How to Buy Your First Car As a Teenager

how to buy your first car as a teenager

Getting your first car is basically a rite of passage into adulthood — you finally get the freedom to go anywhere you want without asking for permission.

Of course, for many teens, it can be difficult to know where to begin. 

You may ask things like: “How will I get the money to buy the car?” “Which car should I buy?”

It can all seem a little overwhelming. 

Don’t worry, though, we’re here to help. In this article, we’ll give you a simple, step-by-step guide for how to buy your first car as a teenager.

And, as with all major purchases, it all begins with setting a budget. 


Step 1: Setting a Budget

Having a set budget will narrow your options and ensure that you don’t go beyond what you (or your parents) are willing to spend. You may have been saving up for a specific car or are looking to get a good deal in the market.

Remember that the car isn’t the only cost you’ll have to prepare. There are many fees associated with car ownership. Here are some things you need to consider:

  1. Car registration
  2. Inspection
  3. License plate acquisition
  4. Insurance
  5. Maintenance costs
  6. Gas
  7. Parking costs

If you’re planning to take a loan with the car, then take some time to set a budget that will accommodate the monthly payments for the vehicle plus extra. If you’re co-signing with a parent or guardian, you still need to do this, as you won’t want to put unnecessary strain on their finances.

When taking a loan, one of the things you can do is get a pre-approval first. The pre-approval allows you to approximate what a lender is willing to let you borrow. 

It helps you set a budget for your purchase, and you can also forecast how much you’ll pay in a month in interest based on the lender’s plan.


Step 2: Research Your Ideal Vehicle

“The cars we drive say a lot about us” - Alexander Paul

The car you’ll buy will depend on your needs and lifestyle. For example, you don’t want to buy a smaller car if you need storage for moving around large items like sports equipment.

 Here are some considerations to make as you’re looking for a vehicle:

  • What features do you need?
  • Will you have other passengers regularly?
  • Do you bring lots of items with you?
  • Are family members going to borrow the car?
  • Do you travel regularly?
  • Do you plan to use the car daily for school or work?

Answering these questions will help you see what type of car you need. You may only need a sedan, or maybe an SUV will fit your lifestyle better. 

The goal here is to minimize the cost. Knowing what to look for will help you research prices in advance. You can then compare it with your budget to see if it’s affordable.

Once you find a car you like, that’s not the final step. You want to avoid buyer’s remorse since you’ll be committed to your vehicle long-term. 

Here are some ways you can test out the car before making a purchase.

  • Go for a Test Drive: Most auto dealers are willing to let you test drive the car before you commit. It’s an opportunity to get a feel for the vehicle if it fits you.
  • Ridesharing: If you haven’t decided on a specific vehicle yet, ridesharing can help you get an experience of being in different cars. You can go for sedans or larger vehicles too.
  • Borrowing: If you have relatives or friends with the vehicle, testing the car or riding in it will help you finalize your decision. You can also ask them if there are specific nuances to consider with the vehicle.
  • Leasing: The most expensive option. Doing this will mean that you rent the car for an extended period. It could be around a week or even a month. You’ll have to commit the funds, but it will be easy to get one if you know what car you want to test.


Test Driving

Just because you like a car doesn’t mean that it will feel the same way while driving it. Not everything that looks good on paper will end up the way you expect. 

There are some nuances with performance, and test driving will help you finalize your decision.

If you want to test out a car that you’re planning to buy, have a feel for the vehicle. If anything feels off or weird, that should be a sign to dig deeper. 

You’ll want to be aware of these feelings, especially if you’re buying a used vehicle. Other things you should notice if you’re buying a second-hand car are:

  • Mileage: Higher mileage cars are typically hard to maintain.
  • Maintenance: The car should have had a recent tuning.
  • Issues: Are there any persisting problems with the car that you should be aware of?


Step 3: Buying the Car

After targeting a model, or several ones, you can begin searching dealerships around you, and ask yourself whether you prefer to buy new cars or used ones. 

Some people prefer brand new, while others like second-hand ones because of the lower price. You may even find something in the middle, like a car that the owner barely used. 

If you can only afford a second-hand car right now, you’re not alone. The prices of brand new cars have risen more than 20% from 2020 to 2021.

