Don’t Drive Yourself Crazy: 5 Tips for Buying a Car

Buying a car is an expensive undertaking for anyone, but can be especially tough for a college student who is low on available cash. Before taking the plunge, it is important to assess your needs and financial situation. Here are some tips to help you make a smart choice:

1. Determine if You Actually Need a Car

While many of us relish the idea of having our own wheels and the freedom it may offer, think carefully about whether or not you really need a car. If you live within walking or biking distance to campus or somewhere with good public transportation, it’s probably best to hold off until you have graduated and/or have a more dependable source of income.


2. Calculate the Real Costs

Remember, a car is an expense, not an investment. You have to consider insurance, gas, maintenance and the unpredictable breakdown costs. According to AAA’s 2015 Your Driving Costs study, the average cost to own and operate a car was $8,698 per year. That figure includes fuel, maintenance, tires, insurance, license and registration fees, taxes, depreciation and finance charges associated with driving a typical sedan 15,000 miles a year. Fuel alone cost just over $1,680 and insurance averaged about $1,115 and would likely be higher for younger, less experienced drivers.


3. Set a Target Price

If you decide you truly need a car for school, work and/or family needs, set a firm price of what you are going to spend. More than likely, your best bet will be to look for a reliable used car. Paying cash will help you save on interest costs. If that isn’t an option for you, determine how much you can afford to pay each month for a car loan. Edmunds.com has an easy calculator to help you set that target price. For example, if you only can afford a payment of $150 a month right now, the maximum price you should pay for a car is about $6,800 (assuming no other car to trade-in), a $500 down payment, and 3‑year, 2.99% interest rate loan. Surprising, right?


4. Be Informed

As with any financial decision, it is important to be prepared (knowing how much you can afford to spend, research the type of car that will best suit your needs) before heading off to the dealership. Fortunately, there is a wealth of information online that can help you find out about pricing, fuel economy, safety and reliability, as well as financing options. Consumer Reports , Edmunds.com and Kelly Blue Book are good places to start. When considering financing options, dealers may be offering some good deals but the best rates are usually given only to those with the best credit ratings. Be sure to compare rates from an array of different lenders, including banks or credit unions, to be sure you are getting the best rates for your situation. Speaking of credit, if you haven’t checked your credit report, be sure to obtain a copy by visiting annualcreditreport.com and correct any mistakes you might find before applying for a loan.


5. Shop Around

Once you have decided on the price and type(s) of cars that you are interested in and have a good idea of what financing you may qualify for, be sure to shop around for the best deal. You can do this by emailing or calling several dealers in your area and telling them to exact model, trim level and other options you are looking for. Think twice before purchasing a car directly from an individual owner, especially if this is your first time buying a car. Opt instead for a car that is warranted by a dealer, such as a certified pre-owned vehicle.



So if you really need a car, remember that it’s best to err on the side of frugality and find a low-cost, reliable option. After all, what’s the point in buying a car whose tank you can’t afford to fill?

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Showing 19 comments
  • Lillian Schaeffer

    This is some great information, and I appreciate your suggestion to shop around when buying your first car. I’ve been doing some looking, and I think I’ve decided on a type of car that I would like to purchase as my first vehicle. I’ll definitely check out all of the different places that are selling that type so I can find the best quality and price. Thanks for the great post!

  • Arvey Torez

    I’m a disabled vet that receives SSI..I ATTEND CTU AS A STUDENT.. GPA:3.45..STUDYING CRIMINAL JUSTICE. I a student car and. Mantaince. Can we take on another student loan from our school ..if so how do I go about it.

  • Tyler Meredith

    I like what this article mentions about setting a target price for a car. I think this could be a good way of ensuring you’re prepared for the purchase. I’ll have to keep this in mind when looking to buy a new car as I want to be able to pay off the loan quickly.

  • KRISTIAN

    I wish i had seen this back in 2013 before i brought ny car, the one piece of advice will give STAY AWAY from “buy here pay here” and places like Drivetime. They jack up your interest rate and make it impossible for you to afford or even payoff your car. Im a single mom who works and goes to school online so its alot to deal with paying bills and trying to pay a high interest rate car. I will definitely be using these times my next go around buying a car

  • Lauren Woodley

    I really like the suggestion you give to set a target price. Like the previous suggestion, you need to have realistic expectations when it comes to financing and affording your car. This way, when you take out your loan and start a financial plan for your car, you’ll be able to get the money you need and pay off your car in a realistic time frame.

