Preparing For Your First Car Purchase: Essential Steps To Take Before You Buy


May 7, 2024
Team Pineapple

You’ve been making purchases for as long as you can remember, from a piece of Chappies at the corner store to a loaf of bread at your local grocery store, all without a second thought.

So, it’s safe to assume that buying is ingrained in your brain.

But that’s not to say that you shouldn’t take the time to reflect on your purchases, especially one as big as a car!

Adequately preparing yourself before buying a car ensures financial readiness, informed decision-making, and consumer protection. It also helps you budget all vehicle-related expenses, including insurance, maintenance, and fuel. 

And so we’ve put together this fun and informative little guide to prepare you for the purchasing process better.

You’ll learn to make informed budgeting decisions, choose car types and models, and understand buying options. 

The guide will also provide negotiation tactics, the importance of inspections and test drives, and covers necessary paperwork and legalities.

Read on and fully prepare to be empowered by this car-buying guide.

Step #1: Determining Your Budget

You wouldn’t attempt to drive while blindfolded or shave your face without a mirror (yes, moustachioed ladies, we mean you too), so why would you try to go into the car-buying process blind?

Before even considering buying a car, the first step to achieving that goal is by putting together a budget.

Whether new or used, setting up a budget allows you to plan around the vehicle’s expenses because, as you know, purchasing’s only one expense associated with being a car owner.

 You still have running costs to consider.

A clear budget allows you to understand what you can comfortably afford and is there to guide your purchasing decisions. 

Knowing what you can and can’t afford will also aid you with negotiations and in choosing the most appropriate financing options.

As reported by the USA’s NerdWallet, a personal finance company, financial experts advise car buyers to spend “no more than 10% of their take-home pay on a car loan payment and no more than 20% for total car expenses, which also includes things like gas, insurance, repairs and maintenance.”

Buying without a budget exposes you to the risk of overextending your finances, leading to stressful situations like debt or inability to meet other financial obligations.

Budgeting Tips: 

Budgeting like a pro requires careful examination of your financial situation.

Start by evaluating your savings.

Having money saved will contribute to how much you're willing to part with for a deposit.

Review your monthly income and subtract expenses like rent, utilities, groceries, and any outstanding debts. 

Doing so will give you a clear idea of how much disposable income you have that could go towards a car payment.

Next, you’ll want to consider your credit score, as it significantly impacts the interest rate you'll get on a loan.

A higher credit score – typically 680 or higher –  will get you lower interest rates, thereby reducing the total cost of the car.

Factoring in Other Expenses:

Planning around your money doesn’t stop there; you still have to factor in those running costs we mentioned not too long ago.

In addition to the car's purchase price, you still have to factor in additional expenses such as insurance, regular maintenance, fuel, and unexpected repairs. 

Vehicle insurance premiums vary widely depending on the type and age of the car, your driving record, and where you live. 

Insurance providers may also examine your insurance history, license code and marital status to determine the appropriate premium.

And then, there’s the matter of general upkeep.

​​Regular maintenance (oil changes, tyre rotation, brake service etc.) is necessary when factoring in other expenses, along with the car's fuel efficiency. 

A car with good fuel economy will make you spend less on petrol.

Including these additional costs in your budget ensures you're not caught off guard after your purchase and helps you choose an affordable car in the long run.

Step #2: Researching Different Cars and Models

The next item to cross off your list is researching different cars and models before purchasing.

The importance of this step cannot be overstated.

Doing research helps ensure you get a vehicle that best suits your needs and lifestyle, as well as your budget.

No two vehicles are designed and manufactured with the same specs, and it’s your job to figure out what you want in a car.

Car models can vary significantly in fuel efficiency, reliability, safety features, comfort, technology, and performance. 

Furthermore, research assists you in knowing the cost of ownership and resale value associated with different models that can impact the long-term value of your investment. 

A bit of homework and time spent assessing different models can help you find a car that satisfies your current needs and has a strong track record of reliability, performance, and value retention.

Finding Reliable Information:

You can always use online car review sites, car magazines and consumer reports; these are all great resources.

They provide detailed reviews and comparisons of different car models, covering aspects like comfort, performance, safety, and reliability. 

And best of all? Most are free or cost a minimal fee (like the magazines).

It may also be worthwhile to check social media and online forums where real owners share their experiences.  

Chances are, you’ll come across detailed or unbiased reviews and comparisons of different cars, covering aspects like comfort, performance, safety, and reliability. 

The bottom line is to look at multiple sources to get a balanced view.

How to Compare Prices and Negotiate:

Now that you’ve compared different car models, it’s time to compare their respective prices.

Despite selling the same car, exact specifications, and all, different dealerships and private sellers may all have different asking prices.

Comparing prices and negotiating with dealerships is another vital car-buying process. 

Your starting point should be checking the manufacturer's suggested retail price (MSRP) and understanding there's room for negotiation. 

