LUSARAP

If youre just starting out, your first car will probably be your largest purchase to date. That makes it the most important financial decision of your life. So youll want to make sure to choose a car that fits your budget, without sacrificing quality or safety. Here are five things to consider when buying your first car.

1. Be realistic
Most people dont buy a luxury car the first time around. Youll want to set a realistic budget to meet your monthly payments.

Or, if you can afford it, you can pay for the entire car upfront with cash. If youve managed to save enough or are lucky enough have a windfall to spend, you can avoid car payments and just calculate your budget for fuel, insurance, and maintenance. Either way, think about whether you need any extra features, like an extended warranty or special detailing, and skip those options if you find them unnecessary or cant afford them.

2. Shop for auto insurance
Most states requires auto insurance. Typically, theyll require just liability insurance, which covers damages and injuries to the other driver if youre at fault. But you might want to go with comprehensive coverage if youre buying a newer vehicle, to cover yourself in case of damage. Base your decision on the following:

• Level of coverage: Decide what level of coverage you need, whether its minimum coverage, basic, extended, or premium. Depending on what level you choose, you can have lower deductibles, or coverage for a rental car, towing, glass repairs, and so on.
• Financial strength: Sources such as A.M. Best can help you gauge whether a given insurer will be reliable when its time to make a claim.
• Price: Make sure you compare quotes across carriers to get the best deal possible. A recent study by NerdWallet found that American drivers on average overpay for car insurance by $368 each year. Rates also can vary among carriers for the same location, so it pays to compare. To make it easier to learn which insurance company is likely to give you the best price, use features such as NerdWallets comparison tool, which gives you free estimates without collecting personal information.
• Service : Note your own interactions with insurers, as well as information from your state insurance agency and other customers (if they post online complaints, for instance), to gauge the level of service you can expect from the company.
• Look for discounts : While the level of insurance you select should depend on your financial situation, location, and vehicle, its better to go a little overboard than the other way around. That said, ask about any discounts, such as those for automatic payments or for driving below a certain mileage threshold, or any good student discounts.

3. Find a co-signer
If youre in your early 20s or younger, you might need a co-signer to get a car, because its possible that your current credit history wont qualify you for a loan on your own. Having a co-signer might also help you get lower interest rates and better terms. But remember that if you get a co-signer and you fail to make your payments, the co-signer will be legally responsible for the cost, so make sure you have enough to make your monthly payments. A co-signer also might have to share legal liability if you get involved in an accident.

4. Double-check used cars
Used cars are cheaper for a reason: They tend to have more wear and tear. So it pays to be extra careful when choosing one. Be sure to check the following:

• Research the vehicles history via Carfax or a similar source.
• Carefully read the dealers return policy.
• Check if the mileage disclosures match the odometer reading on the car.
• See if the car has any recalled parts or safety defects by checking the NHTSAs online database by using the cars vehicle identification number. (Every car has a VIN.) If you see that there were recalls made on parts of the car, ask the seller for proof of the repairs.
• Have the car inspected by an independent mechanic before buying.

5. Bring a second set of eyes
Whether youre intimidated by the thought of a high-pressure salesperson or youre worried youll lose self-control, strongly consider bringing someone with you. A mechanic friend would be a great choice, but even an experienced car-buyer like a parent could be highly useful. He or she can help you remember details about the car, figure out whether youre getting a fair offer, and spot pros and cons you might miss.

Final word
Your first car should be a reliable vehicle that doesnt break the bank. With this in mind, set a realistic budget and stick to it. Also shop for insurance beforehand, so you know whether you can actually afford a given car. Keep safety in mind as well, especially when shopping for a used car.

Finally, bring a family member or friend with you to limit the chance of making a poor decision. Doing that will also make the purchase less intimidating, which should make things a lot easier!

Read more from NerdWallet:

• Comprehensive Auto Insurance: Is It Worth It?
• Allstate vs. Geico vs. Progressive vs. State Farm: Which is the Best Insurance Company for You?
• Esurance vs Allstate: Reviewing Top Insurance Providers

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For many consumers, the great car deals in 2014 are the ultra-low auto loan rates combined with easier credit.

But saving real money will require digging through cryptic lingo for car loans, going beyond some wacky ads and, yes, even decoding some charges.

Weve seen federal regulators in the past month highlight some ways consumers have gotten taken for a ride in the car-buying process.

In January, the Federal Trade Commission announced “Operation Steer Clear,” which cracked down on deceptive advertising. Get a postcard from a car dealer saying you won a prize at a dealership? Dont bank on a fat check.

The Consumer Financial Protection Bureau also is taking issue with dealer markups involving car loans obtained at dealerships, bringing home the point that consumers need to shop around for loans before heading into the showroom.

For consumers, its essential to know the traps and tips.

• Should I worry about being able to get a car loan?

Not really. Mark Zandi, chief economist for Moodys Analytics, said auto lending had one of its best years in 2013, and lending should remain strong in 2014.

“Subprime auto lending is almost back to its prerecession levels,” Zandi said.

Overall, borrowers with good credit can expect to find rates below 4 percent on new- and used-car loans, according to Greg McBride, senior financial analyst for Bankrate.com.

• Take steps to lock up a loan before you take a test drive.

In December, the Department of Justice and the Consumer Financial Protection Bureau brought to light charges of discrimination in lending that allegedly took place through dealer markups regarding interest rates.

More than 235,000 African-American, Hispanic and other minority auto loan borrowers who dealt with Ally Financial were unfairly charged higher interest rates for loans on cars or trucks because of discriminatory practices, according to the federal regulators.

Ally Financial and Ally Bank were ordered to pay $80 million to harmed borrowers and pay $18 million in penalties relating to auto loans made between April 2011 and December 2013. In a statement, Ally said the company does not engage in or condone violations of law or discriminatory practices and, based on the companys analysis of its business, it does not believe that there is measurable discrimination by auto dealers.

The lesson for consumers: Make certain to be pre-approved for a car loan before shopping for a car. Then, you have a better idea of what type of loan rate would apply to someone with your credit score, said Christopher Kukla, senior vice president for the Center for Responsible Lending.

Kukla pointed out that consumers dont know what kind of extra compensation dealers might be getting on the auto loan markups.

“Youre paying the dealer for a service, but you dont know how much youre paying the dealer for that service,” Kukla said.

•What if an ad looks too good to be true?

Consider that all might not be on the up-and-up.

The FTC said false claims made by some dealers drove consumers to believe they could keep super-low monthly payments until the car was paid off. But the payments were temporary teasers, after which consumers would owe a higher amount each month or perhaps a large balloon payment at a given date.

•The price of the car isnt just a sticker on the window.

Consumers want to compare the going deals on similar makes and models by going to sites such as Kelley Blue Book at KBB.com.

But get a detailed breakdown of fees and features on a specific deal, too.

One consumer told me a few weeks ago that while considering buying an SUV, he spotted that he was charged for a full tank of gas.

“Oh, really? Youre going to take $30,000 of my money, and youre going to make me pay $60 for a tank of gas?” said Karl Brauer, senior analyst for Kelley Blue Book.

Spot an item like that one? Negotiate.

Susan Tompor writes for the Detroit Free Press.

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