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Step 1: Talk to Your Parents
Step 2: Do Your Research
Step 3: Start Saving
Step 4: Figure Out Financing and Insurance
Step 5: Visit the Car Lot
Step 6: Fill Out Paperwork with a Guardian
Step 7: Enjoy Your Car Responsibly
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Buying your first car is a milestone that most teens dream about. It’s an exciting step toward independence and adulthood – but it can be complicated to figure out how to actually go about it.
To help you out, we’ve put together a quick step-by-step overview of what buying your first vehicle may look like.
Step 1: Talk to Your Parents.
Communication is key! If you’re under 18, you will need to talk to your parents or guardians about your goal to buy a car before you do anything else. They may be able to offer advice, help you put together a game plan, or even contribute to your down payment. Plus, if you’re still living under their roof, they will probably have a few rules for you to follow once the car is yours.
Step 2: Do Your Research.
Take a quick look online to see what cars typically cost in your area. That will help you get an idea of how much you will need to save before you go car shopping.
According to NerdWallet, you will want to save at least 10% of the cost for a used car and at least 20% for a new car.
To complete that calculation, multiply 0.1 x the price of a car you’re interested in. That will give you the absolute minimum amount of money you will need to purchase the car.
For example, if you find a car that costs $15,000, you will multiply that amount by 0.1 to find the minimum down payment. In this case, 0.1 x $15,000 equals $1,500 – you would need to make a down payment of at least $1,500 on that car.
Keep these calculations in mind as you start saving.
Step 3: Start Saving.
This part can be challenging, especially for full-time high school students.
To save money, you have to earn money; one of the easiest ways for teens to do that is getting a part-time job after school or on weekends. Not only will getting a job allow you to start saving, but it will help you establish an employment history and teach you valuable lessons about time management and responsibility.
Other ways to save money for a car include setting aside your allowance, doing extra chores around the house, babysitting for families in your community, and saving money from holiday or birthday gifts.
It will take time and perseverance, but if you commit to it, you will be able to reach your savings goal!
Step 4: Figure Out Financing and Insurance.
Once you’ve got some money saved, you will need to figure out how you’re actually going to buy the car. Are you going to pay for it outright or are you planning to have a car payment?
It may be a good idea to stop by your local credit union to discuss financing options with a staff member before you start seriously car shopping. Not only will they help you understand what is within your budget, but they can also let you know if there are any special requirements you need to fulfill as a first-time buyer with limited credit history (i.e. providing a certain percentage down payment, choosing a vehicle under a certain number of years, etc.).
Keep in mind that there are more expenses to owning a car than just the sticker price – you will want to be sure that your budget factors those in to ensure you can make all payments successfully.
At this point, it’s also a good idea to figure out how you’re going to handle insurance. Will your parents add you to the family plan or will you be responsible for getting your own? You will need to have insurance to drive the car home once you’ve purchased it, so it’s wise to get those details ironed out before you start shopping.
Step 5: Visit the Car Lot.
This is the most exciting part! Look online or visit your local car lot in person to see what they have available. Make your budget clear up front and stick to it – even if the salesperson tries to encourage you to spend more.
For used cars, you can typically request a record of the car’s life so far – that can help you avoid vehicles that have been through accidents or received damage in the past.
Step 6: Fill Out Paperwork with a Guardian.
Once you’ve found your dream car, it’s paperwork time.
For buyers under 18, you will most likely need an adult co-signer to be able to complete the purchase. A co-signer is another person whose name is on the car loan and who will be responsible for the loan if you default. If your co-signer has a strong credit score, the interest rate you pay on your loan may actually go down, which means you will pay less for the car over the life of the loan.
Step 7: Enjoy Your Car Responsibly.
Congratulations – you did it! You are now the proud owner of your very first car.
Make sure you enjoy this new privilege responsibility. Drive safely, pay attention to your surroundings, and keep up with your car’s service needs to ensure it runs as well as possible.
If you have questions about the auto loan process, you can make an appointment to speak with one of our Certified Credit Union Financial Counselors at https://spero.financial/make-your-appointment/.
Happy driving!
This material is for educational purposes only and is not intended to provide specific advice or recommendations for any individual.
