How to Buy Your First New or Used Car – Consumer Reports

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Teens might love the freedom a first car can bring, but it also brings a lot of responsibility. They need to be ready for significant expenses even after figuring out how to pay for the car. There’s fuel, maintenance, repairs, insurance, taxes and more.
Here are some strategies for getting behind the wheel as painlessly as possible. And because an important element of driving includes sharing the road responsibly, you should read our guide to car safety.
It’s critical for teens and their parents to establish a reasonable budget. Money available for a down payment and for making monthly installments on a loan will determine the range of car choices. 
One key consideration is whether the car is meant to see a teen through high school or college and beyond. Or if it is just something to drive locally for a couple years. That will determine how new and reliable it needs to be.
The best way to save money is to buy used. A new car loses almost half its value in the first five years, so go for one that’s a few years old yet still has contemporary safety features and many useful years ahead of it. Buying used also means a nicer car for the money than possible if buying new.
Financing is usually a challenge for a teen buyer. Lenders are typically looking for adults with a good credit score, steady employment history, and financial assets, such as a sizable bank account or house. In most cases, this will mean a parent will have to co-sign, take the loan in their name, or buy the car outright.
The good news is that many finance companies have specific programs for college students and graduates that ease some credit requirements and even offer special rebates.
 looking for adults with a good credit score, a steady employment history and financial assets, such as a sizable bank account or house. In most cases, this will mean a parent will have to act as a co-signer or even take the loan in their name. The good news is that many finance companies have specific programs targeting college students and graduates that ease some credit requirements and even offer special rebates. 
 
 looking for adults with a good credit score, a steady employment history and financial assets, such as a sizable bank account or house. In most cases, this will mean a parent will have to act as a co-signer or even take the loan in their name. The good news is that many finance companies have specific programs targeting college students and graduates that ease some credit requirements and even offer special rebates. 
 
 looking for adults with a good credit score, a steady employment history and financial assets, such as a sizable bank account or house. In most cases, this will mean a parent will have to act as a co-signer or even take the loan in their name. The good news is that many finance companies have specific programs targeting college students and graduates that ease some credit requirements and even offer special rebates. 
 
 looking for adults with a good credit score, a steady employment history and financial assets, such as a sizable bank account or house. In most cases, this will mean a parent will have to act as a co-signer or even take the loan in their name. The good news is that many finance companies have specific programs targeting college students and graduates that ease some credit requirements and even offer special rebates. 
 
 looking for adults with a good credit score, a steady employment history and financial assets, such as a sizable bank account or house. In most cases, this will mean a parent will have to act as a co-signer or even take the loan in their name. The good news is that many finance companies have specific programs targeting college students and graduates that ease some credit requirements and even offer special rebates. 
 
