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Making Your First Car Purchase
If you're ready to drive, you need a car to get around. Some teens get hand-me-downs from their parents. At least they have a car to drive. But eventually you may need to buy a car. Buying a first car can be an exciting step to independence. However, taking steps to make that actual purchase can be quite difficult because it can be time-consuming and frustrating. The average young adult also does not have the financial means to buy a new car. Even with all the obstacles, you can succeed if you consider your options carefully. First devise a plan before you head out to make your first purchase. Consider the following before you actually start looking for a car:
- How much can you afford to spend on a car?
- What kind of car will best meet your needs?
- Should you buy a new or used car?
WHAT DO YOU THINK? You probably have had your eye on that particular car for a while. Maybe it's a Hummer. Or perhaps it's a Ford Mustang. A Honda Civic? Answer these questions below: What car have you wanted to buy? Why do you want this particular car?
After you consider these questions, answer this question: Can you afford to buy it?
Can You Afford It?
A car will be the most expensive purchase you make in your life other than a house (if you end up buying one). Unlike many of your other purchases, there are additional costs to car ownership. Therefore you don't want to put all of your money into the purchase price. You must be able to pay for all of the following:
- The price of the car
- The down payment (if taking out a loan)
- The title, registration and tag
- Insurance (which you'll have to pay at least twice a year)
- The monthly payments plus interest, if taking out a loan (the interest rate is referred to as annual percentage rate or APR)
- Gas and maintenance (your car simply cannot last forever!)
Once you put down the money, the car is yours, for better or for worse. That's right - there is no three-day grace period for returning a car. Be sure you make the right decision for you before buying.
Getting a Loan
Borrowing money can be a smart thing to do if you borrow an amount you know you can repay on time. When taking out a loan, put at least 20% down on a car and then make payments on the rest (you'll also have to pay interest on the loan, which adds to the total price). You want to get a loan with a term no longer than 48 months (4 years). Why 48 months? The longer you have to keep paying off your loan, the greater your potential for financial hardships as an adult. Examine your budget to ensure you can pay off the loan within that time frame.
Building Good Credit
As a teen, you probably don't have a credit history, which means few lenders will take a chance on you. One way to establish a credit history is to get a credit card from a store. These have a low maximum limit so you won't be able to charge much. However, if you use it and pay your bills on time, you are establishing a solid credit history. Another possibility is to have a parent co-sign your loan. Some parents are willing to take on the responsibility if their teen defaults on their payments. However, if the parents also fail to pay, the credit history for both the teens and their parents won't look so good. Always be sure to make your payments on time.
Sources of Financing
Sometimes you can get a loan from the dealer. However, you are probably better off if you go through a bank or other financial institution. If your parents are a member of a credit union, go through them because you'll get the lowest interest rate (annual percentage rate or APR), which is usually no more than 7%. Banks may charge up to about 10%, while the rate you may get from dealers varies. Usually the larger the dealer, the better your rate. You do NOT want a loan with an APR that is too high. Shop around for the best deal. Be sure to read the terms of your loan. For example, look at the APR and the length of the loan that the lender offers.
Whoever you choose, make sure you borrow from a reputed lender. Unfortunately there are predatory lenders (scam artists) out there. They take advantage of people who are desperate for loans. Avoid "guaranteed" or "easy credit" loans and don't pay fees for securing a loan. These are rip-offs! Be very careful when shopping for a loan!
Do yourself a favor and consider the following:
- Learn how to calculate interest. You may not like doing math, and the answer is one you may not always like. But if you don't figure it out, you will pay for it BIG TIME!
- Don't borrow unless you absolutely must. If you do borrow money, shop around for the lowest interest rate and best terms from a lender you can trust.
- Be honest with yourself about your ability to make the payments. If you think having NO credit is bad, wait until you try BAD credit.
What Type of Car Should You Buy?
Forget about that shiny Mustang for now, unless you really can afford it. Think about how often you'll need to drive and how far you'll be traveling. If you have to drive a long way, consider a car that gets good gas mileage. While deciding on what car to buy is your decision, consider these tips:
Buy a Popular Model
If you get one that is used, you'll have a greater selection to choose from. It will be slightly cheaper to repair because its parts are widely available and more mechanics will know how to repair it. Also it is more likely to be reliable because that is a quality that helps make a model popular.
