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Study up for your 1st car

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Mom's scrapbook includes (or will include) a photo of you with your first car, for good reason. It is a badge of your independence, financially and figuratively. Acquiring your first wheels, though, is a road pocked with potholes. So, before you allow shiny new cars to blur your judgment, cruise the Internet and scour the media to narrow down your choices and determine what your budget allows, then bone up on what to watch out for when you go out to dealerships.

The bible of the industry is Kelley Blue Book (kbb.com), which lists prices. Search dealer inventories on nadaguides.com. Consumer Reports magazine (consumerreports.org) compares cars' performance. For advice that targets the under-25 set, go to edmunds.com/youngdriver.

When you head out to see cars, attorney Lance Raphael suggests, you should bring a checklist. He compiled it after helping clients resolve their bad car deals.

The checklist suggests you ask, for example, if the car is new or used. (Sounds easy, but a "new" car may have been used as a loaner or demo or be a return.) Was the car damaged in transit? Has it been in an accident or flood?

Raphael warns to beware of the seller who asks you to sign anything that waives your rights or gives him power of attorney.

Know the term "spot delivery." A dealer sells a car "on the spot," then yanks the buyer back for additional funds. You don't want to be a victim or buy a car returned by an angry victim.

Also, adds Raphael, beware of the seller who wants you to sign a binding-arbitration clause. "You may be giving up your right to sue if the dealer lies to you," he explains.

For a used car, enter the car's vehicle identification number on carfax.com for a vehicle history report. If it is still under warranty, ask the seller for the car's service record. Have your own mechanic check out the car. If he says the car needs new tires, for example, that's OK if you can afford them and the car's price reflects that.

Unless you are paying cash for the car, research your financing options as well as you research the car. You don't have to finance your car with the dealer. Shop banks and credit unions. The better your credit, the better your loan.

"If you are financing the car, the dealer may not let you sign the title yet because he's guessing your financing won't go through," said Raphael. "He doesn't want your name added to the title if you own it briefly. But the law requires you to sign it."

Before you sign a contract with a seller, make sure every blank is filled in, said Raphael. "If a dealer leaves the financing part blank, for example, he may intend to 'shop' your financing with different lenders." he said.

Don't sign the contract until you read the title, which will tell you, for example, if the car happened to be in New Orleans during Katrina or was formerly owned by Avis Car Rental.

You can't drive your new car without insurance, so plan ahead for this expense too, advises Dave Snyder, vice president of the American Insurance Association.

Some cars, such as high-performance models, trigger higher insurance rates. If you have a history of accidents or violations, your rate will be higher. Ditto for your ZIP code if it is urban, not rural. Top grades in school, however, can give you a discount on car insurance.

"Virtually all states require you to carry a certain amount of insurance coverage for your car," reports Snyder. Beyond that, decide how much coverage you want to buy and how high a deductible you want.

"Don't get a $1,000 deductible if you can't handle a $1,000 bill if you have an accident," said Snyder.

If you live with your parents, you might save money by sidestepping your ego and putting the car's title in your parents' name to ride the coattails of their insurance policy.

Buying your first car is no quick errand. Do your homework before you leave the house, say the experts.

After deciding on a Jeep, school teacher Christine Giles researched buyer reviews online, then shopped dealerships. She wanted a new car, she said, so she could have a warranty.

Giles, 22, of Hampton, Va., put $4,000 down and secured a loan for $21,000. To save the money, she said, she avoided using her credit card.

"It's so easy to just swipe it and get in debt," she said. "So I write checks. Then I don't spend more than I have."

Finally, car shop in the morning so you have time to secure financing and insurance before you drive home the car. And mom has time to charge up the camera.

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When Sara Boehm, 21, of St. Charles, Ill., shopped for a used car in 2008, she found the equivalent to the legendary car "only used by a little old lady to drive to church on Sundays." Her 1993 Chevrolet Lumina was purportedly driven only to the grocery by an older gentleman, so it had just 38,000 miles. She struck the deal for $3,000, which she had saved from an insurance claim. After combing ads online, Boehm shopped dealers until she found her "Louie" at a dealership.

"It doesn't have air conditioning, which is no fun this summer, but it gets good mileage," said Boehm. A college senior, Boehm looks forward to the day she can replace Louie with the car of her dreams — "a silver VW Beetle with air conditioning."

"If I had all the money in the world, I'd get an Aston Martin Vanquish like James Bond has," said Jim Schreiber, 24, of Lisle, Ill. Meantime, his first car had to cost a bit less and have enough room to lug supplies for his new tea distributorship.

After researching online and driving friends' cars, Schreiber chose a 2010 black Ford Fusion. He paid $7,000 down and financed the rest through a bank loan. His savings strategy was to set aside a monthly amount that totaled what he would pay for his car payment, insurance and maintenance, until he had enough for a down payment. "Then, once I got the car, it wasn't such a huge shock to have that money taken away each month."

Rebecca Fleischmann, of Coral Springs, Fla., praises her parents for raising her to be a saver, not a spender. So in July, at age 19, she bought her first car from CarMax.

The red 2004 Toyota Matrix (nicknamed Ruby) has been around the block a few times, but Fleischmann learned from her online research that Toyotas have a reputation for surviving well into six-digit odometer readings.

Fleischmann paid $2,500 down from the car account she had funded with part-time jobs since she was 15. She financed the remaining $10,000. "The payment plan is for six years, but I plan to pay it off early," said the nursing student.

Fleischmann's advice to other young buyers: "Driving your first car means you are not only responsible for yourself but for other people on the road too. So take your time. And breathe."

Copyright © 2014, The Baltimore Sun
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