How to Buy Your First New or Used Car
Teenagers should take these steps to drive away with a great deal
Teens might love the freedom a first car can bring, but it also brings a lot of responsibility. They need to be ready for significant expenses even after figuring out how to pay for the car. There’s fuel, maintenance, repairs, insurance, taxes and more.
Here are some strategies for getting behind the wheel as painlessly as possible. And because an important element of driving includes sharing the road responsibly, you should read our guide to teen driving safety.
What Can You Afford?
It’s critical for teens and their parents to establish a reasonable budget. Money available for a down payment and for making monthly installments on a loan will determine the range of car choices.
One key consideration is whether the car is meant to see a teen through high school or college and beyond. That will determine how new and reliable it needs to be.
The best way to save money is to buy used. A new car loses almost half its value in the first five years, so go for one that’s a few years old yet still has contemporary safety features and many useful years ahead of it. Buying used also means a nicer car.
Financing is usually a challenge for a teen buyer. Lenders often look for adults with a good credit score to co-sign or buy the car outright.
The good news is that many finance companies have specific programs for college students and graduates that ease some credit requirements and even offer special rebates.
Do Your Homework
With a budget in mind, you can start on the fun part: creating a short list of vehicles. You should focus on practical choices, cars that minimize ownership costs and suit the teen’s needs.
Parents should resist the temptation to get a sporty, luxury, or large vehicle. A high-horsepower car or one with the latest high-tech features isn’t practical.
Insurance companies penalize young drivers with sporty cars, big engines cost more to fuel and maintain, and extra features tend to carry reliability risks. Car insurance will already be a major expense; don’t make it worse.
For a car loan, most banks require full-coverage insurance. Families should get an insurance quote ahead of time to get a full picture of costs.
To reduce the risk of buying a lemon (a car with never-ending problems), identify models with a good reliability record. CheckConsumerReports.org/reliability for survey-based insights that can point you to cars that have been shown to hold up well over time.
Inspect and Test Drive
Parents and teens should go online to read reviews of cars. Pay most attention to areas you’re most concerned about (mpg, reliability, infotainment features) and balance the writer’s perspective with your preferences. For instance, complaints about seat comfort or ride quality can be checked out during your test drive. Your opinions might be different.
New cars are presumed to be consistent performers. (For example, each new Honda Civic is expected to drive like any other.) A casual inspection can confirm whether a car is truly in “new” condition.
On the other hand, each used car has led a unique life. Some may have been pampered, others abused. The best used cars tend to be owned by a trusted friend or family member who can share details of the car’s history.
When shopping for a used vehicle, make sure there’s a car-savvy adult on hand. Carefully look the car over inside and out, top to bottom. New or used, always inspect it during daylight hours, when you can spot paint flaws that might indicate repairs or other troubles. Essentially, you’re looking to ensure that the car is in the condition claimed by the seller.
For any used car, it’s important to have it inspected by a certified professional mechanic. They usually charge for the service, but it can be money well-spent considering how much more it might save you in the long haul.
Negotiate Like a Pro
If the car looks good, then it’s time to talk numbers. When negotiating a purchase, it’s essential to have an experienced adult to assist.
Professional car salespeople have been trained to push sales and get the most money for a car. That’s what they do, day in and day out. Many shoppers are outgunned during this phase of car buying, and a first-time buyer usually doesn’t stand a chance going solo.
If you’re buying from a private seller, negotiating is usually straightforward. Research online what the current wholesale price (aka trade-in price) is for the car based on its condition, mileage, and location. That’s your target price.
A salesman at a used-car lot or dealership will focus on the retail price, also easily found online. Chances are the car was acquired through a trade-in or at an auction for near the wholesale price and then fixed up, and now the dealer needs to make a profit.
Your goal should be to get as close to the wholesale price as possible, though you’ll probably end up between that and the retail price.
If you’re financing, prearrange the loan with a lender so that you know the interest rate. If the dealership can beat that rate, great. If not, then you’re still covered. Once that’s settled, you can use an online calculator to figure out what your payments will be based on the expected purchase price and your down payment.
The salesperson will probably focus on monthly payments, which enables him or her to sneak in added profit. Because you did your homework, you can focus on the total amount rather than what the monthly payments will be.
Negotiate one element of the deal at a time. Establish the purchase price and then move on to discussing financing if you’re interested in what the dealership has to offer. Don’t be talked into unnecessary extras such as rustproofing, a fabric protector, or an extended warranty.
If the seller won’t meet what you consider a fair price, walk away. Every year more than 15 million new cars are sold — and every one of them is considered used once it leaves the dealership. Rest assured, there are plenty of other cars out there to choose from.
Whether buying new or used, these are the features you want:
- Antilock brake system (ABS): Readily available, antilock brakes prevent the wheels from stopping completely during hard braking. Because the wheels don’t lock up even during emergency braking on slippery surfaces, the driver retains steering control.
- Electronic stability control (ESC): This feature prevents a car from rotating when going through a turn a bit too fast for the conditions, like bad weather. All new cars and light-duty trucks now have ESC. On older cars, ESC may have been optional. Make sure the used car you’re buying has it.
- Head-protecting side airbags: Side and side-curtain airbags have been shown to provide real protection against side impact, such as when a car is T-boned by another vehicle crossing an intersection.
- Forward-collision warning: Available on many new cars, FCW uses cameras, radar, or laser (or some combination of them) to scan for cars ahead and alert the driver if he or she is approaching a vehicle in a lane too fast and a crash is imminent. Most systems alert the driver with some sort of visual and/or audible signal, allowing time for the driver to react. Better systems include automatic emergency braking, enabling the car to hit the brakes if the driver fails to do so.
- Backup camera: Common on new and almost new cars, a backup camera is activated when the vehicle is placed in Reverse. The rear view is displayed on a center console screen, aiding parking and helping to avoid accidents with pedestrians or other cars.