AIADA: Buying Your First Car With Confidence

ALEXANDRIA, Va., July 12 -- Buying your first car can be a particularly overwhelming prospect, with many components to consider. Young adults and recent graduates face numerous decisions relating to their first automotive purchase. But with the right information, obtaining the necessary confidence and negotiating power to score a great deal is not far from reach.

"There are three basic financial components that determine the cost of a vehicle; price, finance and insurance terms, and trade-in values," said Buzz Rodland, Chairman of the American International Automobile Dealers Association. "It is important to give equal weight to each of these components."

Most people shop around for price, but completely neglect the other two components. All three of the main components of buying a car are negotiable. From sticker price to trade-in value to finance and insurance rates, customers have a say in determining the ultimate cost of the purchase.

Many dealerships offer first-time buyers and recent college graduates incentives for purchasing vehicles, which range from offering buyers favorable credit terms to extended payments. Some automakers even offer cash rebates. It is important to note, however, that these incentives are either/or. Details on these incentives are generally made available on automaker websites.

First time buyers should know their credit rating. Credit ratings reports, combined with your driving record, are key factors in the finance and insurance component of buying a car.

A good rating may mean additional savings on interest rates, while little credit or a poor rating may mean a cosigner is necessary. Equifax, Experian, and TransUnion are three of the major national credit bureaus where credit rating reports are available.

Some insurance providers, finding that good credit and lower accidents are strongly correlated, will offer rate reductions to drivers who fit those standards. If you have a great credit rating, you should make sure the insurance agency knows.

Finally, offering a dealership a trade-in could significantly reduce the ultimate costs of purchasing a vehicle. When doing so, pay particular attention to the estimated values. These can be found in publications like Kelly Blue Book or Edmunds.com, which indicate the retail value of your vehicle based on make/model/year and past maintenance reports.

"Consumers should know what's ahead, be prepared and shop around," added Rodland. "There are many benefits available to first-time buyers -- one just needs to know how and where to look for them."

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