About to purchase my first car need some advice/input

General Discussion
1

So as the title says I am about to purchase my first car in the next month or so and I would like some opinions and input on various things.
I’ll start off by saying that I am 26 year old male and am only now about to get my Drivers liscence.I Have never had insurance, And have no credit good or bad.
I am leaning toward paying straight cash for a used vehicle and I want some advice about how I should approach going to a dealer , What to look for or look out for. Right now I had been shopping around in my area mostly online and My heart is leaning towards a used ford ranger anywhere between 07-10 or a Mitsubishi lancer roughly around the same year range. generally i’ve heard most dealers would prefer to sell financed over straight cash but I would actually rather avoiding that method.

So overall Id like some general input on insurance the most , I am aware that it could be quite costly being a new driver but I am wondering what factors into it ? Does my age help at all being that I am 26 and just beginning to drive and the fact that I live in a part of Rural Canada that’s a long way away from any city driving? Unfortunately growing up I never had parents to fend for me I had to always fend for myself and to be able to get my drivers liscence I had to make my own money to buy a vehicle, I had no help whatsoever.

Any Advice to a new car owner and new driver is welcome.

2

Don’t buy the Ranger, they tip over too much in winter. Go to an insurance agent and ask questions. Buy at any price you can afford, don’t buy warranties or wax jobs. Have a mechanic evaluate the car for safety if it passes the test drive. If the car does ANYTHING odd on the test drive, don’t buy it.

3

Although you don’t really have any driving history, you’re not super young anymore.

I believe 18-25 year old guys get hit with the highest rates. You’re just past that point already.

I recommend that you get comprehensive insurance, at least for a few more years.

I highly encourage you to buy that Ranger for cash. It’s nice to know that your car is 100% yours. Besides, with your limited credit, you won’t get a good loan.

While a Ranger is not very exciting, it is rather simple and should prove to be relatively reliable and easy to maintain. We have several Rangers in our fleet and they’re not too bad.

As for the dealer, negotiate the price first. Then say that you will be paying cash. Have the cash with you, if possible. If you have to leave to get it, they might change the price on you while you’re gone.

Here’s what to avoid:

Under body coating
Upholstery protection
Extended warranty
Aftermarket fat rims and tires
Dealer financing (because you’re paying cash)

4

Well here you go. I’m going to recommend that you finance whatever you buy. Holy cow at 26 and you have no credit rating? The only way to get a credit rating is with credit. You need a rating and car loans are easy to get. If you can get a decent interest rate, pay a good portion down, make payments for a year and then pay it off if you want. Then you’ll have established some credit. You should also have a bank account, a credit card, and a debit card so get busy on that end.

I know nothing about Canadian insurance but I would deal with a national company to start like State Farm here. Get a couple quotes on comparable insurance. The agent will explain what is required in Canada and what is optional. Your rates will be higher because you have no credit, but will be lower because you are older. You should have a very high liability coverage like $300K, then you should also have an umbrella policy for at least another Million or two. Hit a car load of kids and you’ll be hunted down all your life. If you don’t have renters insurance or homeowners, you will have to have that at the same time in order to ger the umbrella policy. Umbrellas are very cheap because they only pay after everything else is exhausted.

After that you can decide if you want comprehensive to cover things like deer accidents and collision coverage if you hit a tree. They really don’t cost that much and if you do get in an accident, you don’t have to screw around with someone else’s insurance to get your car fixed or replaced. You can go with a high deductible if you want to save some money.

Insurance is to protect you from financial loss and also to protect others from your actions. Everyone can have a lapse and cause an accident so just protect against it.

5

@Bing Yep 26 years old soon to be 27 and I have 0 credit. I have been working for years since id been 17 and not even had a bank account until I turned 20. I have never owned a credit card and the only reason I even got the bank account because my new job at the time needed to pay direct deposit.I’ve always felt safe with large amounts of money lying around the house, when i say I live in a Rural part of Canada I mean we live in the woods more or less haha. When me and the wife bought our house we paid straight cash for that as well and didn’t end up paying any extra on it Interest? I figured I’ve made it this far without the need for credit and always manage to have considerable savings on hand so why start now ?

Wife also has no credit score at 24 years old and has never gotten her drivers liscence either, so I guess we are just strange ? As for comprehensive Insurance around here it would probably be a really good idea since moose vehicle accident are extremely common.

6

If you are happy with a “no credit” lifestyle, no reason to change now. Yet, establishing credit might increase you options in the future. 1st step is often a charge card at a retailer, like Sears. Buy some items on the card and pay the bill on time. Next, get one bank credit card. Get a card affiliated with your current bank. Use it a few times and pay the bill on time. Just because you have a credit card doesn’t mean you must use it, you still have the option to pay cash.