Buy a Midsize Sedan
These cars are generally safe and practical. Sedans tend to have a lower center of gravity and are wider than SUVs. They usually give you just enough power for all the necessary maneuvers on the highway, which should help keep you from becoming a habitual speeder. They also have enough room for you to put in your school stuff. Because there is such a great variety to choose from, you can find a model that won't make you feel old.
Buy a Recent Model
Newer models generally have the safety features you need, such as antilock brakes, frontal airbags and side impact airbags. They also offer better crash protection. Look for models that are no more than five years old. Often used cars you buy from dealerships include warranties because they are not that old.
Avoid High-Performance Vehicles
In addition to being more expensive, you will be paying higher insurance rates. Also as a young adult (more so if you are a male), you will be tempted to show off and drive too fast. Wait until you are older if you must have a sports car or other high-performance vehicles.
Avoid Sport Utility Vehicles
These vehicles are more expensive than most other cars. SUVs also may not be safe; because of their high center of gravity, they are more prone to roll over than passenger cars. They are also a threat to occupants of smaller cars in a collision.
Consider buying a car with an automatic transmission. Most cars available are automatics. They are easier to learn and are best suited for novice drivers. You will also be learning how to drive an automatic with this program, though some tips on how to drive a manual will be offered.
Driving a Sport Utility Vehicle (SUV)
The 1990s saw the advent of the sport utility vehicle (SUV) as a major part of the American driving culture, and they are still popular today. Lower gasoline prices combined with a burgeoning economy have allowed millions of people to purchase mini-trucks, making each the operator of a vehicle possessing immense power and weight. Unfortunately many drivers are ill-equipped to operate these vehicles, but are on the roads anyway. You must consider several factors when driving a larger vehicle, whether it is an SUV, van or minivan, camper, or a car with a trailer.
Extra Size = Extra Stopping Distance
The weight of many SUVs can be nearly twice that of a regular passenger vehicle. The extra weight requires considerably more stopping distance for a driver to properly slow down the vehicle.
Wind will affect driving
The height of SUVs leaves them susceptible to loss of control due to wind. Driving in extreme weather may cause the SUV to swerve or require you to work harder just to control the vehicle. You should slow down, increase your following distance, and avoid driving if possible in extreme conditions.
SUVs can often tip or roll over
Cornering in SUVs requires extreme caution and reduced speed. The height of these vehicles and higher center of gravity make roll-overs more common. You must make turns more carefully and know your vehicle's limits. Speed is the main reason roll-overs occur.
Blind spots and lane changing
SUVs often have blind spots or areas on the road which you cannot see while driving that are similar to those present when driving a full-size truck. You may have difficulty seeing smaller vehicles or motorcycles prior to lane changes, which can result in collisions. You need to make the most of your resources to help you see whether the lane you want to change into is clear. Use the side mirror, glance over your shoulder, or even use a passenger for assistance.
Know the height of the SUV
Many drivers purchase an SUV on impulse without properly researching the vehicle. Consequently, collisions often occur because these new vehicle owners drive under overhangs or into parking garages that do not have adequate clearance for the height of the vehicle. Asking a simple question at the dealership or referring to the operating manual can help prevent this avoidable driving mishap.
Special notes on SUVs / Recreational Vehicles:
- Adjust your driving habits to protect yourself and other drivers as well.
- Utilize the height of the SUV as an advantage for increased visibility.
- Drive under control - the vehicle is not a big toy.
Should You Buy New or Used?
It sure is nice to have a first car that is brand new, but your budget will tell you whether this is possible.
Buy a New Vehicle
If you know you can afford a new car, you will be buying from a dealership. There are many advantages to owning a car that is brand new. It is likely to have fewer problems, though even new cars can break down if there are defects or you do not maintain it properly. New cars also will have the latest safety features and offer better crash protection. Before driving off with that new car, be sure to take it for a test drive first. No matter how good a deal it may be at first, you do not want to be stuck with a car you do not like or are not comfortable driving.
Buy a Used Vehicle
If you decide that you can't afford a new car, consider a pre-owned vehicle. A used car can be a good buy if you know what to look for. You want a car that is reliable and has been maintained regularly, preferably one that is no more than five years old (unless you know your way around a car). You want to have antilock brakes, dual front air bags and side impact airbags, which newer cars are more likely to have. If you find a used car you like, do your homework by researching its history. You can easily do this if you have the vehicle identification number (VIN). A car's history report will tell you if it has been salvaged or been in an accident. Also take it to a mechanic you trust so it can be thoroughly inspected. If you are not careful, that used car may just end up costing as much as a new one.
