• Considerations for buying your first car include understanding your needs, determining a reasonable price range, and securing preapproval for an auto loan.
  • To efficiently evaluate new versus used cars, weigh factors such as depreciation, insurance costs, and modern features.
  • Explore purchase options by considering both dealerships and private sellers, as well as lease buyouts.
  • To get favorable financing options, consider increasing your down payment, building your credit history, and adding a cosigner.
  • Consider your long-term financial goals throughout the car-buying journey to ensure a seamless and rewarding experience.

    • Looking to buy your first car? Congratulations — what an exciting time! Here, we'll equip you with what you need to understand the process of buying a car, provide tips to help secure your first auto loan, and ultimately help you drive off into the sunset with your awesome new car.

    If you’re in the market for buying your first car, here are the things to consider:

  • What’s a Good First Car? — Understanding Your Needs
  • What's a Good Price for a First-Time Car?
  • Are You Looking to Buy New or Used?
  • Where Will You Buy Your Car?
  • 4 Ways to Get a Better Loan for Buying Your First Car

    What’s a Good First Car? - Understanding Your Needs

    Before you even start looking, it’s important to take a few minutes to sit down and identify your needs. We’re not going to point out any specific makes or models that you should look to purchase, but here are a few factors you should consider as a first-time car buyer:

  • Purpose - Why are you getting the vehicle? Do you just need a car to get to and from work? Maybe you need something bigger to move tools or transport hardware? Maybe you have a big family and need plenty of seats?
  • New or Used - While owning a brand-new car can be exciting, it may not be the best option for first-time buyers. In addition to costing more upfront, new cars depreciate more quickly and will cost more to insure. On the other hand, used cars can come with unexpected mechanical issues, especially when buying from a private party.
  • Fuel Type - As the prices of gas and diesel continue to rise, it may be worth considering eco-friendly options.

    • What’s a Good Price for a First-Time Car?

    Rewind the clock to 1963. You walk onto the lot of your local car dealership, and there is a sleek new Corvette priced to sell at just over $4,000 MSRP. Unfortunately, it’s not 1963, and here in 2024, a comparable car has an MSRP of $70,000 or more![1] At our current overall rate of inflation, a Corvette's price would have risen from $4,000 to about $41,000 between 1963 and 2024.[2] With an MSRP of about $80,000, it's clear that the prices of luxury vehicles have risen to far outpace average inflation rates across all consumer products. 

    With the price of both new and used cars continuing to climb, it can be hard to know what is and isn’t a good price for your first car. To help you out, we’ve created a tool called PNC Total Auto® that can help you get an idea of what vehicles are available on the market, how much dealerships in your area are charging, and how those prices compare to the industry at large.

    As a general rule, you should always be able to afford at least 10% of the total cost of your new vehicle upfront as a down payment. So, if you’re looking at a new 2025 Toyota Camry priced at around $30,000 — you should have at least $3,000 in cash for your down payment.[3] If you can’t afford that, then you may be shopping outside of your price range.

    Negotiating Your "Out-the-Door" Price

    Your "out-the-door" price is the total amount you'll pay to take ownership of the vehicle and drive it off the lot. It includes the price of the car and all additional fees, taxes, and charges, giving you a clear understanding of the final cost.

    Here are some tips for negotiating your "out-the-door" price: 

  • Research the make and model of the car you're interested in purchasing. Use online resources to understand its market value and any available incentives or rebates.
  • Obtain quotes from multiple dealerships to compare prices and gather leverage for negotiation.
  • Familiarize yourself with standard dealership fees and taxes to avoid surprises during negotiation.
  • When negotiating with the dealership, clarify that you're interested in discussing the total "out-the-door" price rather than the car's sticker price.
  • Request a detailed breakdown of all fees and taxes included in the total cost to ensure transparency and avoid hidden charges.
  • Based on your research and financial considerations, set a maximum budget for the "out-the-door" price.
  • If the dealership is unable or unwilling to meet your target price, be prepared to walk away and explore other options. 
  • Do not be in a hurry. Take your time to negotiate effectively and secure the best possible deal.
  • Communicate your budget and expectations while remaining open to respectful and constructive dialogue with the dealership.
  • Explore the dealership's financing options and research rates from other lenders to ensure you're getting a competitive deal.
  • Be cautious of dealership financing offers that may include hidden fees or high interest rates, and carefully review all terms before committing.
  • Once you've agreed on the "out-the-door" price, request a written contract detailing all terms and conditions.
  • Review the contract carefully to ensure accuracy and clarity before signing.

    • Getting Preapproved for a First-Time Auto Loan

    If you’re trying to decide how much you can afford to spend on your first car, getting preapproved for a loan is an excellent step. When you are preapproved for a first-time auto loan, the financial institution will likely take into account your credit history, income, and other factors to estimate the amount you will qualify to borrow.

    Car loan preapproval provides several benefits that may enhance your car-buying experience. 

