NEW OR USED?

According to the National Institute for Consumer Education, the average price of a new car is about $18,000. Some teenagers can afford to pay this, but many must find less expensive alternatives, so they look for a used vehicle. In addition to the lower base price, there are many advantages to buying a used car, including:

• Insurance generally costs less for an older car than for a brand-new one.
• Used cars depreciate less after purchase than new cars do.
• It may be easier to negotiate with an individual owner than with a car dealer.

There are, however, important disadvantages that you must consider as well:

• A used car will generally require more maintenance and repairs than a new car.
• A used car often comes with no warranty, whether you buy it from an individual or a dealer.
• The previous owner may not tell you everything there is to know about a car.

If you are willing to spend the money for a new car, you will be able to get the color you want, the options you want, and a decent warranty. However, if you take a few basic precautions, you can find a used car that is affordable and right for you.

DEALERSHIPS VS. INDIVIDUALS

When you buy from a dealer, you have the option of paying up-front or financing the car (see below). You also have the advantage of using the Buyer's Guide. The Buyer's Guide is a sticker placed on used cars which describes the warranty (if there is one) and tells you what to watch out for on the car. On the other hand, buying from an individual seller can have its advantages as well. There may be less pressure on you to buy, and you may be able to negotiate the price. However, there may be damage to the car that the seller does not disclose, and the car will be sold to you as is, which means there will be no warranty.

FINANCING

If you decide to finance, you will pay less to begin with, but the total price will increase due to interest and other costs. When financing a car through the dealer, make sure to get these things in writing:

• The price of the vehicle
• The finance charge
• The APR—how much interest will you pay per year? This should be expressed as a percentage.
• The number of payments
• How much each payment will be
• The total price of the deal, including interest and finance charges

MAKING A DEAL

Before you buy, you should take a few steps to make sure you get the best deal:

• Test-drive more than one vehicle.
• Inspect any car you are interested in using the Buyer's Inspection List, which can be found on the Buyer's Guide.
• If you find a car that looks right for you, ask to have it inspected by an independent mechanic.
• Negotiate. Make an offer that is lower than the amount you are willing to pay, so you have room to bargain.
• Get all verbal promises in writing.

Remember, there is no "cooling-off" period for automobile purchases. Once you sign an agreement, you are legally bound, so make sure you read any contract carefully before signing it.