Much of Gen Z (1997-2012) is finally coming of age (no cap fr… sorry, that was cringe) and is entering a new world of transportation options – much more than the leaky, barely held-together clunkers Millennials were greeted with at the turn of the century.

(Wow, we are old.) Gen Z has the pick of the crop of cars on the market – fuel efficient, top safety spec, electric vehicles, bells and whistles, and even wireless connectivity for Spotify (gone are the days of mixing CDs through an aux cord…)

They can even opt for electric scooters, e-bikes, and ride-sharing options.

Unfortunately for the newly minted driving cohort is that they’re experiencing the worst cost of living crisis since the 1990s recession “we had to have” (Don’t get that reference? Don’t worry, it happened before you were born.) So, what can one do?

Car Financing offers a tailored solution for Gen Z drivers looking to get behind the wheel without breaking the bank.

With flexible financing options, this makes it easier to afford the car that fits your lifestyle and budget, whether you’re eyeing a fuel-efficient compact or the latest electric vehicle.

Here’s a guide to buying your first car as a Gen Z without breaking the bank.

Used cars – electric, ICE, or something else?

For most young people, brand spanking factory new cars are out of reach – that was true for your older sibling’s generation and your parent’s generation.

However, there is more choice for Gen Zers than ever before. You can stick with the tried-and-true petrol/diesel car, opt for a hybrid, or go fully electric.

There are ups and downs for each choice, such as the price of fuel, the wear and tear on batteries that may have to be replaced, and the cost of maintenance skyrocketing as the car gains even more years.

Newer EVs and hybrids will likely pass a Roadworthy Certificate (RWC) with no problems, while a long-in-the-tooth ICE car will need closer inspections. Weigh up not only the price of your car but how much it will cost to run.

Figure out what you can afford

This is where you do some back-of-the-envelope calculations for car financing. Figure out how much you can afford to pay back each month or fortnight in finance repayments by using a loan calculator.

This will give you a ballpark figure on how much a lender might give you to borrow (though this can be affected by a few things; more on that later.)

You also have to factor in fuel/electricity, maintenance, registration, and insurance. It might be a rude awakening – but so is taking on a loan you soon realize you can’t afford!

Check your credit score

The first thing you should do before looking at cars or finance is to check your credit score.

Your credit score is a literal number between 0 and 1000 (sometimes 1200) that indicates to banks and lenders how likely you are to pay back a loan on time and in full.

1200 means you’re a lock: somewhere towards the 600-500s or south of that is considered “impaired” or bad credit.

Oh no, I have bad credit!

If you have less than perfect credit, just be prepared for higher-than-normal interest rates for car financing if you are approved.

One way to help you over the line is to have some kind of deposit – at best 20% or more but at least 10% – so you have “skin in the game” and don’t have to borrow as much from your lender.

Don’t be tempted to avoid the reality of bad credit – it may come back to bite you.

In some cases, you could get a guarantor (someone who acts as a backup if your payments fall through) but that also puts them on the hook – so choose wisely, if at all.

Avoid dealer finance

One way it can bite you is predatory dealers offering “zero percent” or “one percent” finance rates.

These sound awesome on paper; but in reality, you’re likely paying through the nose in fees and added charges such as waiving your ability to haggle or bring the price down.

Go to a broker instead

What you should do is see a specialist car loan broker who can hook you up with different loans from a wider range of lenders; not just one like your bank. This means there’s likely a cheaper or more flexible loan that suits you better and will save you a bundle of money.

Save with pre-approval

It doesn’t matter if you’re buying from a dealer or a private seller, having loan pre-approval in the back pocket can give you an edge on price.

You apply, get approved for a certain limit, and have a month or two to find your car. That means dealers will have to meet your price if they want a sale, and shows to private sellers you aren’t just a tyre-kicker.

If you approach dealers at the end of the month (or even better, the end of the financial or calendar year) they’ll likely be more open to cutting you a better deal. Their commissions and sales league table positions are on the line!

Your Ultimate Guide to Smart Car Financing and Buying for Gen Z

In a world of diverse transportation options and financial challenges, Gen Z has more choices than ever when it comes to buying their first car.

By understanding the market, checking your credit, and seeking the right financing options, you can make an informed decision that suits your budget and lifestyle.

Remember: if there’s anything you don’t understand about finance, you should talk to a financial adviser or professional.