Yahoo Autos Learn How Car Loans for Teens Work
For many teenagers, getting a driver's license is a rite of passage. And as a parent, life can be much easier when your kids can drive themselves to school, work, or sports practice.
If you're a young adult whose thinking about buying a car, or a parent whose investing in a car for your child, it's important to understand how auto loans for teens work.
Car loans for teens and young adults are tricky and work differently than car loans for adults. We'll explain some of the most important aspects of auto loans for young car buyers, including how much you can expect to spend.
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The Costs of a Car Loan for Teens
The biggest consideration when getting an auto loan for a teen is the cost. You might need to borrow a substantial amount of money to cover the total cost of the car, and you'll still need money in your budget to cover additional costs beyond your loan payment.
Car Insurance
The monthly car insurance payment on a car driven by a young and inexperienced driver is typically high because they're much more likely to get into an accident. The cost of insurance for young drivers runs about $2,000 a year, but the true cost depends on personal factors, like age, driving record, location, and the insurance company.
Gas
Gas prices are in constant flux and vary widely based on where you live. On average, however, you'll need about $1,600 to cover the cost of gas for a year, based on typical driving habits. Before you buy a car, you should more closely estimate how much you'll drive to determine how much you should allocate in your budget for gas.
Maintenance
Proper maintenance is essential for keeping a car in good shape, and it averages about $1,400 per year. This figure includes regular oil changes, tire rotations, air filter replacements, and more.
License and Registration Fees
When you buy a car fees include the costs of getting a license, registering the vehicle, and paying taxes on it. These costs typically run just under $900 per year.
