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Written by Cari Scribner on March 8, 2022
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How To Buy Your First Car In 2022

Buying a car can be one of life’s largest expenses and greatest sources of stress.

But it doesn’t have to break your bank or make you tear your hair out or refill your ulcer medicine.

Do your homework, arm yourself with information, and don’t be deterred by a sales pitch designed to throw you off course with promises and bargains that seem too good to be true.

Before you even THINK about buying a car or even picking up an auto digest or the latest car magazine, you need to determine how much you can afford, right down to the dollar. Doesn't mean an estimate or guess. Base your decision on your current financial situation. You should not wander onto a car dealership with no budget in mind for a car.

Salesmen are designed to upsell you. The more expensive the car, the higher their commission is!

There is no one-size-fits-all calculation you can use to gauge how much cash you should spend on a pre-owned or new vehicle. Whether you use cash or get a loan and make monthly payments, it should not cause an upheaval of your finances or leave you broke without enough money to pay for necessities like rent, food and Internet services.

The best answer for how much you should spend on a car is the amount you’ve saved for that purchase. Saving up and paying cash for a vehicle is wise and won’t derail your budget.

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Do NOT Buy Brand New!

Come on, did you really think we would recommend this as an option?

Prices on new cars are through the roof. According to Kelley Blue Book, the average new car price at the beginning of 2022 logged in at $47,077. And the average for pre-owned vehicles is over $20,000.

Most people don’t have that kind of cash. Because of this, loans are the most common option, and they’re not cheap. In the first quarter of 2018, the average new car loan was just over $37,000.

Consider for a moment the long-term impact a loan of this magnitude could have on your future. Then stop looking at new vehicle brochures and get back to reality. By purchasing a gently used vehicle, maybe even certified pre-owned, you can save yourself thousands! Let someone else take the depreciation hit.

The 20/4/10 Rule

A lot of experts recommend following the 20/4/10 rule when buying a car. If you don't have money saved up for a car and are completely clueless about what to spend, this could be a good place to start.

  • Make a down payment of at least 20%
  • Finance the car for a term of 4 years maximum
  • Do not let your total vehicle expenses exceed 10% of your total income

So, let's say you have a salary of $50,000. You should spend no more than 10% of your total income on a car, so $5,000 per year. Per month, that comes out to around $416. You would want your total vehicle cost (payment, insurance, repairs) to add up to no more than that amount.

Then, you would just make sure you put down 20% if possible on the loan.

Affordable And Pre Owned

This is an option for people who need a vehicle ASAP and have some cash set aside to pay for it.

It also is a good choice for you if you’ve worked a car loan payment into your budget and it won’t sabotage the rest of your monthly expenses.

Here are some initial steps to take when deciding to buy a vehicle...

  1. Look for a car or truck that’s within your price range. The importance of this cannot be overstated.
  2. Identify the year, make, and model of several used cars you’d like to purchase.
  3. Develop a shortlist of cars/trucks that will work for your needs. Be flexible. Ideally, you will put together a list of several vehicles not just one.
  4. Narrow your list by checking Consumer Reports or a similar website to read trustworthy reviews of the cars you’re interested in.
  5. Browse auto digests, Craigslist and other similar sites for vehicles, and also go to car lots and dealers to check them out in person. Don’t be talked into a quick sale. Impulse buying is always a no-no.

Ask the Right Questions

If you decide to buy directly from another person, ask the right questions. You want to know as much as you can about the car’s performance and history.

Here are some suggested questions...

  • “Does this car have any issues you know about?”
  • “Why are you selling it?”
  • “How many previous owners did it have?”
  • “Do you have paperwork about recent maintenance or repairs?”
  • “Has this vehicle been in any accidents?”
  • “What is the age of the tires?”
  • “When was the last oil change?
  • “Who is your mechanic?”

Check out the facts. Then, put your sleuthing hat on and check history reports to learn more about the car. Sites like CARFAX and Auto Check are great for searching vehicle history reports. Just enter the VIN (vehicle identification number) to find information regarding a specific car.

The info that may be available includes previous owners and whether the vehicle has any liens against it, as well as if it has been involved in major accidents.

Don’t forget to look up the vehicle with the national traffic safety agency to determine if the car you’re considering or any of its parts have been recalled.

