A crash course in cars: here's everything you need to know when buying your first set of wheels

Careers and Colleges, March-April, 2004 by Douglas Love

"as a teenager, your car is your life," says 18-year-old Rebecca Reeder. A recent graduate of Central High School in Phoenix, Arizona, Reeder depends on her car for everything--from getting to her job at Starbucks to weekend trips to Mexico to shopping with her friends. "I couldn't live without my car," she says.

Reeder owns a '92 Isuzu Rodeo SUV (sports utility vehicle) that she has decorated with her signature strawberry air freshener, a mini mirrored disco ball dangling from the rearview mirror, and her motto on a sticker in the back window: "Boys Lie." "I bought the SUV because I knew it would meet my lifestyle needs," Reeder says. "I wanted a car to carry my friends, go on trips, and drive a lot."

FIGURE OUT WHAT YOU NEED

The first step in buying your first car is to find a vehicle that meets your needs and that you simply love. Seventeen-year-old J.P. Morgan of Hampton Bays, New York, decided he wanted a car with four doors because he's tall, and a four-door usually provides a roomy interior. Plus, he wanted a large trunk because he knew he'd be carting a lot of stuff away to college in the fall. (Note: If you're going away to school, be sure to check the college's policy on cars on campus.)

He also needed a car that was reliable enough to carry him through the next few years, and not leave him stranded on the highway waiting for a tow.

THE BIG SEARCH

Morgan admits that he probably went overboard in his search for a used car. He spent 11 months flipping through classified ads and looking at dozens of cars--some of them more than an hour away from his home.

But Morgan's search paid off. He found the car of his dreams: a maroon, 1992 Nissan Maxima Limited Edition with 55,000 miles on the odometer. The price? $8,500.

"Some of my friends told me I was stupid for spending so much on a car," Morgan says. "But they all bought junkers that ate constantly breaking down."

Like Morgan, Reeder devoted months to her search. "I would go to car lots with my parents after hours, and we would study the different choices," she says. "That way, there was no pressure from a salesman." Reeder also found lots of information on Web sites that let her compare features such as average maintenance costs per year, typical mileage, and accessories. You can also look through newspaper classified ads and visit new car dealerships. Reeder's intensive search helped her narrow down her choices to either a Honda Accord or the Rodeo.

DON'T BREAK YOUR BUDGET

Once you figure out what cars you like and what's available, you have to make sure you can afford your choice. New cars are, of course, the most reliable of all, but few high school students can afford to purchase, of insure, a new car. Leasing has made factory-fresh cars more affordable to potential buyers but they also usually cost more to insure. So for many high school students a used car (now often called "pre-owned") is the best option.

* The Cost of the Car. Reeder paid about $7,000 for her SUV and financed it through the car dealership. She has to make monthly payments of about $212 each month until it's paid off. "I'm paying a lot in interest, but this is the only way I could afford a car," Reeder says.

What Reeder didn't think about was the other costs involved with owning a car--insurance, maintenance, and repairs. Plus, she had to pay sales tax and title and registration fees.

"One year, you're in high school asking your parents to drive you everywhere, and they take care of all the expenses," she explains. "But once you have your car, you see how expensive it can really be. I think a lot of kids just want the car now, and they don't think ahead about a lot of costs."

* Insurance. You must have insurance to drive a car. If you have an accident, your insurance policy will give you money to help pay for the damages. But insurance can be expensive, especially for young people, who are considered a "higher risk" and more likely to get into accidents. Also, the newer your car, the higher your insurance payments are likely to be.

J.P. Morgan is currently looking for a job to help pay for his car insurance. Even though he is insured on his parents' policy, he is still shelling out $430 every three months. "It's tough," admits Morgan. "I'm draining my bank account."

And watch out if you break any driving laws--your insurance rates can skyrocket. Melinda Topping, an insurance agent in Riverhead, New York, says she had a 20-year-old client with one speeding ticket on his record who had to pay $400 a month in insurance premiums on his Volkswagen Jetta.

* Repairs and Maintenance. Once you calculate the cost of the car and insurance, you have to think further ahead. Your car will require repairs and maintenance down the road.

"I've put about 15,000 miles on my car in a short amount of time," says Reeder. "I've already paid for a couple oil changes, new tires, and new brakes." Fortunately, Reeder paid for a $600 warranty that reduced costs for many repairs during the first year. Replacing tires, for example, cost her $100 instead of about $400. "The warranty seemed expensive at the time, but it really saved me money later on," she says.