How To Buy a First Car: Everything You Need To Know

If you’re a student or young person ready to buy a first car, it’s a time of excitement and nervousness. It’s a big step in life and something every Canadian faces at some point. If can also be a nervous time, especially if you’re also getting your first auto loan.

Auto loans might seem complex but they are very straightforward and are nothing to be afraid of. That’s especially true if you work with auto loan experts like us! If you’re not sure how to buy your first car, here are some tips to help.

Step 1. Set a Budget

The very first thing you need to do before even starting to look for a new car is set a budget. Do this before you go shopping because it’s very easy to get carried away and spend too much.

Knowing your budget ahead of time will help you keep spending under control and keep everything affordable.

Factor in your down payment too. The more you can put down on a car, the better the car you can afford or the lower the loan you’ll need.

Step 2. Get Preapproved for an Auto Loan

If you’re using a loan to help pay for the vehicle, it will help if you get pre-approved first. It’s like a dry run that tells you how much you can afford to borrow and how much it will cost per month. You should also see what kinds of interest rates you’ll get.

Preapproval is not a guarantee of an auto loan. It’s a quick assessment of the average loan amounts someone in your position might get and what rates they might pay. That's why if you're not sure how to buy a first car, this is a great place to start.

Preapproval does not impact your credit score as it uses a soft inquiry. Only auto loan applications impact your credit score, which is why we recommend only applying for a loan when you’re ready to commit.

Step 3. Choose your First Car

Now you have a budget and an idea of how much you could borrow, it’s time to go car shopping. It might help to create a need and want list for your car. List all the things the car must have and a list of things you would like it to have.

This can help with car selection and focus the mind on what the car delivers rather than getting tied up with looks, colour, performance, and other less important factors. Here's a list of reliable used cars that would make great first cars.

Step 4. New or Used When You Buy Your First Car?

You can get auto loans for both new and used. Which you buy depends on your circumstances.

We recommend buying a used car as your first daily driver. If you haven’t driven much before, you’ll likely scratch or dent the car on occasion. Doing that to a used car will hurt a lot less than if you do it to a new car!

Plus, you could get a lot more of your wants with a used model as you can buy a premium car for the same cost as a low-end new car.

Step 5. Get your paperwork in order

Once you find the perfect choice, you need to prepare your application. Get together your bank statements, proof of income and employment, proof of address and ID and proof of any savings you might have.

The more organized you are and the more you can prove you can afford to repay the auto loan, the more likely you are to get one. Click here for a full list of the documents required to finance a car loan in Ontario.

If you're ready for a car loan, we'd love to help with that! simply fill in the form below to get started.