You can buy a used vehicle from a dealership or an individual (private party). If possible, bring someone along who knows cars to help you get a good deal. That also helps when you can negotiate the price. Always take it for a test drive and have an independent mechanic check the car before you buy it (usually costs about $30, but it is a good investment because it will save you from buying a lemon). Walk away if the seller refuses to let the car be inspected independently.
Buying from a Dealership
When going to a dealership to shop for a car, we recommend going to one that is licensed in Nevada because Nevada dealers are trained to do the paperwork that the Nevada Department of Motor Vehicles requires. Buying a new or used car from a licensed dealership has its advantages. You'll have a little more security because the lemon laws will protect you. Dealerships often advertise special deals in your local newspaper, so be sure to check them out. If buying a used car, look only at those you know about; if a dealer suggests a car you know nothing about, research it first if you are interested in it. You can often negotiate a different price, but be sure it is the price plus tax, with no other extra charges.
Before you sign any papers, read them first! You want to be sure you are BUYING the car and not LEASING it. Also be absolutely clear about the terms of any warranty, so ask to see the warranty. Put ALL agreements in writing. If the dealer refuses to show you the papers before you sign them, walk away! Always read ALL papers you are given and fill out all the necessary parts before you sign them (be sure the dealer signs also). Don't be afraid to ask questions! Get a copy of the contract before driving off the lot.
Sometimes a dealer will ask you to buy credit insurance, which will help pay your loan if you are unable to make your payments. You may also be asked if you want a service contract, which will help pay for repairs. But remember that a warranty is included in the price of the car. If you buy a service contract, you may be paying twice for the same services. Note that credit insurance and service contracts are NOT required by law.
Buying from a Private Party
You can often find good deals through private sales from individuals, and sometimes these deals are better than what you can get from a dealership. Check for these deals in your newspaper or even online. Most individuals sell their vehicles "as is," which means you are buying the car in whatever condition it is in. If possible, ask to see receipts for repairs; these will let you know how well the person maintained the vehicle. Also make sure that the seller owns the vehicle (has a title). If the seller can't provide a title, he or she probably hasn't paid off the car or is still leasing it. If that is the case, you should buy your car from someone else.
Registering Your Vehicle
After you buy your vehicle, you must register it with the DMV within 30 days of purchase. Upon registration, you must pay various fees and taxes which include the following:
- Basic registration fee ($33 for passenger cars).
- Governmental services taxes (depends on the value of your vehicle).
- Miscellaneous fees for titles, license plates, inspections, etc. These include:
- Prison industries fee for each plate (50 cents).
- Title fee ($20).
- Title processing fee ($8.25 for a new title).
You must register your vehicle for a full year and renew your registration annually. If you wish to have someone else (a third party, such as a parent) register the vehicle for you, this person must also present a Nevada Evidence of Insurance card for the vehicle in the exact name(s) that will appear on the title and registration.
If you fail to register your vehicle within 30 days of the date you made your purchase or acquisition, you may be subject to fines. This also applies to new Nevada residents, only they must register within 60 days of the date they move to the state, or at the same time they obtain their new driver's license (which must be done within 30 days), whichever is sooner.
Remember that you must get liability insurance from an insurer licensed in Nevada. The name(s) on the insurance policy must be exactly the same as on the registration and title. Also remember that if you fail to maintain insurance, your registration will be suspended. You will have to pay $250 to reinstate your registration. The steps you must take to register your vehicle depend on who you bought the vehicle from.
Registering a Vehicle Purchased from a Licensed Nevada Dealership
If you buy from a dealership in Nevada, you won't have to deal with as much paperwork because dealers are trained to handle them. Nevada dealers are required to submit to the DMV all of the documents needed for a Nevada title within 30 days of the date of the sale. They are also required to issue the following documents to you (the buyer):
- Copies of any contract, lease agreement, warranty, etc.
- A temporary movement placard which expires 30 days from the date of the sale.
- A passing emissions inspection if required.
- A drive train inspection report on used vehicles which have an odometer reading of 75,000 miles or more.