Remember to keep the total cost of the car, including add-ons, fees, and financing options, in mind, not just the retail price. 

As mentioned before, you can also turn to online resources to help you find the average price that consumers in your area are paying for the same car model. 

Doing so will give you an idea of a fair price.

Lastly, get quotes from different dealerships. 

Coming equipped with multiple quotes shows them you're shopping around and can also help you negotiate a better price. 

If, in the end, you’re still not pleased with the offer that’s on the table, you can always walk away. 

The perfect deal has to fit your budget and meet your needs.

Speaking of the perfect price, Pineapple is renowned for our affordable premiums and hassle-free insurance in about 90 seconds. Oh, we’re also underwritten by Old Mutual Alternative Risk Transfer Insure.

Get a quote and see for yourself!

Step #3: Consider Your Needs and Lifestyle

The next step is a bit more fun than the previous two; it involves you picturing yourself in your new ride and thinking about what it’ll be like to own it finally.

Your driving habits, lifestyle, and plans significantly influence the type of car you need. 

For example, a person with a large family or who frequently transports bulky items might require a spacious SUV or minivan. 

Or, if you have plans to start a family soon, considerations such as safety features and car seat compatibility become essential. 

Alternatively, ​​someone with a long daily commute will require a vehicle with excellent fuel efficiency to save on petrol costs. 

So, aligning your car purchase with your lifestyle and plans ensures it will serve your needs for as long as possible.

Choosing the Perfect Whip:

Settle down, BDSM enthusiasts; that’s not the kind of whip we’re referring to. 

Finding the right ride (or whip, for all the old heads in the back) involves evaluating your daily driving needs. It needs you to determine the size, fuel efficiency, and features that are must-haves for you.

For size, consider the passenger and cargo space you’ll need. 

Think about what you value most in a car – advanced safety technologies, infotainment systems, towing capacity, off-road capabilities, or luxury touches.

Balancing Your Needs and Wants:

Figuring out how to balance your wants and needs while staying within your budget can be challenging. 

Still, it’s crucial for making a satisfying purchase.

The best place to start is by listing out 'must-haves' and 'nice-to-haves'. 

The must-haves are things you absolutely can’t compromise on, and need in your car, like enough space for your family or good fuel efficiency for commuting. 

On the other hand, nice-to-haves could include a sunroof, a high-end audio system, or advanced driver-assist features. 

Focus first on meeting your must-haves within your budget.

It’s essential to remember that a car is a depreciating asset. Going into significant debt for luxury features may not be financially sensible in the long run.

Step #4: Building Your Credit Score

A credit score is an essential factor that lenders use to determine whether to approve your auto loan application and at what interest rate.

Having good credit is exceptionally essential in your journey to financing your car.

Your credit score represents your repayment history and your reliability as a borrower. 

A good credit score can give you access to more significant loan amounts, lower interest rates, and more favourable repayment terms, making the vehicle purchasing process smoother and more affordable.

Building and maintaining good credit:

The secret to good credit involves responsible financial behaviour over time. 

One of the most effective ways to build and maintain good credit is consistently paying all your bills on time; late or missed payments will negatively impact your credit score. 

Another way to take care of your credit is to pay down existing debt, particularly high-interest debt like credit cards.

Doing so will help improve your credit utilisation ratio (the total credit you use).

Ideally, keeping this ratio low, generally under 30%, is favourable for your credit score. 

Moreover, try to open only a few new credit accounts in a short time, as opening too many can cause temporary dips in your score and signal risk to lenders.

Good credit, better financing and interest rates:

Did you know having good credit can lead to better financing terms when buying a car, thereby saving you money?

Lenders reserve their best loan offers – including the lowest interest rates and flexible repayment terms – for those with high credit scores. 

If you have good credit, you'll likely qualify for lower interest rates on your car loan, reducing the total amount you pay over the loan’s term.

Even a slightly lower interest rate can lead to remarkable savings, particularly on large loans repaid over several years. 

Step #5: Saving for a Deposit Payment

Having money saved towards the deposit of your car’s financing has numerous benefits.

For starters, a deposit can increase the likelihood of loan approval as it lowers the risk for the lender, who then perceives you as a more trustworthy borrower.

A sizable deposit can also get you access to better interest rates and financing terms. 

Also, it immediately provides equity in the car, which can protect you from owing more on the car than it's worth, which is particularly important given the rapid depreciation of newer vehicles.

Saving for a Deposit:

Saving starts with a budget; creating a budget can be highly beneficial. 

Begin by identifying your income and expenses and figure out where you can reduce unnecessary spending. 

You might have to dine out less, cancel unused subscriptions, or avoid impulse buys. 

Another way to save is by setting up an automatic debit order to a dedicated savings account which can make the process easier and ensure you regularly contribute to your deposit fund. 

Taking on part-time work or selling unused items can also boost your savings.

