A Teen’s Guide to Budgeting for a Car

Now that you passed your exam, it is time to start planning for that dream car. Carefully outline your car plans. Then follow these tips to save on your first car purchase.

Research

Find out the price range of your ideal car, and then look for articles and reviews that discuss the pros and cons of owning it. Next, narrow down your car search to a few local dealers and independent sellers. Research additional expenses, such as license plate, car title, oil changes, and etc. Narrow down your search to a few car insurance companies. Research their general interest rates. Determine the factors that cause an increase or decrease in these rates. Read consumer reviews on sites such as the Better Business Bureau. These reviews give you an indication of the insurance company’s ethics and practices.

Set a Budget

Evaluate your financial situation. Set a realistic budget that includes the car cost and additional expenses. Decide if paying by cash or a loan offers the best solution to obtain your car. Weigh the pros and cons of committing to a car loan. Make sure it is something that you can afford in the long run. Speak with others about the perks and consequences of having a car loan. If under 18, make sure you speak with your parent or guardian about them taking out the loan for you, and then set up a plan to repay them for it. If possible, pay off the entire car with cash. It will cause you less problems in the future.

Set a Time Limit

Pick a date to buy your car: it will motivate you to stick to your monetary goals. Be realistic about the car timeline. Calculate your monthly income, then subtract monthly expenses. Use this number to determine how long it takes to reach your car goal. For example, if you only have $1,000 left over every month, and the car costs $5,000, then set at least a 5-6 month goal to buy your car.

Cut Costs

Cut costs in other aspects of your life. This helps you reach your car buying goal faster. Drink and eat out less. Save more when you shop for clothing by using Groupon’s coupons at stores such as Famous Footwear.​ Start a side job to make extra money each month. Eliminate​ unnecessary bills, or lower current ones.

Buy Used

Use eBay Motors to look through local listings from people trying to sell their own cars. Car dealers offer less deals than an individual selling his own car. Make sure to have a mechanic look over the car before buying from an independent seller. Use extreme caution when purchasing a car via Craigslist. Ask tons of questions before meeting with the seller in person. Bring someone or multiple people with you when you go to meet the seller. Only meet in a public place