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buBuying A Used Car
"I can’t wait to get my
own car."
Sound familiar? 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:
1. Whether the vehicle is being sold "as is" or with a warranty;
2. What percentage of the repair costs a dealer will pay under the warranty;
3. The fact that spoken promises are difficult to enforce; and
4. 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:
1. Get all promises in writing;
2. Keep the Buyers Guide for reference after the sale; and
3. 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:
1. Examine the car using an inspection checklist. You can find checklists in magazines
and books and on Internet sites that deal with used cars;
2. Test drive the car under varied road conditions–on hills, highways, and in stop-and-go-traffic;
3. Ask for the car’s maintenance record from the owner, dealer, or repair shop; and
4. 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:
1. Compare coverage and premiums with several insurance companies. Buy from a low-price,
licensed insurer, or add your teen to your policy. Some companies offer discounts
to students with good grades. Remind your teenager that it pays to drive safely and
observe speed limits. Traffic violations can cost money in tickets and higher insurance
premiums.
2. Pump your own gas and use the octane level your owner’s manual specifies.
3. Keep your car in safe driving condition. Following the vehicle’s maintenance schedule
can help forestall costly repairs.
4. 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.
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