Some teen drivers receive a used car from their parents. However, others buy a car for themselves. If this is the case, it's a great way to learn more about your own financial independence. However, once you have that responsibility, you must manage it. Owning a car means facing costs you likely haven't seen in the past. What can you do to better manage your financial responsibilities as a new driver?
Your ownership responsibilities are considerable. Thus, take some time to think long and hard about the ways you can manage first-time ownership.
The Cost Of Vehicles To Teen Owners
Some teenagers make the decision to buy their own car, rather than borrow one from a relative.. Still, buying a car means a considerable investment.
Many teenagers do not have disposable income like older, more stable buyers. When you decide to buy, you'll have to take your bank account into consideration. You don't want to bankrupt yourself trying to maintain the car.
First, look at your budget. You will have a responsibility to repay the dealer or previous owner for the vehicle. Therefore, your car will often cost you more than a one-time payment. Look at your ability to maintain a sustainable income. Then see if it can support a car payment, maintenance costs and unexpected hazards.
Consider Used Cars
Most teens will find used vehicles more cost-effective than new ones. Because of previous ownership, used cars will often have less value than brand new models. Even those that have gentle usage and few previous owners will likely come with lower costs.
Still, with used car ownership comes a risk of receiving a poorly-maintained car, or even a lemon. These vehicles require significant repairs and cost a lot of money to maintain. That's often wasteful to any driver.
To get the best used vehicles, look for certification. Certified cars are those that come with certain guarantees from the manufacturer or dealer to meet quality standards. They often have good maintenance records, refurbishments and recent inspections. That means they have a lower likelihood of experiencing significant problems. Though they may cost a bit more, you might save on maintenance and other upkeep costs over time.
Financing Your Vehicle
Almost no one buys a car outright. Most people, especially teens, cannot afford it. Instead, drivers choose to finance the vehicle.
When you finance a car, you take out a loan from a financial lender, which goes to the dealer to pay for the car. However, the driver must repay the loan to the bank. In other words, you have debt to the bank, and they essentially own your car until you pay off the loan.
You have a responsibility to repay that debt. That means making every payment and doing so on time. Therefore, setting up financing often depends on your preferences. Many dealers offer different tiers of payment options. You should choose one that allows you to pay off the loan in a satisfactory amount of time. However, do not select such a high payment that you strain your own assets over the vehicle payment. Keep in mind, most loans accumulate interest, though your payment will reflect this.
Insuring The Car
When you buy your car, you'll have to insure it in almost all cases. Following unexpected accidents, your car insurance policy can help pay for damage. That's imperative financial security. Getting the appropriate coverage takes work, though.
Most states require all drivers to carry liability insurance. Liability protection helps drivers repay others they harm if they cause an accident. Some states also require personal injury protection, medical payments coverage or uninsured/underinsured protection.
Also, some vehicle lenders require drivers to carry collision or comprehensive protection. Coverage can help pay for vehicle damage following wrecks or other hazards. Gap insurance might also be a required feature. It helps pay off a vehicle loan following an accident that totals a vehicle.
Find out about the coverage required of you, then contact your Auto Insurance Discounters agent. As a teen driver, your relative inexperience at driving might mean you pay more for your coverage. Still, your agent can help you tailor your coverage to your advantage. They can also make sure you pay a fair, affordable price for coverage.
Other Costs Associated With Ownership
Once you buy your car, a myriad of other bills might arise as you establish ownership of your vehicle.
- Your state will require registration and tags on the vehicle. Furthermore, you will need a driver's license. Each of these come with costs. You'll have to renew these qualifications periodically.
- Some states require vehicle inspections before a driver can register the car. During inspections, mechanics will test the vehicle for safety and security. You might need to pay maintenance fee for this service.
As always, your vehicle will cost money to fill with gas, clean and fix if something goes wrong. Therefore, you must make room financially for this new asset. You can negotiate many of the costs of vehicle, so don’t hesitate to do so to your advantage.