  • Obtaining preapproval helps you establish a realistic budget for your car purchase. By knowing the amount you’re approved to borrow, you can narrow your options to vehicles within your price range. 
  • With preapproved financing in hand, you can expedite the car-buying process. Rather than spending time at the dealership negotiating financing terms, you can enter the showroom with confidence, knowing how much you may be able to afford to pay. This allows you to focus your efforts on finding the right vehicle.
  • Preapproval for a car loan empowers you with greater negotiating leverage. Armed with preapproved financing, you can negotiate based on the total cost of the vehicle rather than monthly payments or financing terms. This positions you to secure a better deal.
  • Preapproval also allows you to shop around and compare interest rates from different lenders. Choosing a loan with favorable terms could save money on interest over the loan term. Securing financing before shopping for a car allows you to take advantage of any special promotions or offers available to preapproved buyers.
  • Without preapproved financing, you may feel pressured to accept the dealer’s financing offer, even if it’s not your best option. Preapproval puts you in control of the car-buying process and helps you avoid dealerships' pressure tactics to push unfavorable loans.

PNC's Check Ready Auto Loan offers competitive interest ates. Flexible options regarding loan amounts, repayment terms, and model years are available.               

    Are You Looking to Buy New or Used?

    We mentioned a few quick points on this ongoing debate, but in this section, we’d like to give a little more insight to help you settle the new vs. used debate for your first car purchase. To make the point, we’ll be comparing two Honda Civics — a 2024 and a 2020.

    Now, this compact car won’t be the right fit for everyone, but it will help to enforce an idea that will be true for any first vehicle you buy. Without further ado, let’s look at some Civics.

    Price

  • New 2024 Honda Civic - $25,045 MSRP
  • Used 2020 Honda Civic - $18,000 to $23,000

    • The 2020 Civic could save you anywhere from  $2,000 to $7,000 compared to a new 2024 model. It’s important to remember that you can always upgrade later. This is your first car, not your dream car, and very likely not your last car.

    Cost to Insure

    Depending on where you live and other factors, including age and any previous accidents, insuring a new versus used car may add up to a substantial cost difference. Depending on your situation, the new car may cost more to insure. This doesn’t have to be a deal-breaker, but if you’re someone on a tight budget, it is a factor certainly worth considering.

    Whether you buy new or used, it always pays to shop around and find the best deals. You can also generally find savings by bundling other types of insurance (such as renters or homeowners).

    Depreciation

    When you buy a new car, its value drops the moment you drive away from the dealership. Why? Let us explain.

    Once you register a car, it is no longer new but used—this instantly reduces its value. Within the first year of owning a new car, its worth could be 20% less than what you paid the dealership. The car will continue to depreciate over the first five years of ownership until it reaches about 60% of its original value. From then on, depreciation will be based upon the vehicle’s mileage and condition.

    Dependability

    When considering the purchase of a used vehicle, dependability is paramount. Certified pre-owned (CPO) cars may offer a reassuring option for buyers, providing a level of reliability similar to that of a newer vehicle. CPO vehicles undergo rigorous inspections and reconditioning processes, backed by manufacturer-backed warranties, to boost buyers' confidence in their performance and longevity.

    Manufacturer warranties accompanying CPO vehicles may offer comprehensive coverage, addressing various components and systems, often extending beyond the original new car warranty. This additional protection safeguards against unexpected repairs and may mitigate financial risks associated with potential mechanical issues.

    Extensive warranties are often available for added peace of mind, extending coverage beyond the manufacturer's warranty period. These warranties may offer customizable options, allowing buyers to tailor coverage to their specific needs and preferences.

    In essence, certified pre-owned vehicles backed by manufacturers and extended warranties may provide buyers with a more reliable solution when purchasing a used vehicle.

    Closing Thoughts on the New vs. Used Car Debate

    We’ve broken down three key reasons why buying a new vehicle may not be the right financial decision for a first-time car buyer. In closing, we just wanted to make two quick points.

  • Buying Used - Just because you’re buying used doesn’t mean you have to settle for a suboptimal vehicle. Look for something that was well-maintained that should continue to be reliable. A $500 car might sound nice, but it won’t save you money if you’re back to walking again in two weeks.
  • Buying New - While it may not be the right financial decision for everyone, there is nothing inherently wrong with looking at new vehicles as a first-time car buyer. Consider what your needs are and what your budget is, then make the best decision for you.

    • Where Will You Buy Your Car? First-Time Auto Loan Options

    Whether you’re looking for something new or used, there are three options to look at when it comes to where you will buy your first car. You can:

  • Buy from a dealership.
  • Buy from a private seller.
  • Buy out the vehicle you’re leasing.

    • Each of these comes with its own pros and cons, but which is best for the savvy first-time car buyer? Let’s briefly explore each option to see.

    Buying Your First Car From a Dealer

    As a first-time car buyer, working with a dealership can be fairly straightforward. You will test-drive and inspect the car, negotiate a price, sign the necessary paperwork and be on your way. While securing payment first is not necessary, it will help the experience go more smoothly and help you get more attention from salespeople.

