New Car, First Car

If you’ve decided that your first car will be a brand new car, there are things you need to know about the buying and financing process that makes it different from buying a used car.

New cars – only from dealers
All new cars must  be purchased from state-licensed and manufacturer-authorized new-car dealers. It’s the law. It’s the only way you can buy a new car.

If a car has never been titled or registered, it’s considered to be a new car. Even if you initiate your purchase through an Internet car buying service, or through a buying service at warehouse stores such as Sam’s Club, the car actually comes from a local new-car dealer.

How do I buy a car from an individual private seller — not a dealer?

When you buy a car from an individual, you pay with cash, a money order, or a bank cashiers check. The money can come from savings, a checking account, a family loan, or a loan from a bank or financial company. Most sellers do not like personal checks.

Buyers sometimes expect a private seller to “take payments” but any smart seller will not agree to such a plan. It is too risky. As a buyer, it’s better to get your own loan.

Your First Car – Making Your Decision

Most of us get our first car as teenagers. It’s the car we’ll always remember.

Let’s take a look at some of the important questions you’ll want to consider when deciding about what you’ll buy as your first car, how you’ll pay for it, and how to go about the purchase.

How much can you spend?

If cost is not important and you can choose practically any car you want, we’ll get to you later. However, most teens have restrictions on how much they can spend. It might be that parents are buying and have set a price limit, or that you have your own budget and limited income.

Owning and Driving a Car is a Legal Thing
 

Licensing

In the U.S., drivers must be licensed to legally operate motor vehicles. Each state has its own licensing laws that set requirements, terms, and procedures. Minimum age is typically 16 years old, but can vary by state. Most states have special learner driving permits that serve as temporary licenses. Young drivers have have restrictions that restrict time of day for driving, who must be in the car with the driver, how many passengers can be in the car, and certain other conditions. Failure to follow the laws can result in license suspension.

The state agency that provides driver’s licenses is the Department of Motor Vehicles (DMV). In some states, the agency may have a different name, such as Department of Driver Services (DDS). Licensing laws and procedures for each state can be found at DMV.org.

In order to obtain a driver’s license, certain tests must be passed — a vision test, a written test, and a driving test. Some states provide sample test questions either in a license test study manual or on the state’s DMV web site.

License holders are provided with a photo ID card that serves as legal proof of being licensed. The license must be in the driver’s possession when driving.

Driving Responsibly

Your car exposes you to laws that you wouldn’t otherwise be concerned with.  At the low end are parking laws and speed limits. Some laws determine who is at fault in accidents. and how you should conduct yourself on the road. Other laws are more serious, such as those dealing with DUI and vehiclular homicide. Breaking driving laws can result in not only criminal charges but also personal liability charges.

Driving Laws

All states have rules of the road, the laws that determine what you can and cannot do while driving. Speed limits can vary, turn-right-on-red laws can be different. Since each state sets its own laws, the laws can differ considerably between states. If you move from one state to another, or travel to another state, you should become familiar with the new state’s laws.

Insurance

Most states have laws requiring automobile insurance. A minimum level of liability insuance is usually required, although comprehensive and collision coverage is not. Other states have financial responsibility laws that may not require insurance but you must prove you have the ability to pay in at-fault accidents.

Vehicle Registration and Tags

Motor vehicles must be registered to establish legal ownership and responsibility. Registration is typically handled at the state or county level. Metal tags are issued to be displayed on the vehicle. Registrations must be renewed each year. Fees and taxes are collected at the time of renewal. States have varying laws regarding how tags may be transfered between vehicles. Sales tax is usually paid at the time of vehicle registration.

Emissions Standards and Laws

State and Federal laws require that automobiles meet certain standards. California is particularly strict. All new cars must be built to meet Federal and state requirements. Many states and counties have annual inspection procedures to test emmissions and safety compliance.

Sales Tax

In most states, sales tax must be paid for new and used vehicle purchases. Vehicles moved from another state may also be taxed. Tax laws vary considerably between different states, especially regarding credits and refunds for taxes paid in another state. Some states also allow for sales tax credit on trade-ins at dealers. 

Property Tax

Many states and counties impose an annual property tax on motor vehicles. The tax is generally based on the value and age of the vehicle. The owner of the vehicle is responsible for the tax. For leased vehicles, the tax is paid by the lessee (the party who is leasing and driving the vehicle).

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