First Time Car Buyer: Read this Before Buying Your First Vehicle


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After lots of hard work, congratulations you’ve graduated! If you’re like I was, there’s probably a lot of excitement mixed with a bit of trepidation…the financial decisions made from here on out are your own. Is your next step enlistment in the military, continued education, a job? There are so many choices to make about the future and one may include, “do I need a new vehicle”?


Here are three questions that can help in your car buying decision process:


1. Is a new car a need or a want?


Here’s how to determine the answer to that question:

It may be tempting to take your initial installment of your enlistment signing bonus and/or graduation money and buy a new or used car. Take the time to determine, could that bonus money be used somewhere with a greater need (examples: paying off debt, down payment on a place to live, supplies for a new place, an emergency fund)? If you are in the military, will you be assigned to a unit that has multiple deployments planned? If so, your brand-new ride could be collecting dust in a parking lot during your months away, depreciating each day- without you even enjoying the new car smell! Will you live on or off post and will your post have public transportation? Here at NAS Lemoore, the bus system runs frequently between housing, the commissary, shops and the operational work areas, making it possible to get everywhere you need without your own vehicle. And sure, you’ll want to hit the town, but nothing says you can’t hitch a ride with your buddies and kick in some gas money. All the fun without the financial obligation. Take a moment to determine the timing for purchasing a new or used vehicle.


2. Is it a reliable/practical choice?

Make sure the vehicle you choose fits your needs. While a Mustang convertible may be a fun choice, it is better to find a vehicle that can meet your needs at a cost that allows you to have money left over to spend elsewhere. Will you be commuting a long distance to your job or post? If yes, then something gas efficient would be smart. The gas mileage for a mid-sized sedan versus a large truck can be very different. The extra costs of $100-$200 could be a budget buster. Think about your lifestyle for the next three years, for example: will there be a PCS or do you plan to start a family? What seems to make sense right now, might create more headaches down the road.


3. Is it within your budget?
There are calculators that will help you get a handle on how much car you can afford and it is smart to get a car loan preapproval before you start your shopping. When you walk into a dealership with financing options in hand, it's easier to focus on getting the best price.

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In addition, keep in mind the true cost of owning a car includes much more than loan payments. There's also sales tax, insurance premiums, gas, vehicle registration fees and ongoing repairs and maintenance. JJ Montanaro Certified Financial Planner® says, “ideally you can cap your total transportation costs—that’s any loan payment, insurance, gas and maintenance at 10%-15% of your gross income”.

By using these three questions, you’ll narrow down if the timing is right to purchase a vehicle and then determine the type of vehicle based on your lifestyle. Knowing these factors will help you stick to a budget. Buying a car is a long-term financial commitment, one you don’t want to rush into. Best of luck on your new adventure!



Have you recently purchased a vehicle? What is your advice to a first-time car buyer?


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USAA means United Services Automobile Association and its insurance, banking, investment and other companies. Banks Member FDIC. Investments provided by USAA Investment Management Company and USAA Financial Advisors, Inc., both registered broker dealers, and affiliates.


Use of the term "member" or "membership" refers to membership in USAA Membership Services and does not convey any legal or ownership rights in USAA. Restrictions apply and are subject to change.


Certified Financial Planner Board of Standards, Inc. owns the certification marks CFP® and CERTIFIED FINANCIAL PLANNER™ in the United States, which it awards to individuals who successfully complete the CFP Board’s initial and ongoing certification requirements.


The information contained is provided for informational purposes only and is not intended to substitute for obtaining professional financial advice. Please thoroughly research and seek professional advice before acting on any information you may have found in this article. This article in no way attempts to provide financial advice that relates to all personal circumstances.


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