Sound familiar? If you have a teenager,
you've heard it before. But, before you start shopping for a used car
with a teenager you know, do some homework. It may save you serious money. Consider
driving habits, what the car will be used for, and your budget. Research models, options,
costs, repair records, safety tests, and mileage through libraries, book stores, and web
sites.
Cash or Credit?
Once you’ve settled on a particular car, you have two payment options: paying
in full or financing over time. Financing increases the total cost of the car because
you’re also paying for the cost of credit, including interest and other loan costs.
You also must consider how much money you can put down, the monthly payment, the loan
term, and the Annual Percentage Rate (APR). Rates usually are higher and loan periods
shorter on used cars than on new ones.
Dealers and lenders offer a variety of loan terms.
Shop around and help your teenager negotiate the best possible deal. Be cautious about
financing offers for first-time buyers. They can require a big down payment and a high
APR. To get a lower rate, you may decide to cosign the loan for your teen. If money is
tight, you might consider paying cash for a less expensive car than you first had in
mind.
Dealer or Private
Sale?
The Federal Trade Commission’s Used Car Rule requires dealers to post a Buyers
Guide in every used car they offer for sale. The Buyers Guide gives a great deal of
information, including:
whether the vehicle is being sold "as is" or with a warranty;
what percentage of the repair costs a dealer will pay under the warranty;
the fact that spoken promises are difficult to enforce; and
the major mechanical and electrical systems on the car, including some of the major
problems you should look out for.
The Buyers Guide also tells you to:
get all promises in writing;
keep the Buyers Guide for reference after the sale; and
ask to have the car inspected by an independent mechanic before the purchase.
Buying a car from a private individual is different from buying from a dealer.
That’s because private sales generally aren’t covered by the Used Car Rule, or
by "implied warranties" of state law. A private sale probably will be "as
is"—you’ll have to pay for anything that goes wrong after the sale.
Before You Buy
Whether you buy a used car from a dealer or an individual:
examine the car using an inspection checklist. You can find checklists in magazines and
books and on Internet sites that deal with used cars;
test drive the car under varied road conditions—on hills, highways, and in
stop-and-go-traffic;
ask for the car’s maintenance record from the owner, dealer, or repair shop; and
hire a mechanic to inspect the car.
Other Costs to
Consider
There’s more to buying a car than just paying for it. Other items to budget
for include insurance, gas, maintenance and repairs. Here are some tips to help you save
money:
Compare coverage and premiums with several insurance
companies or ask an independent insurance agent like The Auto Insurance
Center to help you shop for the best rate. Some companies offer discounts to
students with driver's training. Remind your teenager that it pays to drive safely and observe
speed limits. Traffic violations can cost money in tickets and higher insurance premiums.
Pump your own gas and use the octane level your owner’s manual specifies.
Keep your car in safe driving condition. Following the vehicle’s maintenance
schedule can help forestall costly repairs.
Look for a mechanic who is certified, well established, and communicates well about
realistic repair options and costs. Find one who has done good work for someone you know.