- A Dealer's Report of Sale (DRS or "green slip"). Dealers don't have to issue the DRS at the time of the sale. They can wait up to 15 days for financing to be finalized. If that is not possible, they can void the sale or redo the contract with different terms. Because the contract is different, you do not have to accept it.
Once you get these documents, you must register at a DMV office before the expiration date on the temporary placard. You must present the following documents when registering:
- Dealer's Report of Sale
- Emissions Vehicle Inspection Report, if needed
Registering a Vehicle Purchased from an Out-of-State Dealer
If you buy from an out-of-state dealer, you'll have to do a little more work. For example, you should ask the dealer about a movement permit and for details on how the vehicle will be titled before you buy. Always be sure you understand the sales contract before you sign. Also not all out-of-state dealers collect sales tax (or they charge a different amount). DMV will verify the taxes you paid and charge the difference between that amount and what you would have paid in Nevada.
You need to get the following documents from the dealer:
- Invoice or Bill of Sale, and one of the following:
- Manufacturer's Certificate of Origin.
- Security Agreement.
- Lease Agreement.
- Nevada Emission Vehicle Inspection Report (if needed).
- VIN inspection.
You must register your vehicle before the expiration date on the movement permit.
Registering a Vehicle Purchased from a Private Party
If you buy from an individual, you'll have to work with the seller to ensure your vehicle is properly titled and registered. You need to get the following documents from the seller:
- Title or Security Agreement from a financial institution. If the seller does not have a title, the owner will have to apply for a duplicate from the state where the vehicle was last titled. You must have a title, not a bill of sale, to register the vehicle.
- Nevada Emission Vehicle Inspection Report, if needed.
- VIN inspection (if not previously registered in Nevada).
- Current odometer reading (if less than 10 years old)
Once you get the title, look at it to see who must sign to sell the vehicle. If the title says "Person 1" AND "Person 2," both people must sign to sell the vehicle. If it says "Person 1" OR "Person 2," you only need one of them to sign the title. Be sure to complete the buyer section of the title with your full name (or whoever will be owning or co-owning the vehicle).
You must complete a Bill of Sale (Form RD-104) with the seller. You won't need it if the title has been properly signed off. Be aware that the seller is required to keep the license plates, so you will need to register for a movement permit.
If the seller does not have a title, you can still buy the vehicle if it can meet ALL of the following conditions:
- It was last titled in Nevada;
- It is more than 9 years old (by model year); AND
- It has no liens or the owner has a lien release.
Because you are buying from a private individual, you won't have to pay any sales taxes to the DMV. DMV only requires taxes on private party sales that were made before January 1, 2006. However, some dealers selling as private individuals have their cars registered under their dealership, so you will need to make sure the car you are buying is under that person's name or you will have to pay sales tax. You still must register your vehicle within 30 days of purchase.
Nevada Emission Testing Requirements
Certain gasoline-powered cars (regardless of weight or size) and light-duty diesel-powered trucks (14,000 pounds or less) must undergo emission testing every year before registration. You must have your vehicle inspected if it is gasoline-powered (any weight or size) or diesel-powered (14,000 pounds or less) and:
- Based in urban areas of Clark or Washoe County; and
- 1968 model year or newer.
If your vehicle requires emission testing because it meets one of the conditions listed above, you must have a valid test to complete any original registration or renewal. The emissions tests are valid for up to 90 days, so any vehicle you are considering that requires testing should already have been tested. That is made easier if you purchase from a used car dealer in Nevada. Nevada used car dealers are required to issue a valid emissions test on any vehicle they sell if those are required to be tested. However, if you purchase from a private party, you will be responsible for the test.
The testing requirements do not apply to all vehicles. These vehicles are exempt from emission testing:
- New motor vehicles on their first and second registration;
- New hybrid-electric vehicles for the first 5 model years;
- 1967 or older;
- Motorcycle or moped;
- Vehicles based in remote areas of Clark and Washoe counties and all other Nevada counties (contact the DMV if you are not sure whether testing is required in your area);
- Alternative fuel vehicles;
- Diesel vehicles with a gross vehicle weight of 14,001 pounds or greater;
- Transfer of ownership/registration if the last test was conducted within 90 days before the transfer;
- Transfer of ownership/registration between husband and wife;
- Transfer of ownership/registration between companies whose principal business is leasing vehicles if there is no change in the lessee or operator of the vehicle;
- Vehicles registered as a Classic Rod or Classic Vehicle and driven 2,500 miles or less per year.
