Q&A: Buying your first car? Follow these tips

Between learning how to deal with overeager car salesmen and deciphering new lingo like residual values, buying your first car can be a confusing and exhausting process. To make it a little easier before you walk into the dealership, David Flores, a financial counselor with GreenPath Debt Solutions, answered your questions as part of USA TODAY's weekly Twitter chat series for Millennials. Below is a summary of the questions and answers.

Q: How do you decide between leasing a car and buying a car? What's the better way to go?

A: Think about how you drive, mileage each day. Leases come with a mileage limit and it will cost you at the end when you turn in the car if you go over the limit. You can also buy additional mileage up front, called mileage bands, but it will cost you more per month.

Q: How important is a down payment when buying a new or used car?

A: If you have poor credit, you may need to put more down. Think about what you want to spend each month.

Q: Will shopping around for a good interest rate on a loan hurt my credit?

A: No, if you do it within a short period of time. Credit bureaus understand you need to shop around. Try shopping in a 30-day window. Spreading out your credit inquiries could affect your credit score.

Q: What's the first step I should take if I am giving my car as a trade-in? Look at the Bluebook?

A: Yes! You will make more selling yourself than trading in. But if you want to trade in, negotiate a price on your new car before revealing to the dealership that you have a car to trade-in. If they know you have a trade-in in advance, they'll take the trade-in value into account when negotiating and may not give you the best possible price on the new car.

Q: What's the importance of knowing about residual values? What is that and why does it matter?

A: Do you want to turn in the car at the end of the lease or buy it outright? Knowing how much it's worth when you first lease can save you money at turn-in. A lower residual ! value at the end means the car will cost you less to buy.

Q: A 72-month term is tempting because it makes the payments so low. Is that OK to do if the APR is very low too?

A: You could be paying a lot for repairs (once the warranty expires). Plus you are paying interest for a long time.

Q: Should I shop based on the price of the vehicle or the monthly payment?

A: Never shop for payment, even if it's low. It could be longer term and higher interest.

Q: Besides the price of the car, what other expenses do you have to take into consideration?

A: Maintenance of the car and insurance. Luxury cars cost more to maintain and insure than economy cars.

A: Are extended warranties worth the price?

A: Research basic warranty first. You might not need an extended one. See if your car has had recall issues. And if you think you will drive longer than the original warranty, it might make sense. If not, don't spend the extra money.

Q: Can I rely on a vehicle history reporting service to find out the history of a used car before buying it?

A: Histories are good but you also want to get a car inspected by a mechanic to ensure a sound vehicle.

Join next week's chat on March 12 at 3 p.m. ET. We'll be talking about how to protect your identity. Email questions ahead of time to Hadley Malcolm at hmalcolm@usatoday.com. Use the hashtag #millennialmoney to ask questions and follow along.