A Beginner’s Guide to Car Buying

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There are many occasions that can make you feel like an adult and that you’re truly on your own; however, very few occasions match the feeling you get when you purchase your first car. You’re not only setting off on your journey behind the wheel, but you’re also making your first investment and accepting a major responsibility. The prospect alone can be daunting, especially if you’re not familiar with the car-buying process or know the right questions to ask. That’s why, as your premier Kentucky used car lot, we’ve put together a beginner’s guide to car buying to help you successfully navigate the process of purchasing your first car.

Back to Basics: English 101

The car industry is inundated with acronyms and words like VIN, APR, and fair market value that might sound foreign to you at first. But just like you learned the basics of the English language, you can quickly learn what these terms mean and how they apply. Here’s a quick overview of the most common words and phrases you’ll hear as you shop for a used car.

Annual Percentage Rate (APR)

The Annual Percentage Rate, which is also known as the finance rate, is the annual interest rate that a lender charges you to borrow money for your car loan. You’ll hear “APR” when you apply for financing. Our finance department will work to secure the best or lowest rate available based on your credit score.

Certified Pre-Owned (CPO)

There’s a big difference between a used and CPO vehicle. A CPO vehicle is usually priced slightly higher than a used vehicle and is backed by the manufacturer. Every CPO vehicle must meet a set of requirements and undergo a comprehensive inspection and any necessary repairs before it’s given the CPO badge.

Default

When you finance your first car, you’re responsible for making the monthly payments on time and in full. Defaulting on your loan occurs when you fail to make those payments, which can cause the bank or lender to take back the vehicle. Defaulting also affects your credit rating and can make it difficult for you to secure loans in the future.

Depreciation

Depreciation is the decrease in a vehicle’s value over time. While every car depreciates, new cars depreciate much faster over the first five years of ownership. This makes buying a used car a better option since you’ll get a better value car at a more affordable price.

Down Payment

The down payment is the money you put down on the vehicle at the time of purchase. This payment reduces the amount of money you’re borrowing from a lender and, in turn, can lower your monthly payments. Typical down payments are approximately 20 percent of the vehicle’s sale price. For example, if you’re purchasing a $15,000 car, the down payment would be $3,000.

Extended Warranty

When you shop for a used car, you’ll want to learn all you can about warranties and extended warranties. New cars come with a manufacturer’s warranty which expires after a set time or mileage. The extended warranty can add coverage after the factory warranty expires, which gives you greater peace of mind in your purchase since warranties cover expensive components like engines, transmissions, air conditioners, etc.

Lease

The dealership may ask if you’re interested in leasing a vehicle. Leasing is an agreement between you and the dealer that allows you to use the car for a set period of time and within certain mileage parameters. Once the lease is up, you return the vehicle to the dealership with several options––buy the leased vehicle, sign a new lease, or buy another vehicle. While leasing is a great way to get behind the wheel of newer models every few years, it’s only a good option if you know you can take good care of the vehicle since there are penalties for excessive wear and tear.

MSRP

An acronym for the “Manufacturer’s Suggested Retail Price,” the MSRP is the price you’ll find on the vehicle’s Monroney or Window Sticker. The MSRP reflects the price of the vehicle as it sits on the lot but does not give you the total cost of the vehicle. For example, a vehicle’s MSRP is $25,000, but this does not include finance charges or taxes.

VIN

The 17-digit Vehicle Identification Number identifies the vehicle by its make, year, body style, and engine. Located under the windshield or on the door jamb, the VIN is a great way to learn more about the vehicle itself. You can use the VIN to look up the vehicle’s value as well as any associated recalls.

Questions to Ask

One of the best things to remember when buying a car for the first time is that you are in control of the process. You can look at as many cars as you want, take as many test drives as needed, and ask every question imaginable. A reputable dealership will be there every step of the way until you have all the information and confidence you need to make your purchase. But what questions should you ask?

Can I take the vehicle for a test drive? A test drive can tell you a lot about how a vehicle performs. Once you’re behind the wheel, you can test the vehicle’s ability to quickly accelerate or stop and how it responds. You can also take a closer look at its interior and features like the infotainment system, air conditioner, etc., to ensure they function properly.

• Is the vehicle history report available? Often provided by CARFAX, this report gives you a clearer picture of the vehicle’s history and includes its repair history, number of owners, title issues, and accident involvement.
• Is the vehicle under warranty or eligible for an extended warranty? Since repairs can be costly, you’ll want to know more about the vehicle’s current warranty as well as available coverage.
• Has the vehicle been inspected? If you’re shopping for a CPO vehicle, you know the answer is already “yes.” However, if you’re shopping for a used car, don’t be afraid to ask this question or ask the seller if you can have your mechanic inspect the vehicle for any potential issues.

First-Time Buyer Tips

As you start your search for a used car, it’s important to understand a few key phrases that will help you navigate the process and find a vehicle that truly meets your driving needs. It’s also important to start your search on the right foot, and that means knowing your budget. For first-time buyers, setting a budget can be difficult, but it’s not impossible; it’s the best way to set yourself up for success. Just like you budget for groceries, utilities, and hobbies, budgeting for a vehicle tells you how much you can afford to pay for a vehicle. Just be sure to factor insurance and maintenance costs into your budget.

Once you know your budget, it’s easy to start your search for the perfect vehicle. You’ll discover that your budget may not go as far on a new model, but it can get you behind the wheel of a fully-loaded model when you shop from the used lot. This is a great incentive to purchase a used vehicle and is what attracts many first-time car buyers to our lot.

When you find a vehicle that you love, be sure to take it for a test drive (or two). Don’t be afraid to get the car’s VIN and do some research of your own to ensure it’s priced fairly. We even recommend reaching out to your insurance agency to see how much your monthly coverage will be on the vehicle. This can give you a better idea of whether or not the vehicle is within your budget.

From there, the process is easy as the dealership works with you to get the paperwork completed. You’ll have the opportunity to apply for financing, make your down payment, or buy the vehicle outright, as well as add any additional warranty coverage. Once the papers are signed, the vehicle is yours, and you can drive home happy and filled with pride from making your first car purchase!

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