During these last days of summer and into fall and winter, many families turn their attention towards buying a car for younger drivers. This is the time when a lot of young people learn (the hard way) how important it is to not make mistakes in purchasing that first car.
I’ve bought a few cars in my time, and I’ve helped my wife when she was buying her last car. But the most exposure to car buying mistakes comes from when I was a banker and had to deal with families at all stages of the car buying experience.
When I was starting the process of researching and writing FINANCE FOR YOUTH: THE BOOK, I knew the chapter that most young people would be interested in would be the one on buying a car. That’s fine with me, because this is going to be the biggest purchase most people make before they buy a home. In the chapter on buying a car, I’ve included a lot of important information that benefits young people especially, but also anybody who is going to buy a vehicle. I’m including a few tips here to help anybody who is looking to buy a car without making costly mistakes.
- Especially for first-time drivers, stay away from new cars.
- Aside from the off-the-lot cost differences, new cars also have additional insurance requirements, lose value immediately upon driving off the lot, and are more expensive to repair if needed. No matter how good a driver you are now, you will be better with a few years of experience—save your money for a new car until then.
- Avoid dealerships that won’t tell you the actual price of a car.
- There are a few of these that specialize in financing for those who can’t finance a car using normal methods. They over charge, and their cars are no better than anybody else’s.
- Be prepared to invest a little money up-front.
- Before you sign any paperwork or give the seller any money, take the car to an ASE certified mechanic that your family knows or trusts. The mechanic might charge up to $100.00 to give your car a good inspection, but that is a small price compared to buying a lemon.
- Don’t forget the Carfax®. Dealers should be able to provide you with a Carfax report. If they can’t, keep looking. If you are buying a car from a private party, you can get 5 reports for under $50.00 from WWW.CARFAX.COM.
- Dealers aren’t the only place to find cars for sale. Check around your neighborhood, around local shops, in publications like Auto Trader or Pennysaver. Even family members might want to sell a car for a fair price. Sometimes these are better deals because you aren’t paying for dealer salaries.
- Always travel in packs! Young people should shop for cars with older adults who are familiar with buying cars. Even if they don’t do anything, their mere presence makes unscrupulous sellers think twice.
- Drive the car. Never buy a car that you aren’t able to look at closely for defects or one that you can’t test drive.
- Be willing to walk away without the car. Never fall so much in love with a car that you ignore your gut feelings that tell you something is wrong. Worst case scenario, you look for another car.
That last point is probably one of the most important. There are a lot of cars out there. None of them are going to be so good a deal that you will hurt yourself by passing them up.
In addition to tips on buying cars, F4Y:TB also has information on getting a job, keeping a job, making a budget, choosing a financial institution, balancing a checkbook and other topics that are important to teens and young adults as they start their journey on the way towards financial literacy.