So, the time has come for you to buy your first car here in the U.S. Be sure to also read about "Establishing Credit." If you have not yet begun building a credit history, you may find buying a car a bit more difficult. It will almost certainly be reflected in a higher interest rate. But this large scale purchase is certainly one way to dive right into the American economic system. Keeping in mind that car dealerships want to sell you a car and the salespeople want their commissions, if it is possible to sell you a car, they will find a way. It is up to you, however, to be certain they do not take advantage of your lack of experience with their way of doing business.

The sale price of the car is not all you will need, either. Remember to figure in the cost of license tags and car registration. If you are working with a car dealership, they will take care of this and include the cost in your total. You will also have the expense of car insurance now. Learn more in our section on "Car Insurance."

NEW OR USED -- That is the Question...

Arguments for Buying New :

If you buy a new car, you can be certain of its receiving proper care and maintenance from the beginning. This will ensure a longer life and, most assuredly, greater resell value when you prepare to buy your next car. With good care and regular maintenance, you should have little or no trouble anticipating the costs related to your new car. While the monthly payments on a used car may seem more manageable, unexpected repairs must also be planned for with a financial cushion.

Arguments for Buying Used :

It is usually easier to pay for a used car outright, if you cannot secure a loan or prefer not to have car payments. It is also easier to get your monthly payments lower than on a comparable new model.

If you like luxury, but have limited funds, this is the best way to get what you want.

Beware When Buying Used : If you are budgeted only for car payments on a used car or use all of your available cash, leaving no reserve, you may find that repair bills are beyond your expectations! Warranties on used cars (if you have any at all) rarely cover the things you need repaired.

Things to Look for in Buying a Used Car :
Lower mileage on the odometer. It is usually estimated that a driver will put 10,000 miles on a car per year. If you find a car with considerably more, be sure to check everything out carefully. Keep in mind, however, that a lot of highway miles on a car are less damaging than a lot of city miles.

If the maintenance record is available, it is reassuring to know that the car has had regular oil changes and good care. Make sure the car will pass state inspection OR find out from a certified mechanic exactly what it will cost to repair. (Requirements vary from state to state.) Don't take the word of the seller without having it first checked by your own mechanic.

Whether You are Shopping for New or Used :
Determine the things which are essentially important to you to have in a car. You may require air conditioning, automatic transmission, 2 air bags and absolutely HATE blue. Make a clear-headed decision as to these essential qualities and don't back down under the pressure of the moment or a smooth-talking seller.

Prioritize other features as most or least desirable, for example:

I really would like :	I'd prefer not to have :
a good tape player	only 2 doors
air conditioning	power windows
Power steering	automatic transmission
child locks	blue

Keep in mind that while saving money on such extra costs as air conditioning, you may find later that this greatly limits the appeal of your car at resell (depending upon your geographical location). Another consideration: a two-door car is less expensive, but if you have children, the wear & tear can be considerable, not to mention the inconvenience and discomfort; especially if you will have a child safety seat to deal with.

Financing :

If you can get financing anywhere, you can generally get it through the dealership, but that is likely to be at a higher interest rate. Your own bank may be able to give you a car loan at a better rate. Also, if your place of business uses a credit union, these often have very good rates. Government employees (federal, state & local gov't) educational institutions and hospitals often have credit unions available for their employees. Read more about these is our section on "Banking."

Leasing a Car :

If you use your car a great deal for your work (especially for your own business) and are able to take tax advantages for this, you may be a candidate for leasing a car. While the cost of leasing a particular make and model of automobile may make it more appealing, keep in mind that once the leasing period is over you own nothing -- you have nothing for a trade-in and nothing to sell. So unless there are tax advantages for you, this is not something we recommend for the average person.

Also see our sections on Establishing Credit and Car Insurance as well as Roadside Assistance.