    But why is it a safe option? The chief reason is that dealerships are responsible for disclosing problems the used vehicle might have or repairing those issues before selling it to you. If you’re buying a new vehicle, you will also receive a warranty built to protect your investment through the first few years of ownership.

    Please keep in mind that the price you pay will not be the same as the sticker price on the car. While that may be what you pay for the vehicle itself, you will also have to cover fees for documentation, prep and delivery, sales tax, and any additional accessories or extended warranties that you may choose to purchase. While buying your first car from a dealership may be safer in some respects, it may also end up being the most expensive option because of these additional expenses.

    See if PNC's Check Ready auto loan option is right for you.

    Buying Your First Car From a Private Seller

    You’ve been looking on third party marketplace sites and you've found it — the perfect first car. But it’s being sold by an individual. Or maybe you’re even looking to buy a used car from a friend or family member. How does this transaction work?

    In short, buying from an individual is very similar to buying from a dealer. You’ll have to fill out some of the same forms and get a loan if the vehicle is more than you can afford.

    Here are the key differences to be aware of:

  • There are no dealer fees on private sales.
  • Private sellers do not have the same obligation to disclose mechanical issues or flaws.

    • There are, of course, pros and cons to this. A pro is that an eager private seller is probably going to give you a much better price than an established dealership. The biggest con is that you’ll have to scrutinize every inch of the vehicle before purchasing to make sure you’re buying a reliable first car and not just inheriting someone else’s car problems.

    Tip: Don’t be afraid to ask the seller if you both can take the car to a mechanic for a thorough check prior to purchase, and always run a vehicle history report on the vehicle to see if it’s had any reported issues in the past. These extra steps could save you a lot of trouble in the long run.

    See if PNC's Private Party auto loan option is right for you.

    Buying the Vehicle You’re Leasing

    If you’re leasing a car, then you’re already familiar with having a monthly car payment, and by having that, you’ve built up some credit history. Well done, you!

    Naturally, the next step is buying your own car. But you like the car you’ve been leasing. If only there were some way you could just keep that car. Guess what — there is!

    If you want to do this, you will need to talk to the finance company from whom you’re leasing the car  to determine whether or not a lease buyout is possible. In some instances, you won't be able to purchase the vehicle until the end of your original lease contract.

    PNC Bank's Lease Buyout Auto Loan (LBO) option may be appropriate for those looking to secure ownership of their leased vehicle. 

    By choosing an LBO, you can transition from leasing to owning without searching for a different vehicle or worrying about lease-end charges. 

    The Answer - Where Should You Buy Your First Car?

    In the end, there is no right answer. All three of these buying options can be positive and result in you driving away in your first car! The important thing is deciding which route you’re going with and finding an appropriate solution that fits your needs.

    4 Ways to Get a Better Loan for Buying Your First Car

    Whether you want more money for your first-time auto loan, better credit rates, or just more options, here are three ways you can make that happen.

    1. Increase Your Down Payment

    If you’d like to reduce the overall cost of your first-time auto loan, saving up for an increased down payment is an excellent way to accomplish this. We mentioned earlier about making sure you have at least 10% cash to put down when buying your first car, but what happens if you can afford an even higher down payment?

    There are three key things to note — the larger your down payment, the better you can negotiate a better interest rate. At the same time, a larger down payment helps you build equity faster and decreases your monthly payment moving forward.

    2. Building Your Credit

    Unfortunately, this is not a quick solution to getting a better loan, but building strong credit is the key to getting the most out of any loan opportunity. During the preapproval process, your credit score and history will likely be one of the largest factors in determining if you qualify and the loan amount and terms you qualify for.

    Your credit score is impacted by paying off debt and making consistent, on-time payments. As you monitor your credit report, over time, these actions can increase your credit score.

    The better your credit score, the more money and better rates lenders will likely be willing to loan you because they can be more confident that you will pay it back in a timely fashion.

    3. Cosigning Your First Auto Loan

    Having a cosigner on a first-time auto loan allows you to benefit from a friend or family member with a higher credit score than your own. By agreeing to take full responsibility for any debts you are unable to pay, a cosigner gives you access to a larger loan and often significantly lower interest rates.

    If you have low or no credit and do not apply for financing, using a cosigner on the purchase of your new vehicle may be your only option. Be aware that some people may not wish to be cosigners on such a major purchase because of the direct link it has to their own credit.

    4. First-Time Car Buyer Programs

    First-time car buyer programs are crafted with first-time buyers' needs in mind. They aim to ease the financial burdens associated with purchasing a vehicle and make the process more accessible and affordable.

    Various institutions, including banks, credit unions, and sometimes even car manufacturers, may offer first-time car buyer programs. These programs offer a range of benefits tailored to the unique circumstances of first-time buyers. Such benefits may include lower interest rates, extended loan terms, or special financing options that cater to individuals with limited credit history or low credit scores.

    Closing Thoughts for First-Time Car Buyers

    Buying your first car can definitely be an exciting experience, but it is a major life decision as well. We hope we were able to answer your questions and provide some practical advice to help you through the ins and outs.

    Contact PNC Bank today to start exploring your loan options and get preapproved for an auto loan.