How to buy your first car

Consumer Reports

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Owning a car brings tremendous freedom and responsibility. But it also brings significant expenses, such as the purchase, maintenance, repairs, insurance, and fuel. Our advice can supercharge your car buying as you get ready for this big, exciting step. And remember, because a key element of driving includes sharing the road responsibly, see our guide to teen driving safety.

What can you afford?

Establishing a reasonable budget is critical. The money you have available for a down payment and potential for making monthly installments on a loan will determine your car choices. (See our picks for best cars for teens.)

As a young driver, you are probably budgeting for college or other educational pursuits, so it is important to work with your parents to set a realistic target. In doing so, consider whether this is a car just to see you through high school or whether it will be your traveling companion through college. That distinction will determine how new and reliable the car must be.

No question, the best way to save money is to buy used. A new car loses almost half its value in the first five years. The smart money is to let someone else take the depreciation hit, and instead purchase a car that is a few years old, yet still has contemporary safety features and many reliable years ahead of it. And by purchasing used, you can buy more car, meaning you could afford, say, a midsized sedan rather than a tiny econobox.

As a teenager, financing will be a challenge. Lenders are typically looking for adults with a good credit score, steady employment history, and financial assets, such as a five-figure bank account or a house. In most cases, that will mean a parent will have to act as a co-signer or even take the loan in their own name.

A loan is a business agreement based on a lender charging interest for you to borrow money. The lower the interest rate and shorter the loan period, the less extra you have to pay in finance charges. The best solution may be to borrow from a family member, repaying them a fair interest rate that they would have seen from their savings account. That would save paperwork, keep the money in the family, and hopefully allow payment flexibility.

Do your homework

With a budget in mind, now comes the fun part: creating a short list of target vehicles. Focus on practical choices—cars that will minimize ownership costs and suit your needs for the next few years.

To right-size your costs, resist the temptation to target sporty, luxury, or large vehicles. Such models would probably lead to your college fund being tapped to cover insurance, maintenance, and fuel costs. Instead, look to small sedans and hatchbacks from mainstream brands, or even better, midsized sedans.

It can be tempting to lust after a high-horsepower car or one with the latest-and-greatest high-tech features, but be practical. Money may be made from trees, but it sure doesn’t grow on them. The insurance company will penalize a young driver in a sporty car; big engines cost more to fuel and maintain; and gee-whiz features tend to carry reliability risks. Plus, financed new cars will command higher insurance premiums to cover collision protection. It may not be the most fun advice, but simple is best.

To reduce the risk of purchasing a trouble-prone vehicle, identify models with a good reliability record before you begin shopping. Consumer Reports collects data on more than a million cars a year to present reliability information covering the past decade. Such data can point you to cars that have been shown to hold up well over time. Reliability is a key factor, as it speaks to potential costs and inconvenience.

Read professional and owner reviews of the cars you’re considering. Balance the different perspectives against your preferences, and use the feedback to highlight aspects that warrant closer attention. For instance, complaints about the seat comfort or ride quality can be evaluated on a test drive. Your opinions may differ from those held by others. And ultimately, it is you who will live with the car.

Inspect and test-drive

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 the car is truly in "new" condition. However, with a used car, every example has led a different life. Some may have been pampered, others abused, potentially by a teenager just like you! 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 used, have a car-savvy adult join you. Carefully look the car over inside and out, top to bottom. New or used, always inspect during daylight hours when paint flaws that may indicate repairs or other troubles can be readily spotted. Essentially, you’re looking to ensure the car is in the condition claimed by the seller.

For used cars, the real trick is having the car inspected by a professional mechanic. They will usually charge for the service, but it can be money very well spent.

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Negotiate like a pro

If the car looks good, then it's time to talk numbers. When negotiating a car purchase, it is essential to have an experienced adult to assist. A professional car salesperson has been trained at how to manipulate customers and maximize profits. That is what they do day in and day out. Most car shoppers are outmatched during that phase of car buying. (Think of how competitive your grandparents are with video games, and you get the idea.) Rest assured, a first-time buyer doesn’t have a chance when going solo.

If buying from a private seller, negotiation is rather straightforward. Research online what the current wholesale price is for the car based on its condition, mileage, and location—that is your target. Closer the better, and bonus points are awarded for getting an even better deal.

A used-car lot or dealership will focus on the retail price, again easily found online, including on our car model pages. Chances are, they bought the car on a trade in or at an auto auction for something near the wholesale price and fixed it up, and now they need to turn a profit. The goal remains to get as close to the wholesale price as feasible, though in reality, you’ll probably end up in between the two figures.

If financing, pre-arrange the loan so that you know what the interest rate is. If the dealership can beat it, great. If not, then you’re still covered. You can use an online calculator to figure out what your payments would be, based on the expected purchase price and down payment.

The salesperson will probably focus on monthly payments, as that enables them to sneak in added profit. Because you did your homework, you can focus on the total amount, rather than just the monthly payments.

Negotiate one element of the deal at a time, establishing the purchase price, then moving on to discussing financing, if interested. Don’t be talked into extras, such as rust-proofing, fabric protector, or even an extended warranty. They aren’t necessary. You’re smarter than that, as proven by the effort put in to find a good, safe, reliable car.

If the seller won’t meet what you would consider a fair price, walk away. Every year, more than 10 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 from which to choose.

It is a lot of work to buy a car, but the reward is years of freedom on the open road.

Must-have safety features

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 do not lock up, even during emergency braking on slippery surfaces, they enable the driver to retain steering control.

Electronic stability control (ESC): This feature prevents a car from rotating, such as when going through a turn a bit too fast for the conditions. ESC can be especially welcome in bad weather. All new cars and light-duty trucks now have ESC. On older cars, ESC may have been optional. Make sure the specific used car you’re buying has it.

Head-protecting side air bags: Side and side-curtain air bags have been shown to provide real protection in a side impact, such as when T-boned by another car crossing an intersection.

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