Buying your first car is an exciting rite of passage. Whether you've just turned 18 or you're buying your first car a little later in life, you don't want to end up with a lemon.

Here are a few things to consider before purchasing your first vehicle.

Set your budget

• Figure out what your budget is. Look at your savings, income and debts. This should give you a ballpark figure of what you can afford to spend on your first car. Be flexible but firm with your maximum price – it could save you a whole heap of financial trouble in the future.
• When setting your budget for your first car, it’s also important to keep in mind any long-term associated costs, such as fuel, registration, insurance and maintenance.
• What’s the best way to pay? If you've got some cash, you may save on interest payments by paying outright.

Know the difference between 'want' and 'need'

A reliable first car that gets you from A to B is a ‘need’.  Leather upholstery and wireless charging pad? Those probably belong in the 'wants' list.

Understand the lifetime cost

In the short term, the price of a car may seem low. However, in the long-term, its cost may be far more than you bargained for. The lifetime cost of your first car includes on-road costs, such as:

• fuel
• maintenance
• vehicle registration, and
• car insurance.

Luckily, there are some great tools to help make figuring out the lifetime cost of your first car easier. ASIC's MoneySmart website helps break down the true cost of buying and running a car. On the app, you can input loan options and other hidden costs to discover the lifetime cost of buying and running a car, as well as alternate finance options.

Do your homework

There's no one-size-fits all car for first car buyers. The main thing to consider is whether the car make and model will meet your present and future needs and if you can afford the on-road costs.

Avoid making a rushed decision. Consider your lifestyle and how you'll use your first car to narrow down the size and model that best fits you.

Whether it's a new or used model, investigate how well it's been performing and read any third-party reviews. It's also good to consider the vehicle's safety performance. Again, car reviews could help here.

Decide whether you want a new or used car

Factoring in your budget, needs and lifestyle, weigh up the pros and cons of a new or used car. There's no right or wrong answer – it'll come down to your unique circumstances.

New cars

• Come with a new car warranty.
• May include features like improved fuel efficiency and the latest technology.
• May be more expensive.
• Depreciate in value quickly.
• May affect your car insurance premium.

Used cars

• May not come with a warranty.
• Require you to check that they're debt-free before you buy.
• May come with unexpected problems or be more likely to need repairs.
• Can still come with great features (especially if they're only a few years old).
• May be less expensive.
• May attract lower car insurance premiums.

If you're considering a used car, bring along someone who's bought one or knows what to look for. Check if the odometer matches the service history logbook and consider having a mechanic inspect the vehicle.

Figuring out depreciating value

While new cars lose their value quickly, not all vehicles depreciate at the same rate. Generally, the higher the demand for a car, the less it tends to devalue over time.

According to Canstar, a new car can depreciate in value by 10% to 15% as soon as it leaves the dealership, and a further 10% or 15% over the following year. However, this doesn’t mean all first cars are a bad investment. New cars may be:

• more fuel efficient
• less prone to breakdowns, and
• covered under their warranty.

Buy from a private seller, dealership or auction

If you're buying a new car, head straight to a dealership. If you're buying second hand, this can be done at a used car dealership, with a private seller or at an auction. Each one has its advantages and disadvantage.

Licensed dealer

Car dealerships may be more expensive than private sellers. Depending on your state, car dealers may have to offer a statutory warranty for cars under a certain age/that have done under a certain number of kilometres. Again, do your research.

Don't be pressured into buying a car if you're not 100% sure. Don't sign anything you don't understand. And remember, dealer finance isn't always the best deal – shop around!

Private sale or auction

If you're buying a car in a private sale or auction, always check for the following paperwork:

• proof of ownership
• current registration paperwork, and
• state roadworthy certificates.

Check on the Australian Government Personal Property Securities Register (PPSR) for any outstanding debt owed.

Decide whether to buy outright or finance your car

If you're considering purchasing your first car with a loan, weigh up whether any additional fees and interest on the loan are worthwhile. If you pay for a car outright, it may take you some time to save enough.

Financing a car means you may be able to get the car sooner, but you will likely end up paying more money in fees and interest in the long run. Consider whether this is appropriate for your circumstances and seek independent financial advice if needed.

Leasing vs. buying your first car

If you finance your first car, you may have higher monthly costs than leasing, but you'll own something at the end. Leasing a car may be less expensive, but you are essentially renting it.

Take a test drive

To ensure you're 100% certain on your first car, take it for a spin before buying. A test drive lets you experience how the vehicle responds on the road and gauge its condition. This can help you decide whether it's the right one for you.

Shop around and don't be afraid to negotiate

Many first-time car buyers fall into the trap of accepting the initial offer without shopping around. So, have a browse and see if there's a better deal out there. If you know the market value, you may be able to use that knowledge to negotiate.

Check out your car insurance options

If you're considering getting a new car, it's good to know about your car insurance options. And that’s where Bingle can help!

Bingle has two easy-as policy options: Bingle’s Third Party Property Damage Insurance offers cover for accidental damage your car causes to someone else's car or property, or a Bingle Comprehensive Car Insurance that offers cover for that, plus cover for any accidental loss or damage to your own car up to its market value.

You could also have a think about other insurance-related questions:

• Do you want the option of a hire car if your vehicle has to go in for repairs?
• Consider adding window and glass coverage so you don’t have to pay an excess to repair damage to your car that is limited to the windscreen and window glass only.**
• And it’s also worth considering new for old insurance, which may provide you with a new replacement car if eligibility criteria are met.***

All of these are optional extras that may be worth considering when it comes time to take out insurance on your first car. Compare Bingle's car insurance options and get a quote to see how much your insurance would cost. You may also want to check out our Car Insurance for P Platers article.

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