My first car notes and insurance?

[skytrain18]

i'm 16 and plan on getting A JOB BY MAY 2008. I wanna buy a USED CAR at least a 1997 model -2000 model. Do you think I can afford the car note? Could i possibly get on my mom's insurance plan to make it cheaper for my car to be insured or am I just putting myself up for a future of bad credit???

[izzie]

As a minor you cannot enter into a legal contract until you are eighteen, once you are eighteen if you can get a parent to cosign that would be better...it is unlikely a bank or other financial institution would give you a loan.  As for the car insurance....get onto your mom's policy, it would absolutely be cheaper.

[josyman902974]

OK, the note is going to depend on how much you can put down, and what the car is worth.  Budget DOUBLE the note, for the insurance.  



Can you afford $1,000 a month?  If not, you probably can't afford this.   Save your money, buy a $2,000 car for cash, and carry only liability coverage on it, it will save you THOUSANDS in insurance.

[Elwin4]

You will probably need your parents to co-sign on the car note.



As far as credit goes -- your credit is in your hands.  If you pay all your bills on time - you will have good credit. If you do not pay your bills or pay them late - you will have bad credit.



There are a lot of payment calculators that you can use on line to help estimate what the car note would be.



A good website to check the car's value is www.nadaguides.com.   This is from the National Automobile Dealer Assoc.  This is the guide the insurance company will use to value your car if you total loss it. And most banks use this one as well.   If you get a "high retail" value - ignore it - most companies only consider "average retail".  



Also remember - you will have to pay for insurance, gas and maintenance for the car. Since you are going to have to buy an older car - there will be some costs here (timing belt, tires etc).



Sit down and have a conversation with your parents. They will be able to tell you what they have paid for maintenance for their cars and gas in their area. You can talk to their agent and get an idea of what insurance would cost.



Then you can go into the car search with an idea of the financial responsibility associated with the car.



I'd suggest you get the job first. You should probably work a bit first and save up a few thousand. That way, you have the money to pay the insurance, taxes on the car when you buy it (you can't finance those) and have a reserve fund for maintenance. If you can save up enough for a down payment - even better. The less you have to borrow- the lower your payment.



The last car I financed - I borrowed 6,000 at 6% over 4 years and my payment was between 200-250  (sorry but I don't remember the exact amount) per month.



Hopefully your parents have good financial habits and good credit scores and can teach you about how to be responsible with money and credit. If they don't have good habits - that does not mean you are doomed to repeat their mistakes. If that's the case, seek the advice of people with good financial habits. You may also want to catch a few episodes of the Suze Orman show on CNBC, Big Spender on A&E (with Larry Wingett).  Both of these give good credit information in an easy to understand format.



Good Luck.