Guide to buying a car

Buying a car is an exciting milestone, but it can also feel overwhelming. Getting behind the wheel of a new or used vehicle is a big financial and practical commitment. From understanding your needs to navigating financing options, the process demands careful planning and informed decision-making.

This guide is designed to arm first-time car buyers with the knowledge they need to confidently enter the car market. You’ll find everything here, from setting your budget to test-driving and finalizing the paperwork. Whether you’re wondering what to look for when buying a used car or trying to understand the key differences in leasing vs buying a car, this comprehensive guide has you covered.

Assess your needs: determining the right car for you

Before jumping into listings or dealership visits, take a moment to think carefully about what you need from a car.

• How will you use the vehicle? Will it be for commuting, road trips, or family transportation? The intended purpose will help determine the size, features, and fuel efficiency you require.
• How many passengers and how much cargo space do you need? Compact cars work for individuals or couples, while families may require SUVs, minivans, or sedans.
• Are you concerned about maintenance costs? Some vehicles are more reliable and less expensive to maintain than others. Research the reliability ratings of different models before choosing a car.
• Hybrid, electric, or gas-powered? Consider the environmental impact, charging infrastructure, and fuel affordability in your area.

Matching these factors with your lifestyle ensures that the vehicle you choose complements your day-to-day activities without overspending on unnecessary features.

Set a budget: understanding the true cost of car ownership

For many first-time buyers, setting a budget is the trickiest part. Purchasing a car involves more than just the sticker price—you also need to consider long-term ownership costs.

1. Down payment: While some dealerships may offer financing that allows for smaller upfront payments, a larger down payment can reduce your monthly expenses and the amount of interest you’ll pay.
2. Monthly payments: Ensure that your monthly car payments do not exceed 15% of your take-home pay. Stretching your budget too thin for a premium model could leave you struggling financially down the line.
3. Ongoing costs: 
   • Gas: Fuel expenses will vary depending on the car’s mileage and fuel type.
   • Insurance: The cost of car insurance also fluctuates based on factors like age, driving record, and the car’s safety features.
   • Maintenance and repairs: Budget for routine services like oil changes, brake replacements, and tire rotations.

Understanding the true cost of ownership helps you avoid financial surprises and focus on cars that fit comfortably within your means.

Research your options: Exploring new vs. used cars

When it comes to buying a car, many first-time buyers face the new-versus-used dilemma. Each option offers advantages and disadvantages based on your needs and financial position.

New car

• Pros: Comes with the latest technology and safety features, includes a warranty that reduces repair costs during the initial years, no wear and tear or mileage to worry about.
• Cons: Depreciates faster—new cars lose significant value within the first few years, higher upfront and monthly costs.

Used car

• Pros: Lower purchase price and lower insurance premiums, slower depreciation since most of the value loss occurs during the vehicle’s early years.
• Cons: Depending on the car’s age and mileage, it may require more repairs or maintenance, and there is a risk of hidden problems if not thoroughly inspected.

Looking at the pros and cons can guide you in deciding which option best aligns with your needs.

Test driving and inspecting cars: what to look for

Test driving is your chance to ensure the car performs as expected. Whether you’re planning on buying a used car or considering a new one, follow these tips to avoid surprises later.

• Examine comfort factors like seating and visibility.
• Test the air conditioning, heating, and sound system.
• Pay attention to the brakes, acceleration, and handling.
• Listen for unusual noises from the engine or suspension.

For used cars, request a vehicle history report and have a trusted mechanic conduct a pre-purchase inspection. Knowing what to check when buying a used car could save you from potential headaches down the road.

Leasing vs. buying a car

When it comes to acquiring a new car, one of the first decisions you’ll face is whether to lease or buy. Both options have their benefits, and the right choice depends on your budget, lifestyle, and long-term goals.

Leasing a car allows you to drive a new vehicle with lower monthly payments compared to buying. It’s ideal if you like driving a new car every few years and don’t want to worry about long-term maintenance or depreciation. At the end of the lease term, you can either return the car or buy it for a predetermined price. However, leases come with mileage limits, and you’ll never own the vehicle outright.

Buying a car, on the other hand, requires a higher upfront cost or financing, but once the loan is paid off, the car is yours. While monthly payments are typically higher, you have the freedom to drive as much as you want, customize your vehicle, and keep it for as long as you desire without any restrictions. Over time, buying often proves to be more economical if you plan to keep the car for many years.

Ultimately, the decision between leasing and buying comes down to your driving habits, financial situation, and how often you want to change cars.

Financing your car

Car loans help buyers bridge the gap between their budget and a vehicle’s price. Use these helpful tips to secure favourable financing terms.

• Check your credit score: A good credit score can qualify you for lower interest rates. Obtain a copy of your credit report and address any errors before applying for financing.
• Compare offers: Don’t settle for the first financing offer you receive. Compare rates from banks, credit unions, and dealerships to identify the most competitive option.
• Get preapproved: Securing a preapproved loan gives you negotiating power at the dealership and ensures you don’t exceed your budget.

Closing the deal: understanding the paperwork

Finalizing the purchase involves more than just signing on the dotted line. Carefully review the following before committing to anything:

• Sales contract: Verify the agreed-upon price, financing terms, and additional fees (e.g., documentation, registration). Ensure there are no surprise charges.
• Warranty considerations: Understand what’s covered under your warranty, including its duration and any exclusions.
• Title and registration: Ensure the car’s title gets transferred to your name, and register the vehicle with your province or territory.

Insuring your vehicle

Once you’ve purchased your car, obtaining insurance coverage is the next critical step. If you’re leasing a car, review the lease agreement for specific coverage requirements. For new car owners, prioritize comprehensive and collision coverage for added protection.

You may also benefit from using a broker like Westland Insurance to shop around for competitive rates. Our local insurance experts will help you find the car insurance policy that suits your lifestyle, needs, and budget.

Becoming a car owner is a significant accomplishment. Armed with this guide, you’ll know what to look for when buying a used car, how to compare leasing vs. buying a car, and how to secure the best financing options.