18 Sep Tips for Teens: Purchasing Your First Car
Once you’ve taken your driver’s test and tucked your license into your wallet, the possibilities for travel seem endless… except when Mom’s using her car and none of your friends have a ride. A new car seems like an ideal graduation present, even if you’ve only graduated 10th grade. You probably know lots of people at your high school who have abandoned the bus in favor of their own set of wheels. But before you head to your local dealership, you’ll have to decide your budget, factor in additional costs, spend time researching, and finally test drive. Purchasing your first car is a big decision, and you want to spend your hard-earned money wisely.
Who doesn’t want the keys to a shiny new car sitting in their driveway? As appealing as a new vehicle is, a gently used car with under 1oo,000 miles is a better financial investment. New cars lose nearly half of their value in the first five years of ownership. Each monthly payment carries an interest rate which drastically increases the money you spend on your vehicle. New cars are also more expensive to insure. As a rule of thumb, don’t buy the car if you can’t pay it off in 48 months or if you can’t put down 20% of its purchase price.
Beware: additional costs ahead
Insurance rates are often higher for teen drivers due to a higher risk of accidents. Male drivers are also more expensive to insure. Taxes, maintenance, fuel, and repairs add on additional monthly expenses, meaning that you have to look beyond the initial purchase price when budgeting. Your parents may agree to finance some of these expenses, but you might realize you don’t want to drive as often when you’re paying for your own gas. Depending on your situation, public transportation or a bike may be the best choice for your high school years.
Online resources like Kelley Blue Book can help you determine if the car you’re considering buying is a good deal. Be sure to research how much your car of choice sells for in your state and nationwide to make sure your dealership isn’t charging more. Don’t pay extra money for a flashy color, but improved safety features may be worth the splurge. Investigate Consumer Reports for information about the reliability of whatever model you are interested in to help prevent buying a lemon.
Don’t rely on an online advertisement to give you accurate information about the car you want to buy. Inspect the car in-person and take it for a spin. Although it’s an additional cost, a certified professional mechanic should evaluate any used car you are seriously considering purchasing. Even if it’s your favorite type of car, you won’t be thinking about how flashy it is when you’re broken down on the side of the road. Mileage, condition, and history are three important factors in deciding whether or not you should invest in a particular vehicle.
At the Bank of the Lowcountry, we can help finance your first car. Reach out to a representative online or at (843) 549-2265 to discuss taking out a loan today.