It’s true that buying your first car is a significant milestone, and it comes with both excitement and challenges. Over the years, I have met many people who have bought their first car, and from their experiences (as well as mine), I’ve learned what to avoid and what to focus on, including international student auto insurance for those who are students here. I currently own a RAV4, which I absolutely love, and I’ve gathered all these insights into this simple guide.
I’ll walk you through the basics, covering essential points like insurance, when you need a car, buying new vs used cars, and more. Let’s get started!
When and Why Do You Need a Car?
One of the first questions to ask yourself is whether you truly need a car, or if it’s something you want. In some places, public transport may make owning a car unnecessary. For example, cities like New York, Los Angeles, and Chicago offer a variety of public transport options. College campuses often have good transportation networks too.
However, if you are moving for an internship, a job, or to a location without easy public transport, a car becomes a necessity. Many students decide to purchase their first car for their commute, especially when they move to areas where public transport isn’t reliable. Before buying, though, compare the costs of commuting via car with alternatives like Uber to see what’s more economical.
If you don’t know how to drive, it’s a good idea to learn how before making the purchase. Cars in countries like the US tend to have automatic gears, which can make driving easier. Be sure to also familiarise yourself with the local driving rules.
International Student Auto Insurance and Hidden Costs (Title Fees, and More)
It’s easy to overlook the hidden costs that come with owning a car. For example, when you buy a car, you’ll need to pay title fees, registration fees, and of course, insurance.
In some states, registration fees can cost several hundred dollars per year. In Arizona, for example, I pay about $300 annually. Maintenance costs are another consideration, as you’ll need to take your car in for regular servicing.
Insurance is also a big expense. For instance, my wife and I pay about $138 per month for our car insurance. Depending on your driving history and location, this cost could be higher or lower.
Buying New Car vs. Used Car
The next big decision is whether to buy a new or a used car. I bought my car used, and at the time (pre-2024), the prices were significantly lower than new cars. However, in today’s market, the price difference between new and used cars has narrowed. I still recommend buying used, especially for first-time buyers.
For example, I bought a 2019 Toyota RAV4 for $23,000, while the new version cost $33,000. The depreciative value on a used car has already been dealt with by the previous owner, meaning you won’t lose as much value right after purchase. You can visit sites like Kelly Blue Book to check and compare prices of new and used cars.
Pros of Buying a New Car
- No immediate maintenance concerns since it’s brand new.
- The satisfaction of owning a new car.
Cons of Buying a New Car
- Depreciation: The value of the car drops as soon as you drive it off the dealership lot.
Pros of Buying a Used Car
- Lower cost compared to new cars.
- Depreciation has already occurred.
Cons of Buying a Used Car
- It may require more frequent maintenance.
If you’re new to driving or to the country, I recommend getting a used car with around 25,000 to 40,000 miles. This way, if you have minor accidents or scratches, it’s less stressful than damaging a brand-new vehicle.
SUV vs Sedan: Which One Should You Choose?
When it comes to choosing between an SUV and a sedan, it depends on where you live and your personal needs. Some people choose SUVs when they live in places with heavy snow or rough terrain. For example, in places like Colorado or the Midwest, a 4×4 SUV like a Subaru is quite popular.
However, if you live in a city, a sedan can still handle snowy roads, as these are usually cleared regularly. Personally, I prefer an SUV because I find it practical for carrying loads. When I bought my Toyota RAV4, I needed the space to commute between Tucson and Phoenix, often with many belongings.
If you’re someone who loves sedans, you can always rent a U-Haul when you need extra space for moving things. So, don’t feel pressured to get an SUV unless you really need one.
Where to Buy Your Car in 2024
There are several options when it comes to where you can buy a car.
1. Dealerships
You can go to a dealership, which is the most common option. However, I don’t prefer them because they tend to haggle a lot. Even after extensive negotiation, the price reduction may not be significant.
2. Online Platforms
Websites like CarMax are another option. I highly recommend CarMax over platforms like Carvana, as CarMax has a better reputation. Carvana, in my opinion, has too many risks and potential problems.
3. Dealers’ Websites
You can also visit a dealer’s website directly to check both new and used vehicles in their inventory. This allows you to see the car in person, take it for a test drive, and get a feel for how it drives.
4. Rental Companies
Another option is to buy from rental companies like Hertz or Enterprise. These companies often sell their cars after they’ve reached a certain mileage (e.g. 30,000 miles). These cars can be good deals since they’re well-maintained during their rental period.
Preferred Manufacturers: What Brands to Consider
Now, let’s talk about which manufacturers to consider. Hondas and Toyotas are incredibly popular among people from countries like China and India. These brands hold their value well and can easily last for over 200,000 miles.
For example, I bought my Toyota RAV4 for $23,000 with 11,000 miles. A similar model now, with more miles, is still selling for $24,000. These brands also have luxury divisions, like Acura for Honda and Lexus for Toyota.
I’ve driven a variety of cars, from Mitsubishi to Mercedes, and while they’re all fun to drive, I prefer Toyotas and Hondas for their reliability and affordable service costs.
Financing Your Car
There are different ways to finance your car. If you have the money saved, you can buy the car outright. However, many people take loans to cover the cost.
1. Financing through a Dealer
When you finance through a dealer, be cautious. Dealers often make money from financing deals, meaning they may charge you a higher interest rate. I learned this the hard way when I financed my car at 5.6% interest through Capital One. Later, I refinanced it to 2.2%, saving me a lot of money.
2. Refinancing
If you don’t have a credit history, you may get a higher interest rate initially, but don’t worry—you can always refinance later to lower your interest rate.
I also recommend opening a credit union account. University students can benefit from credit unions, which often offer lower interest rates on loans compared to banks like Chase or Capital One.
Should You Buy or Lease as an International Student?
This is a question many first-time buyers struggle with. Buying a car means you are building equity, whereas leasing doesn’t offer the same benefit. For example, I have about $7,000 worth of equity in my car, which I wouldn’t have if I had leased it.
Leases also limit the number of miles you can drive each year, usually around 12,000 miles. If you go over that limit, you’ll be charged extra at the end of your lease term.
If you plan to take frequent road trips or commute long distances, leasing may not be the best option, as it can become expensive.
Is It a Need or a Want?
Finally, before making the purchase, ask yourself if a car is truly a need or a want. Many students buy expensive cars like Teslas or Audis, only to struggle with the monthly payments later.
If you’re in school or just starting your career, it’s wise to buy a more affordable car and focus on paying off student loans or other debts first. Remember, you can always upgrade to a more luxurious vehicle later in life once you’re financially stable.
Indeed, buying a first car is a significant decision that requires careful consideration. Just think it through when and why you need a car, your insurance options, whether to buy new or used, and exploring your financing options, you’ll be well-equipped to make a smart choice. Remember to factor in the hidden costs, and always ask yourself: Is this a need or a want?
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