If you have 10-20K hanging around I’d look for a nice full sized SUV. Rugged to handle rural Canada and safe. I have an '01 Toyota Sequoia that I really like. I bought it in '08 with 90K miles and it has 135K now and looks great, runs smooth, no problems. A good used Ford Explorer would serve you well and might be easier for obtaining parts and service.

If you really want to establish credit, go to your bank and pre-arrange an auto loan. Then go to the dealer and make a deal on a new, or a nice pre-owned certified car or SUV. Make the payments on time and you’ll have all the credit you’ll ever need.

7

Believe It Or Not, Insurance Companies In The State In Which I Live Factor Credit Scores Into The Amount They Charge Customers For Insurance.

A Poor Credit Rating Results In Higher Insurance Costs And A Good Rating Results In Lower Rates. I’m Not Sure If “No Credit” Is A Good Thing Or Not.

I’d Check That Out With Agents In Canada. Find A User Friendly Agent.

CSA

8

Since You Own A Home You Probably Have HomeOwners Insurance. Many (All ?)Companies In The States Give Multi-Line Discounts To Customers Who’ve Got Policies For House, Car, Life, Etcetera, All With The Same Company. If You’re Happy With Your Company And Your Agent Then That May Be The Way To Go.

CSA

9

It’s a very good idea to bring a used car to a mechanic of your choice for a pre-purchase inspection, which might run around one hour of labor. Many used cars have been sold because of some serious problem that you wouldn’t notice but that a mechanic would, so this is usually money well spent.

If you can find a car from a private seller with records showing proper maintenance, that’s a plus, as proper maintenance will help in making the car more reliable for you.

As others have said, consider using this opportunity to improve your credit history. You don’t have to finance the whole amount, but doing some portion for a reasonable length of time might be worth the interest you’ll pay. (I do applaud your mindset, though, as we see too many people here who are perfectly happy financing every car purchase, even later in life, instead of buying less-expensive cars and saving enough money to eventually get ahead of the game.)

10

I’d suggest that you first look around for a private sale, particularly from the family of an elderly person who can no longer drive and no one else in the family wants their car. These vehicles are usually well maintained, low mileage but older models and never driven hard and often have never been in a wreck.

11

Absolutely nothing wrong with paying cash for things and not having any debt, but there are advantages to at least having a credit history and a bank account. For heavens sake don’t tell anyone you live in the woods alone and have large amounts of cash on hand, particularly on the internet. Then what if there is a fire or tornado, will those large amounts still be safe? Nothing wrong with just letting a bank handle the large amounts that you can access with a check or debit card. Plus if you ever want to travel, you need a credit card and debit card and around here you can’t carry more than $10,000 in cash without alerting the drug police. Good for you for managing your money but just move a little bit into the banking system and it could be helpful in the long run.

I remember a relative who hid her money in a baking soda can and buried it out back because she didn’t trust banks after the depression. She told one person to dig under the tree out back if anything happened to her. When she died they found money all over the place but I’m sure not all of it was recovered in the back yard. Gotta have a disaster plan.

12

Your age and being a property owner should get you a break on insurance and my vote would be for the Ranger over the Lancer as I think it’s a more functional and superior vehicle.

My hat is off to you for the way you’ve handled things financially and I never financed a car until I was 28 years old. The thought of owing someone kind of grates… :slight_smile:

13

Weeding out specific loser cars for mechanical problems is best left to a pro, so hire a good respected local inde mechanic to inspect the car you are considering to make an offer prior to making the offer, or make the offer contingent on the inspection results.

But the actual process is easy as one, two, three.

First, make an appointment and personally visit 2 or 3 insurance agents from different companies before you even start looking for cars. You can compare the rates, and they may have some good ideas. They may even know of used cars for private sale, since they deal with cars all day long anyway. You might just be able to entirely avoid the dealer lots. Plus they’ll know the insurance rates for the various cars you are considering to buy. You need that info before you make any offers. And I expect you’ll find the agents will be more than happy to help you out on this.

Second, visit your local DMV and ask them the best way to buy a used car and avoid scams. You want to be sure you hold a clear title, and the DMV knows what you have to do to insure you will after you hand over your cash. There are scams galore, and you want to avoid them all. The DVM there may tell you to pay with a personal check rather than cash or cashiers check for example. There may be inspection requirements too, which you’ll do yourself service to know about before engaging a seller. Line your ducks up in a row the best you can.

Third, consult Consumer Reports Guide to Used cars. You’ll increase your odds of getting a car that you’ll like for years to come if you choose from their list of good used cars to consider. Add to this the online Kelly Blue book for comparable pricing of used cars.

