time to get multiple price quotes well before you buy.
Do your research (Car, Incentives, and Dealers)
The average consumer spends over 14 hours shopping online for a new car. Millennials should be no different. For most, this will be the largest single purchase of their lives. The savvy shopper will proceed with caution. Research will include car reviews, car prices, car dealer reviews, cost comparisons, reliability assessment, and of course the feedback you get from family and friends. This is by no means a complete list, but it’s a great start.
Don’t over buy
After you have done all of your research, you should be ready to engage a dealer and be ready to buy. This assumes that you have already figured out your budget. The average new car today costs over $30,000. If you are eligible for one of those special 0% interest rate programs, that $30,000 car will come with a 5-year monthly payment of $500. If that’s out of your price range, you should spend some quality time with an auto loan calculator. Take time to budget out a few different scenarios (down payment, interest rates, and total cost). These three variables can have a dramatic impact on how much car you can buy. And… don’t forget about taxes, its good way to get a budge surprise.
Buying a new car is not just a transportation decision, it’s a financial decision. Happy Shopping