 looking for adults with a good credit score, a steady employment history and financial assets, such as a sizable bank account or house. In most cases, this will mean a parent will have to act as a co-signer or even take the loan in their name. The good news is that many finance companies have specific programs targeting college students and graduates that ease some credit requirements and even offer special rebates. 
With a budget in mind, you can start on the fun part: creating a short list of vehicles. You should focus on practical choices, cars that minimize ownership costs and suit the teen’s needs.
Buying a used car or giving a child a hand-me-down is the natural choice, especially if college costs may be on the horizon. We have recommendations for the best used cars under $20,000, with many available for less than $10,000.
But there’s another path: a new car, even if that means a parent has to drive an older model. This strategy isn’t for everyone, but it has its merits.
Combining expertise and data, CR and the Insurance Institute for Highway Safety now provide simple lists of new and used cars, SUVs, and minivans that balance accident avoidance, crash protection, performance, and reliability. The vehicle recommendations are ideal for teens, but they can serve any shopper looking for a vehicle that excels in those areas. These lists are an excellent place to start. 
Parents should resist the temptation to get a sporty, luxury, or large vehicle. A high-horsepower car or one with the latest high-tech features isn’t practical.
Insurance companies penalize young drivers with sporty cars, big engines cost more to fuel and maintain, and extra features tend to carry reliability risks. Car insurance will already be a major expense; don’t make it worse.
For a car loan, most banks require full-coverage insurance. Families should get an insurance quote ahead of time to get a full picture of the costs.
To reduce the risk of buying a lemon (a car with never-ending problems), identify models with a good reliability record. Check CR.org/reliability for survey-based insights that can point you to cars that hold up well over time.
Parents and teens should go online to read professional reviews of cars. Pay most attention to areas you’re most concerned about (mpg, reliability, infotainment features) and balance the writer’s perspective with your preferences. For instance, complaints about seat comfort or ride quality can be checked out during your test drive. Your opinions might be different.
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 whether a car is truly in “new” condition.
On the other hand, each used car has led a unique life. Some may have been pampered, others abused. 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 for a used vehicle, make sure there’s a car-savvy adult on hand. During the pandemic, be sure to wear a mask, maintain social distancing, and be prepared to clean the car surfaces and your own hands with sanitizing wipe. This can make buying now a bit awkward. Consequently, you might favor buying from a dealership that has sanitizing protocols in place or a family member, rather than purchase from a stranger, until the pandemic passes.
Carefully look the car over inside and out, top to bottom. New or used, always inspect it during daylight hours, when you can spot paint flaws that might indicate repairs or other troubles. Essentially, you’re looking to ensure that the car is in the condition claimed by the seller.
For any used car, it’s important to have it inspected by a certified professional mechanic. They typically charge $75-$150 for the service, but it can be money well-spent considering how much more it might save you in the long haul.

If the car looks good, then it’s time to talk numbers. When negotiating a purchase, it’s essential to have an experienced adult to assist.
Professional car salespeople have been trained to push sales and get the most money for a car. That’s what they do, day in and day out. Many shoppers are outgunned during this phase of car buying, and a first-time buyer usually doesn’t stand a chance going solo.

If you’re buying from a private seller, negotiating is usually straightforward. Research online what the current wholesale price (aka trade-in price) is for the car based on its condition, mileage, and location. That’s your target price.
A salesman at a used-car lot or dealership will focus on the retail price, also easily found online. Chances are the car was acquired through a trade-in or at an auction for near the wholesale price and then fixed up, and now the dealer needs to make a profit.
Your goal should be to get as close to the wholesale price as possible, though you’ll probably end up between that and the retail price.
If you’re financing, prearrange the loan with a lender so that you know the interest rate. If the dealership can beat that rate, great. If not, then you’re still covered. Once that’s settled, you can use an online calculator to figure out what your payments will be based on the expected purchase price and your down payment.
The salesperson will probably focus on monthly payments, which enables him or her to sneak in added profit. Because you did your homework, you can focus on the total amount rather than what the monthly payments will be.
Negotiate one element of the deal at a time. Establish the purchase price and then move on to discussing financing if you’re interested in what the dealership has to offer. Don’t be talked into unnecessary extras such as rustproofing, a fabric protector, or an extended warranty.
If the seller won’t meet what you consider a fair price, walk away. Every year more than 40 million used cars are sold. Rest assured, there are plenty of other cars out there to choose from.
Browse the CR Used Car Marketplace for local pre-owned deals.
Standard on all recent and new cars, these features are readily available on used cars. Be sure when considering a model from before 2012 that you check what features it has. These are must-haves: 
These advanced features reduce injuries and fatalities. They are readily available on new cars and can be found on late-model used cars. If your budget permits, they are smart investments to help protect new drivers:
There are a lot of things you need to check when shopping for a used car. On the "Consumer 101" TV show, Consumer Reports expert Keith Barry explains to host Jack Rico how to evaluate a pre-owned vehicle and negotiate with a dealership to get the best possible deal.
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Jeff S. Bartlett
A New England native, I have piloted a wide variety of vehicles, from a Segway to an aircraft carrier. All told, I have driven thousands of vehicles—many on race tracks across the globe. Today, that experience and passion are harnessed at the CR Auto Test Center to empower consumers. And if some tires must be sacrificed in the pursuit of truth, so be it. Follow me on Twitter (@JeffSBartlett).

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