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I’m a 19 year old student and have been trying to get through college without a car. However, as more time passes I realize that it would be extremely beneficial to me to have a car as my school is not in an area where public transportation is readily available. My parents have been ever so kind to pay my tuition, but anything I want to do or get outside of that is up to my own funds. I planned to buy a car when I graduated in a year and a half (used because I can’t see the point of buying a new car at my age), but I feel like I need to get one sooner as I’m tired of working minimum wage, fast food jobs.

To give you some background, I’m now looking to buy a car in December (it’s basically August now). I’ve done some research and the car that I want costs anywhere between 15 and 19k. I’ve got 1k saved so far and have a job where I will probably make about 8-900 a month. I’ve got a discover credit, which I’ve had for about a year and a half now as well as some retail credit cards. My credit score is in the mid to high 700s. I had my mom check with the insurance company to see how much it would cost for my choice of car, and they say it would be around $230 a month. To be clear, my choice of car is a Honda HRV. I’m not too worried about the year of the car, although I would like to have as new a car as possible while staying within 15-19k.

Now, my question(s?). Is it possible for me to buy a car by December? What kind of interest rate would I be likely to get based on my credit history and age? Would I have to have my parents co-sign for the car? How high should I be willing to have my car payment be? Is it true that I shouldn’t want to finance a car for more than 48 months? And lastly, I’m given the option to finance 60 or 72 months, should I do that in order to decrease my payments?

I want to thank you all in advance for all the help and insight that I know you will give to me.

EDIT: Thank you guys for the information. I didn’t really get the answers I was looking for, but I’ve got some more insight on other options should I decide not to buy a newer used car.

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    Is it possible? Yes, of course. Is it reasonable? No. There are few questions here with great answers why such move is bad idea. Quick math: for 18 months you will be doing minimum wage. No interest, no costs would mean that car taken for 48 monhs would cost you $400 a month. Plus that $230 insurance. Now you need to put gas in in. Change tires Oil change. Maintenance. With around 270 bucks left in your pocket. Car is not an investmenet. Car is cost generating item. The lower the costs the better for you. A 3k car might not be as cool as HRV but it will save you a lot of money in the long run – SZCZERZO KŁY Jul 31 at 7:27
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    $15K is a LOT to spend on a first car in a situation like this. Look for something much smaller / cheaper. – Vicky Jul 31 at 8:29
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    Your post says that you can now afford a $1,000 car. And you have four to five months to save. Can you save 500/month? 4K buys a decent car. – Pete B. Jul 31 at 9:59
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    There is no reason you can't buy a car today. $15K is way too much to be spending. FWIW, the most I've ever paid for a car was $8500 (and that was a hybrid that more than paid for itself in gas savings). The two I drive now each cost under $3K. – jamesqf Aug 1 at 0:02
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Fattie is correct. It is always best to avoid financing a vehicle. Cars are not an investment and nearly always depreciate very quickly. The exceptions are older, well-maintained vehicles and some collectibles. Our family has 3 cars which now have more than 200K miles each. Our cars are not fancy, but we take good care of them and they work just fine. We owe much less on our house and have much more in savings because of our car buying decisions.

There are additional costs incurred when financing a vehicle, which means that individuals who finance pay more for cars than they are actually worth. And those additional costs do not improve the vehicle or increase the resale value. You will be much better off if you never get on the auto loan carousel. Instead, make car payments to yourself until you can afford to buy the car you want - or better yet - the car you need. After your first purchase, continue making car payments to yourself so you can purchase another car down the road.

If you decide to finance anyway, these are some important points to keep in mind.