  • emily bennette

    Shopping around does seem like a smart thing to do when you need new tyres. It seems like it would be able to help you find a good deal. Also, that might also help if you need a lot of new ones as well.

  • James Bergman

    I definitely agree that you should set a budget for your car and do lots of research. Then, if you can buy a good car for cash, great! However, it is OK to get financing. Just make sure the loan is reasonable, but it is better to have a monthly payment for a year or two than to have to drive a car that your not sure will get you from point A to point B.

  • Pancho Cham

    I’ve been thinking about getting a new car, and I haven’t been able to decide on what to get. I’ll make sure to use your advice, and take my time to shop around. That way I know that I’m choosing the car that I want, and the car I’ll love driving around.

  • Laurie

    My husband and I just purchased a vehicle a few months back. We did our research for around 6 months, maybe a little longer. We knew we wanted a medium size SUV, but weren’t sure which kind. So we researched makes, models, brands – and narrowed it down to two vehicles that fit our criteria for reliability, size, looks, etc. We took a test drive a couple months out to pick which was the best fit for us and when we were ready we went to our bank as we already knew they would give us the best rate. Planning and research is key to the best vehicle buying is key. Great tips, thank you for sharing!

  • Lillian Moore

    I love the suggestion to calculate the real costs. This year I bought my first car and there was a lot more to having a car than I thought. In addition to just the cost of the car loan, I forgot to take into account the cost of gas, maintenance, and insurance. After having the car for about 6 months, I have finally found a balance in my budget between what I can afford and what I need. Thanks for the tips!

  • Marie Watson

    Mary, thanks for putting together some tips for buying a car. You make a good point about how it can be a good idea to calculate all of the costs. I would think that you have to consider things like the price of gas, maintenance, etc. It seems like it is also a good idea to make sure you take the time to do enough research so you can be sure you are getting the best car for the best price.

  • Sarah Smith

    I just graduated and am in need of a car. Thanks for the advice about how a car is an expense and that you need to set a target price. Something to consider is putting a downpayment on a car and getting financing to help you get a car that will last a long time.

  • Kendall Everett

    Setting a firm price for what you are going to spend is really smart. The more of a budget you have, the less chance you have of getting a loan you can’t pay back. Finding a loan that’s within your budget including interest is a good idea.

  • April Cook

    I really like your tip to set a target price. The highest loan amount you can get isn’t always the right amount to take. I like how you say to consider what monthly payments you can handle to pay off the loan. Does a larger down payment reduce the monthly payments or just the repayment length? Thanks for sharing this information. It will help a lot the next time I am buying a car.

  • Hazel Adams

    I agree that you should shop around. I think that it is important to price check when doing large purchases like purchasing a car. I think that this would be the most important part of car shopping.

  • Gaston

    It may seem obvious, but the tip to be informed is the one that I think is the most important in the article. A car is a fairly significant investment, and it really needs to be treated as such. Anyone looking to buy a car should try to learn everything they can about the particular one they’re considering, as well as the model in general.

  • Megan Earl

    I’m so glad I found this post! I’m going to be buying my first car soon and I’m a bit overwhelmed at the thought of it. I love your tip about shopping around. It’s never a good idea to make a choice without knowing all your options, especially when it comes to cars. I also like what you said about pricing. I’m actually thinking about contacting a financing specialist to make sure I stay within my price range. Do you think that’s a good idea?

  • James Bergman

    I think that the thing most people, me included, forget when buying a car is the maintenance costs. In my mind I am only thinking, I can afford the payments for this car easily and forget that I also have to gas up the car. I often factor in insurance, but I do agree that fuel economy and cost should be considered when I think about what kind of car I can afford. Thanks for the heads up!

  • Zequek Estrada

    I like the tip about remembering that a car is an expense and not an investment. Keeping that in mind makes it easier to make a financially smarter choice. I’d imagine that it’s easy to overlook things like insurance or how much gas cost.