Many teens opt for a used car because of the lower price and so they don’t risk crashing a new car. Most new vehicles demand high price tags that may be out of your budget.


Choosing a Dealership

Dealers will be one of your top options for buying a vehicle because of the options and opportunities. It can get overwhelming since there are many of them. 

You may have to spend time going through different ones until you get the vehicle and deal you want.

You’ll want to take the extra time, especially if you’re buying a second-hand car. You don’t want to commit to a vehicle with hidden damage. The good thing about most dealerships is that they handle the registration and offer a warranty. 

You’ll want that included in the package.

Don’t forget to ask about any fees they may have. Most dealers add a fee that you’ll need to pay on top of the car’s price, especially if they’re a buy-here pay-here dealership that ignores credit scores. 

It may increase the loan you need or the cost you need to pay upfront.

Another option is to look for online dealerships or businesses that aggregate them. They can potentially offer lower prices because they have lower overhead. 

However, there is still some risk involved. Check their reviews and make sure they are a registered business in your area.



One of the biggest concerns when buying a used vehicle is that it may come with issues from its previous owner. You don’t have to worry about that with a new car as they are unused with new parts. 

For example, a used car that has been in an accident or flood can have damages that hide beneath the surface. Just because there isn’t an issue with it doesn’t mean that something won’t spring up after the sale.

As you go through dealerships, you want to be wary of the signs that may indicate that it’s a damaged car. Remember the old saying: “If it sounds too good to be true, it probably is.”

Some dealers may even tamper with the odometer or use low-quality materials to restore a junkyard car. Here are some things to look out for:

  • Check with local agencies if the business is legitimate. If they’re selling unusually cheap cars, there might be a catch.
  • Check the average prices of the cars of that make and model. The dealers should sell you somewhere near that price — not too high, not too low. 
  • Check the vehicle history to see if it’s safe to drive. Some older models have been recalled due to safety issues. 
  • Bring a mechanic with you during the purchase so they can assess the vehicle. The seller should have no problem with this if they’re confident the car is in good condition.
  • Verify the car’s VIN (Vehicle Identification Number). You can search online to check their history to see if they’ve been in an accident or theft.
  • If you’re buying from an individual seller, meet up somewhere public. If you can, avoid bringing large amounts of money with you during these transactions.


Negotiating the Price

Most sellers price their vehicles that way because they understand that buyers will try to negotiate. More often than not, they have enough of a margin that they’re willing to work with you to find a better deal. 

If you plan to negotiate, it’s ideal to have a parent or another adult. You'll have someone who can help you with getting the best price.

Before you go to the dealership, do your research first. Know about that specific car and the prices they go for.

You can include these prices in the conversation, which can help drive the price down.

From there, you’ll have to be firm on your price limits. If it is too high, walk away and find a better deal in another dealership. 

Remember that you’re still dealing with salespeople who want to maximize profits. For example, they may offer you an extension of warranties or other features that will add to the price.

Unless they’re necessary, they’re likely unneeded. If you want one, you may be able to negotiate it for free or lower the price.


Step 4: Finalizing the Deal

Once you’ve agreed to a price, all you need to do is fill out the paperwork. Remember to read through the documents first. 

There might be some conditions in the fine print that could come back to bite you at some point. For example, they might place conditions there that free them from liability if something goes wrong with the car after the purchase.

After reviewing the document, let the adult or parent verify. That way, you have a second opinion and check different angles of the contract.

If you’re buying from an individual seller, you’ll also have to consider the cost of ownership transfer. It can get complicated, especially if the car is from another state. 

Before agreeing on these types of deals, check the price and process of the transfer first. That way, there is no headache after the sale.

The car should include all documents necessary for you to register it under your name. Papers like emission tests and stickers should all be part of the purchase.


Step 5: Enjoy Your Vehicle

Once you have papers and pay, the car is officially yours! Enjoy your newfound freedom. 

Just be sure to stay safe along the way, both for your own sake and for the sake of your insurance payments. 



If you diligently followed these steps, you will have fewer problems when purchasing your first car.

If you’re planning on lending for your first vehicle, be sure to check out our “Four Wheels to Freedom” youth savings initiative as part of this year’s Financial Literacy Month.

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