Reporter John Shumway with CBS News in Pittsburgh shared Kelley Blue Book’s tips for getting your high school or college graduate a good new or used car that will work with their budget and experience.
An important consideration when buying a used car is what safety features are must-haves. Airbags (head curtain airbags, too) are a must, as are anti-lock brakes, traction control, and stability control.
Pay Cash if Possible
Since new drivers will likely add dings and dents to their first car, a used car that you can pay cash for is probably best. Remember, if you finance a vehicle for a new driver and the car is completely wrecked, you still owe the loan balance. Insurance coverage for teen drivers can be pretty high, especially coverage that covers your teen’s car in an accident.
Check Interest Rates
New and used car prices are trending down, but interest rates remain high. These trends can significantly impact the monthly payment. In the long run, a lightly used car will cost more than a new car since new cars almost always have better interest rates than used cars, even for buyers with good credit.
Credit Score and Incentives
Good credit is also important. Know your credit score before visiting the dealership. Get pre-approved for a loan from your bank or credit union. There’s a good chance the dealership will be able to beat your bank’s interest rate, but having pre-approval can help speed up the process.
Today, new car incentives are hit-and-miss, so do lots of research. For example, a few models within one brand may have 0% interest, while all other cars from that brand have no discounts. Even on advertised cash back or low APR deals, having excellent credit is the way to qualify.
New drivers need to take a long test drive. A kid or young adult might not know what features work best or how to gauge outward visibility. Adjusting the seat and finding a car that’s the right fit is more important than the color of the car or even financing options.
