Smiling man driving a new car.

Roadmap for First-time Car Buyers

Buying your first car is an exciting life event. If you are a first-time car buyer, be smart and do a little research up front to make sure you drive away with a set of wheels that really works for your budget and your needs.

Know your price point

Think about what you can afford. Whether you expect to pay cash and own your first car outright or pay monthly payments on a car loan, consider affordability first. Using the 20% rule can help keep first-time car buyers from overspending on a car. Here’s how that works:

If you want to pay cash, spend 20% (or less) of your net annual salary. If you bring home $45,000 a year, that means saving $9,000. If you already have that money set aside for your first car, that’s great! Just make sure your savings aren’t totally wiped out. You’ll need some extra cash to afford insurance and registration.

If you’re a first-time car buyer who plans to take out a loan to pay for your car, use that same 20% rule. But you should also get pre-approved for your auto loan before heading to the dealer or car lot. When you get preapproved, you can shop with a check in hand, which can help you make a better deal on a new or used car.

Figure out your needs

Once you know what you can spend, consider what you need from your first car.

  • Do you have a long commute to school or a job? In that case, reliability and great gas mileage is a must.
  • Will you carpool and need room for several passengers or do you plan to transport a lot of gear? Then shop for a sedan rather than a subcompact.
  • Need an adventure-ready vehicle? Look for 4-wheel drive, roof racks, and plenty of trunk space.
  • Live in a city? Scale down your dream of owning a truck or large SUV for a smaller vehicle that you can more easily parallel park.

By understanding your price point and needs, you can get started on researching your auto options. The internet offers plenty of resources to learn about the best-ranked new and used cars for a first-time buyer. Try these sources:


Understand the benefits of new and used

There are great benefits associated with either a new and used car. The price of a used car will typically be lower than a new car. A used car depreciates less (or loses less value) than a new car. Plus, insurance on a used car can cost less, too.

When you buy a new car, you can choose your model and custom features. A new car comes with a warranty, which lowers your risk of a big repair bill within the first few years. In addition, new cars typically are more fuel-efficient than used cars.

How do you know which type of car would be a good deal for you? Check out the Kelley Blue Book or Edmunds for insight into car values, reviews, and pricing. Sierra Pacific offers AutoSMART, an online resource to help you find your perfect car from a trusted local dealer. AutoSMART uses Kelly Blue Book, Carfax, and Preferred Plus dealers to help you make a smart car choice.