If you are looking at a car being sold by a private owner, always have the vehicle inspected by your own independent mechanic. Walking around the car/truck and kicking the tires isn’t a good enough indicator of whether it’s a smart purchase or not.

When the seller stalls or won’t allow the car to be inspected, you can safely assume they’re hiding something, and our advice to you at this point is to run.

If your mechanic finds problems with the vehicle, ask how much it would cost to have them fixed. If it requires a lot of work and money, this is likely a deal-breaker. But for more minor repairs, you could use this as a negotiating point for a better deal on the car/truck.

Get Behind The Wheel

Always test drive the car. Giving a used car a test drive is imperative to see if it fits your style, budget and needs. It will help tell you if the car really is the one for you. During your test drive, evaluate the car’s performance and whether or not it accommodates you comfortably.

Here are some things to consider...

  • Ensure that the seats are comfortable and easily adjustable.
  • You must be able to sit in the car without your head grazing the interior ceiling.
  • Test the blinkers.
  • Keep your ears open for any sounds of clinking, clanking, or grating which could mean engine trouble.
  • Test the brakes
  • See how easy it is to drive. The steering wheel should be responsive.
  • Blast the air conditioner then the heat to make sure both work effectively.
  • Look for any warning lights or symbols flashing on the dashboard panel.
  • Check for blind spots by adjusting the rear-view mirror and side mirrors appropriately.
  • Drive by your mother’s house and see what she thinks (this step is optional).

Dealer vs Private Party

Although you may score a good deal buying directly from an owner, shopping through a dealer has strong selling points. Dealers offer certified pre-owned vehicles, which means they’ve passed industry standards of excellence. They also often come with a warranty that gives you reassurance if you find something wrong after you drive away.

For example, in New York you are covered under the lemon law when buying from a dealer. Other states have similar laws!

Keep in mind, too, that the best price is not necessarily the lowest dollar price. If you get a car from a private seller, the cost will probably be less than it would at a dealership, but a dealership can offer certification and warranties that a private seller can’t.

We always recommend you get a service contract. A service contract (or extended warranty) is available through dealerships and holds them responsible if your car blows a gasket, if the engine warning light comes on, if the brakes fail, or the car exhibits any number of other faults within the time period specified by your service contract.

Read the details of your service contract carefully so you know what is covered and what is not.

Cash Deals

If you’re in the position of paying cash (lucky you!), keep that to yourself when shopping at a dealer.

In other words, don’t tell the salespeople you’re using cash. They often earn hefty commissions on car loans, and if they know they won’t be personally benefitting, they may be less helpful in negotiating the deal. Only tell them at the very end of the sale that you’ll be paying with cash.

Do your best to negotiate a good deal. Straighten your shoulders and speak with authority. Don’t cave and accept the advertised price immediately. Instead, offer a figure that is lower than your target price, then edge up little by little.

For example, if the asking price is $10,000 but your ideal purchase price is $9,000, you might offer $8,500. The seller might make a counteroffer with a price of $9,500.

Keep working to lower the price. Eventually, you may settle for a price of $9,200 – a compromise between the seller’s starting price and your ideal purchase price.

Don’t be afraid to take up too much time, or to even walk away if you get flustered or feel pressured by the sales people. You can always go back the next day.

Did I Get A Good Deal?

There is no set definition of a good deal. If you’ve done all your homework and know beyond the shadow of a doubt you are getting a serviceable vehicle, and the vehicle you want, consider it a good deal.

As long as you feel that the price is fair, you’ve done your best to negotiate a fair deal. Good job!


Always sign and retain a bill of sale for the car you are purchasing. The bill of sale should include the date of sale, the make, model, year, and VIN of the vehicle, the current odometer reading, and the sale price. It should also include your name, the seller’s name, and each of your addresses.

Get the title from the seller of the vehicle. Laws regarding the vehicle title vary from place to place, but generally, both you and the seller will be required to sign the vehicle’s title. With the title, in hand, you officially own the vehicle.

By following these steps outlined, the car buying process can be utterly painless! At the end of the day, the best rule of thumb we can give you is not to make an impulse purchase. Do your research and put some serious thought into how much you can realistically afford to spend on a car.

Article written by Cari Scribner

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