Dealer lot sellers sometimes like to use a credit-deal, for various reasons, but I find it’s easier to negotiate the lowest price when paying cash. If the negotiations stall – for example say I’d like to pay $10,000 but the seller wants $10,500 – I write out a check for $10,000 and show it to the seller, along with the most recent bank statement showing there’s enough in the account for the check to clear. Just showing that you’re willing to write a check, and have the funds available, and all you need to do is hand the check over, that can be enough to swing the deal in your favor. Best of luck.

14

A small amount on a credit card would be a good way to start. If you only use it for gas purchases, and pay it off on time, you’ll get it up very quickly. Not all gas stations are open 24/7, but several pumps are; here in the US anyways. You can use the card to buy gas, even when the station is closed.

15

I agree that you deserve compliments for your handling of money.

My advice matches a few, disagrees with others here.

I strongly advise buying privately.
In most cases, a dealer will not know much about the maintenance history of a vehicle, and that’s the most critical thing to consider when buying used. The dealer is expert at making a car look attractive. That’s far less important than the information they can’t or won’t give you.

Ask to see the maintenance records.
Look especially for regular fluid changes: oil, coolant (every 2-5 years), transmission fluid (30,000 increments). Look for signs of abuse, and be wary. Check the level of oil and coolant, and if either are low or discolored, make a mental note. Look for badly worn tires, odd noises, scrapes on the underside of the vehicle. I like to have the seller drive the car first so I can see how the car has been driven. If a seller has other signs of how well or poorly they care for things, that will be clues to how the car has been treated.

Pay particular attention to low mileage cars offered by the older couple.
You’re much more likely to get honest information from them than a car salesman, and you’ll get more for your money too.

Get a car loan, or don’t, whichever feels more comfortable to you and your wife.
Don’t get a car loan just to establish credit. You can establish a credit rating sufficient to serve you with a credit card as someone has mentioned, being sure to pay it off every month. That way you’ll establish credit without costing you hundreds of dollars in car loan fees and interest.

Spend the money for a professional mechanic to evaluate a car before you buy it.
The mechanical aspect is much more difficult to discern, especially since you have little experience as a driver. No matter how nice the car looks to you, have a mechanic to a pre-purchase inspection.

Buy what excites you
If you really want a Ranger, go for it!

16

Have you considered a full size pickup? It will be older than the Ranger, but they are sturdily built. If you live in the boonies, you might be limited by dealer selection. Even though you are buying used, it would be a good ideal to go with something that is sold new near you. All mechanics near you will be more familiars with those brands. How much do you want to spend?

17

To credit or not to credit. I know that there are people, even today, who have never financed anything and have gotten along perfectly well, but if you ever plan to travel internationally, you will find a Visa card very handy. Visa is the most widely accepted card in Europe and with it, you don’t have to worry about currency conversions. You always get the best rate when the bill is sent to your house.

But if this is not in your future, then you won’t need it. But should you decide to go for it, I offer the following suggestions.

If there is a credit union that you can join, then you would be much better off joining them and leaving the bank. Next, when you find a suitable vehicle, find out what the trade in value is, you will probably have to pay significantly more, but if you find the trade in value and then finance 80% of the trade in value, you should get the best interest rate even though you have not borrowed before. Then while you are paying off the loan, get a Visa card through your bank or credit union with a minimum limit.

You may not be able to get the lowest cap on a no fee card, most of those require higher limits, but get the lowest possible limit available for a no fee card. If you pay it off every month, the interest rate won’t concern you, but you must use the card every month. If you don’t and your identity is stolen, you may not find out soon enough to protect yourself.

18

BTW, just how did you and spouse get around without a car? or is that an assumption that you had a car but no license/insurance. ?

19
Although you don't really have any driving history, you're not super young anymore.

I believe 18-25 year old guys get hit with the highest rates. You’re just past that point already.

Age is only part of the factor. Since you haven’t had insurance before and just now getting a drivers license…that will also put you in the high-risk pool. Thus a 26yo with no previous insurance and new drivers license will pay the same (for a couple years anyways) as an 18yo.

My brother-in-law ran into this. He retired about 20 years ago from Chryco. He was high enough in the chain where Chryco leased for him and my sister two new vehicles every other year. This included all maintenance and insurance. When he retired it continued for another 10 years. Then chryco decided to remove this perk to it’s retire executives (unless you were way high up - he was only a plant manager). So he had to buy a car and get his own insurance. Even though he’s been driving all that time and never had an accident he was put in the high-risk pool because he hadn’t had insurance under his name for almost 20 years. He never had a speeding ticket or accident in well over 20 years.

20

I would go new if I were you, and finance it with the 1.9 apr being offered these days. You will probably find a new car with similar payments as buying used, have a warranty, thus no unexpected repair costs, and build your credit rating.