How a Deposit Can Lower Your Monthly Payments:

By reducing the amount you need to borrow, the deposit decreases the total amount of the loan and, consequently, the interest you'll pay.

Lower monthly payments will make your budget more manageable and lessen the chance of missing payments, which could harm your credit score. 

And it also puts you in the position to pay off the loan faster, reducing the total interest paid. 

Paying a deposit is a powerful tool for making car ownership more affordable.

Step #6: Getting Pre-Approved for Financing

Getting pre-approved for financing before visiting a dealership gives you a clear idea of how much you can afford.

This helps to streamline your vehicle search and keep you within budget. 

Secondly, it provides negotiation leverage; you're effectively a cash buyer without relying on the dealership for financing. 

Lastly, you can focus on the vehicle’s price during negotiations rather than getting distracted by monthly payment amounts, which can sometimes hide higher total costs.

Finding the Best Financing Options:

Finding the best financing options requires you to shop around and compare quotes from multiple lenders.

The best place to start is with your bank or a credit union. 

However, your search shouldn’t stop there; check online lenders and financial services companies. 

And while the interest rate is a critical factor, pay attention to other terms like the loan duration, which impact the total cost of the loan. 

Remember to check for repayment penalties, particularly if you intend to repay the loan early.

Pre-approval and Negotiations:

Getting pre-approved for a loan can give you quite an edge when negotiating terms at a dealership. 

With a pre-approved offer, you have a precise amount to compare against the dealership's financing offer – saving you money by ensuring you get the best possible interest rate. 

Even a minor difference in the interest rate can amount to significant savings over time.

You’ll also find that pre-approval speeds up the buying process.

You can bypass the dealership's financing department and avoid high-pressure sales tactics.

Step #7: Test Driving Different Cars

Photos and specifications can tell you a lot about a car. Still, nothing compares to the feeling of actually driving it. 

The test drive is a learning experience, allowing you to experience how a vehicle performs and feels. It's also your chance to assess whether the car fits your needs and preferences and, ultimately, whether it's right for you.

Taking your dream car out for a test drive can provide insight into a car's handling, comfort, acceleration, braking, noise levels, etc.

Test Driving Tips:

Here’s a checklist of things to look out for during a test drive:

  1. Safety Features. Ensure you understand how the vehicle's safety features work and feel comfortable using them.

  1. Handling. Evaluate the car's response to turns, accelerations, and braking.

  1. Comfort. Assess the comfort of the seats, and check for adequate legroom and headroom.

  1. Visibility. Pay attention to visibility from the driver's seat and ensure you can see well in all directions.

  1. Controls and infotainment. Check that the controls and infotainment system are intuitive and easy to use.

Use a Test Drive to Find the Right Car For You:

Ultimately, the test drive is your way of evaluating whether it's a good fit for your specific needs, preferences, and lifestyle. 

Testing for comfort, like seat comfort, legroom, and ease of entering and exiting, is crucial. 

Consider how well the car fits your daily routines, whether there's enough space for you or your family and any equipment you usually carry. 

Remember to test the car in various conditions, like city streets and highways, to understand the car's capabilities fully.

Listen for any unusual noises and gauge the general noise level in the cabin while also ensuring you're comfortable with the car's manoeuvrability, especially when parking.


Buying your first car is an exciting milestone, second only to purchasing a property. 

It's crucial to approach this process thoughtfully and well-prepared. 

Start by setting a budget based on your income, expenses, and credit score. Research and test-drive different cars, taking into account your lifestyle and driving habits. Secure a good credit score for favourable loan terms, and consider saving for a down payment to reduce monthly payments.

Getting pre-approved for a loan is also wise to negotiate better terms. 

Taking your time and making informed decisions will ensure you find the right car for you at the best possible price. 

Once you've made your purchase, budget wisely, ensuring you stay on top of your car payments and other associated expenses. 

Lastly, remember to enjoy the journey – owning your first car is not just about the destination but also about the freedom and opportunities it provides.

Enjoy more than just the journey, enjoy getting a car insurance quote in less than 90 seconds!

Please Note: The information provided above is for informational purposes only; you should not construe any such information as legal or financial advice.

Pineapple (FSP 48650) is underwritten by Old Mutual Alternative Risk Transfer Insure, a licensed FSP and non-life insurer. T&Cs apply. Premium is risk profile dependent.

Team Pineapple

Team Pineapple comprises our company’s top talents, who are dedicated to creating clear, high-quality content on essential vehicle insurance topics. This diverse group, including actuaries, accountants, data scientists, and insurance professionals across South Africa, collaborates to produce enlightening and empowering articles.

Each piece is thoroughly researched, factually accurate, and rigorously reviewed to ensure quality.

*We say they’re the finest because we want them to keep writing for us!

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Please Note: The information provided above is for informational purposes only; you should not construe any such information as legal or financial advice.

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