As a young adult one of the most exciting times is that when you seriously can begin looking at getting your first car... or becoming a first time car buyer. As a parent this is time to have some genuinely honest conversations about the car buying experience and beyond.
I have gone through the same with a couple of my kids now and having been in the car business for a number of years, I can assure you that there are some very real reality checks that need to happen as you discuss this subject with your child.
Clearly, the most obvious is to engage in the discussion of just how they are going to pay for their first car. Now... needless to say that if you as a parent are of the financial means that you are going to take care of the financial responsibilities of car ownership for them, then obviously you need read no further. If however, you insist on the major portion of the participation be owned by your son or daughter, you will definitely want to consider the following points.
One detail that you want to make sure that you bring home to the thought process of car buying for your son or daughter is that as long as they own the car; they are going to be paying for the car... even if they pay cash. Cars are an expense... they are a monthly hit to everyone's budget... so they'll never really stop paying for the car... and boy don't we know this!
As parents, we know that a vehicle can at times be very hard on even an adult sized budget. So, you really want to be very certain your child understands those additional money grabbers such as maintenance, gas, tires, batteries, and of course that little monthly expense know as insurance.
For now though let's focus on the price of the car and what to do about that so your son or daughter doesn't make a bad financial decision their very first time out. To keep it simple and to make sure your child starts out in a good financial position in the car, the best rule of thumb is that they put at least 20% down... and ... they do not finance the car for any longer than 48 months.
The vital aspect of the no more than 48 months and at least 20% down will help ensure that your son or daughter isn't financially upside down in their car (they own more than it's worth) for the life of their loan. No complaining or crying... make sure they do this.
A vehicle is not an investment... it is a depreciating asset. So, your young person needs to be sure that they fully understand the magnitude of this monthly expense. And that continually paying for a car that isn't even worth market wise what you owe, is a very bad strategy. I've seen time and time again people that disregard these simple rules find themselves in an uncomfortable financial position when it comes time to trade. So stand your ground on this with your kids.
Throughout the article we've talked about a first time car buyer planning on buying their first car under the assumption that this would be a used car, since the vast majority of them are. However, if you and your first time buyer are headed down the new car path, there are a whole another set of rules and procedures you must follow in order to avoid overpaying thousands for a new car.
If it is indeed a new car purchase, you're still in the right place. That is if you visit my website. Once there you'll find all the tips, tools, and personal advice that'll you'll need to ensure that your car purchase is a good one for you.
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For more valuable information on car buying, be sure to visit www.acarbuyersguide.com where you'll find information on topics such as getting the best car deals, best time to buy, & more.
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