- Vehicles registered as a Replica Vehicle.
Types of Tests
All 1996 and newer vehicles will receive on-board diagnostics (OBD II) testing. In this test, the inspector connects an analyzer to the OBD computer in your vehicle. The results will indicate whether your vehicle's emissions systems are operating properly and within emissions limits.
Vehicles with a 1996 model year and newer have a built-in OBD computer system, which monitors your vehicle's emission controls system to make sure it is functioning properly. This system serves two basic purposes: minimize your vehicle's impact on the environment, and identify minor problems before they become expensive repairs. If an OBD test cannot be performed on a vehicle, the inspector may need to perform a Two-Speed Idle test (TSI).
All 1995 and older model year vehicles are tested with a Two-Speed Idle test, where the inspector tests the vehicle once at idle speed, and then again with the engine running at approximately 2500 rpm. If you have a diesel vehicle that requires emission testing, it will be tested on a dynamometer.
Maintaining Your Vehicle
Always keep your vehicle in good working order. Preventative maintenance should result in fewer unexpected mechanical failures. It also will help you to save money and gas in the long run. Quick reaction time is useless if your vehicle cannot respond due to poor maintenance. Even if your vehicle seems to be in great shape, it can still encounter the occasional problem. If you are not prepared, your vehicle may encounter problems when you least expect them to occur. Be sure to follow a proper maintenance time table, with oil, brakes and tires the primary focus. You don't need to be a mechanic to perform basic maintenance on your vehicle. Here are some things that need to be checked on a regular basis:
Check your vehicle's oil level regularly. This is probably the most important maintenance task you can do for your car. Oil is to the car what blood is to your body. Without it, your car will not last very long. You should check your vehicle's oil level every time you fill up your gas tank. To check your oil level, find the dipstick, which is near the front of the engine and usually has a brightly colored handle (i.e. yellow or red). Take it out and wipe it clean with a rag or towel, reinsert it into the hole, and then take it out again. Look for the two hash marks at the end of the dipstick. If the oil on the stick is between these two marks, you are okay. If it's under, you need to add more oil (usually a quart should be enough). Too much oil can also be bad for the engine, so be careful when adding more than a quart.
Replace the oil and oil filter regularly. Consult your owner's manual to find out how often you need to do this, but they should generally be changed every 3,000 miles or three months. Be sure to use the specified oil type to maximize the life of your vehicle's engine. Never pour used oil down the drain or into the ground. It is illegal and harmful to the environment. Put your old oil into a used oil container or other clean plastic containers that can be closed. Label the contents clearly on the outside and bring the used to oil to a facility that accepts used engine oil.
Check tire pressure and tread wear regularly. Do this at least once a month, and look for uneven or irregular wear and cuts and bruises along the sidewalls. Tires should be inflated and maintained at levels suggested in your owner's manual (follow the manual, not the tire, for the recommended tire pressure). Do this at every other fill-up. Rotate tires as specified in your owner's manual to extend their mileage.
Have your brake system inspected at least once a year. You should also have the brakes checked when the warning light flashes on, the steering wheel shakes, there are unusual pulsations in the brake pedal, the stopping distance is increased, or there is excessive grinding or squealing.
Check fluids periodically. This includes brake, steering, transmission, and windshield wiper fluids and antifreeze. Consult your owner's manual to find their locations. Always check your fuel gauge when you start your car.
Check all belts for tightness and wear. Look for any cracks or bulges in hoses. Replace belts and hoses when specified in the owner's manual (usually about 60,000 to 90,000 miles for belts) or if they are more than four years old. They must also be replaced if they show any signs of wear.
Check your vehicle's air filter. You should do this when you get your oil changed. The filter needs to be replaced at least once a year. If it is dirty, soaked, or show any signs of wear, you must replace the filter. Your car's air filter keeps impurities from damaging the inside of your engine. In addition to protecting your engine, replacing a dirty air filter saves gas.
Check your lights. If any are out, replace the bulbs.
Make sure your windshield wiper blades are clean and in working condition. Replace them about every six months. Also replace them if they show signs of wear.
If your "check engine" light turns on, you should take your vehicle to a shop to have a mechanic check. A serious problem requiring immediate attention may be present if it flashes.
NOTE: It is imperative to get a tune-up regularly. Follow the schedule in your car's maintenance handbook.