  1. Never finance a new car - financing a new car is a very bad idea in general, and even worse for a young driver.
  2. Put money down - if you finance a vehicle and do not make a down payment, you will almost definitely be 'upside-down' on the loan, i.e. you will owe more than the car is worth.
  3. Talk to your bank or credit union about financing BEFORE you shop for a car. See what kind of loan terms you qualify for and determine what it will really cost.
  4. Choose a term of 3 years or less - if you can't make the payments on a 3 year car loan, change your expectations. You may keep a car for many years, but it is not wise to be locked in a long-term relationship with a vehicle.
  5. Do the math - do NOT just consider the monthly payment. Make sure you understand how much you will pay in interest and fees. You can do the interest and payment calcs using Excel or an online loan calculator.
  6. Consider the insurance costs - if you finance a car, the lender will require you to carry insurance to protect the asset associated with their loan and will probably require you to have a low deductible. If you did not make a down payment, you may be required to have GAP insurance as well. Insurance costs for young drivers are high. Talk to your insurance agent so you know how much your insurance will be.
  7. Know the value - before you drive a car, use sources like KBB, NADA, etc. so you know the actual value of the car. Read about the different types of title and the impact on value. Financing a salvaged vehicle is not a good bet.
  8. Government fees - You will have to pay taxes, title and license fees over and above the base price of the vehicle. You should be able to look these up for your state and locale pretty easily.
  9. Dealer fees - If you buy from a dealer, they will charge other fees. Those should be minimal, but some dealers add lots of bogus fees, so watch out for those. Make sure you know what the 'out-the-door' price is.
  10. Only look at cars in your price range - if you follow the previous steps, you should be able to determine your max base price. Don't let a dealer show you cars out of your price range. They will tell you they can get your payment down to what you can afford, but this is done by extending the term of the loan.
  11. Get a mechanic's opinion - Have a qualified mechanic that you trust take a hard look at the vehicle to make sure it is mechanically sound.
  12. Beware dealer financing - Dealers make a LOT of money on financing and often have fees and terms that are unfavorable to the buyer. Get all of the terms of any dealer financing options in writing. Compare their terms with the terms from your bank or credit union and determine the best option for you before you sign anything.
  13. Don't get emotional - the last thing you need is an emotional attachment to a car. Be objective and sensible. You're buying a hunk of metal. You'll make better financial decisions about it if you rely on logic and reason.
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  • What a fantastic list. +100 – Fattie Jul 31 at 21:05
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You can buy a fantastic car for $1500 - $2000 cash.

One of the most critical points is,

  • With insurance, you will only be paying third-party insurance (the legal minimum in your area). This will absolutely slash your monthly costs.

The other benefits are too many to mention. Repair, tire, etc costs are incredibly lower. Regarding the price, it actually won't cost you anything, when you sell it in a year or two you can craigslist it for the same 1500 bucks.

Yet another HUGE benefit is that if you happen to ding it - tap a mailbox, gutter the wheels, tap a lamppost - it means nothing. You just smile and carry on and think how clever you were not to be driving a hyper-expensive car.

Yet another benefit is you can go do this today, none of this waiting until December business.

(There's no realistic way in OP's situation to spend more than say $3000 on a car. But there's no need to spend more than $1500.)

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  • I'm not sure how to edit this in. I agree with the post. One caveat to a $2000 car is that you need to have it inspected by a mechanic you hire, and have at least a few hundred dollars readily available to fix things. Even a great older car is still an older car. The cost of repairs to a $2000 car will still be cheaper and easier to manage than a loan on a $15000 car, but having some liquidity is vital. – Freiheit Jul 31 at 12:21
  • An excellent point. All the more reason to buy a 1500- car than a 2000- car. (BTW you would indeed normally add such excellent comments, as a comment, rather than an edit.) – Fattie Jul 31 at 12:35
  • I drive a 13 year old car, 175K miles. My wife's new car costs $2000 more per year in insurance. I'm ok to keep paying for repairs to my old car. OP should start by pricing the insurance on his intended car, VS your suggested older one. – JTP - Apologise to Monica Jul 31 at 14:05
  • indeed, the critical thing "teenagers these days" forget is that you only need the minimum third party on a cash-bought car. the insurance-government complex forces you in to expensive insurance, when you play their game of buying a car with a loan on it. – Fattie Jul 31 at 14:09
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    I basically agree, though I'd say $1500-2K is more "servicable" or basic transportation. "fantastic" probably would be about twice that, though it might depend on your location. (I'm in the western US.) – jamesqf Aug 1 at 0:07

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