What young drivers and their parents need to know about selecting a vehicle, the costs of ownership and getting an auto loan.   

Google “cars for teens” and you’ll discover a lot of lists. The best cars for teens. Safe cars for teens. Vehicles under $20K. Indeed, there are many models to choose from but identifying suitable cars for a teen is just part of the process. Whether a new driver has saved up their money to buy the car themselves or a parent is helping them out, it’s important to understand the car buying process and costs of ownership.

Selecting a used car

Most cars chosen for teens are used vehicles—for sound financial reasons. Used cars are cheaper to buy and cheaper to insure. However, buyers need to balance these costs with expenses of maintenance and repairs. Check out the True Cost to Own calculator to see a 5-year breakdown of ownership costs.

The Insurance Institute for Highway Safety and Consumer Reports advise young drivers to bypass high-horsepower models. Instead, teens should seek a car with electronic stability control because ESC substantially reduces fatal risk due to loss of control of the vehicle. Also, bigger, heavier cars are recommended for teen drivers because they offer better protection if they’re in a crash.

Before you head out to shop for used car, get familiar with the red flags that indicate potential problems. As you review the vehicles for sale, look for safe reliable models that fit your budget.

Why you might opt for new car for teen driver

Buying a new car will cost more than a used one, however, buying new offers some key advantages. In addition to lower maintenance and repair costs, they will have the most advanced safety equipment, including crash-avoidance technology.

Financing a car for a teen driver

Most lenders require borrowers to be at least 18. Credit unions are more likely than banks to issue a loan to someone with a low credit score or no credit history at all. If low or no credit is factor, a co-signer can help a young driver secure financing.

If buying a new car, ask the dealer about special programs for students. Some manufacturers offer discounts for high school seniors, college and trade school students and recent college graduates in the form of a credit toward down payment or a rebate. At the time of this writing, several manufacturers offered a $500 incentive.

Typically, lenders will require a down payment of 10% of the purchase price for a used car and 20% for a new one. Use our auto loan calculator to see financing scenarios for monthly payment and purchase price.

Getting a loan

Securing an auto loan starts with an application. You’ll provide information about your income as well as documentation like pay stubs. Your lender will review the information and check your credit report.

Many car buyers find it helpful to get pre-approved for a vehicle loan before they start shopping. Knowing exactly how much they can borrow helps them choose a car within their budget.

Like other loans, there are fees for car loans. Commonly, an origination of 1% to 2% of the loan amount is charged. Just like you comparison shop for cars, compare lender fees as well as interest rates. If you have very good credit, you may be in a position to negotiate lower fees or interest.

An auto loan for a new or used car always comes with a great rate at Consumers. Plus there are no prepayment penalties if you pay off your vehicle loan early. Apply online or call us at 800.991.1221 to get your loan started. We especially like helping first-time car buyers learn the ropes.

 

All loans subject to approval. Rates, terms, and conditions are subject to change and may vary based on credit worthiness, qualifications, and collateral conditions. Federally insured by NCUA