Buying A Car: The Numbers

Posted by at 7 June 2017, at 10 : 42 AM

Buying A Car: The Numbers

Buying a car is a rite of passage. However, the reality is that fewer young people are driving today. Research conducted at the University of Michigan Transportation Research Institute found that in 2014, just 24.5% of 16-year-olds had a license. This is a 47% decline compared to 1983 when 46.2% did. It is a similar situation with 19-year-olds, 69% of whom had a license in 2014 compared to 87.3% in 1983. A lot has changed since the early eighties. One major difference between now and then is that a lot of young people are now using the internet to run their social lives. With 88% of Americans now using the internet, 77% owning their own smartphone and 69% using social media, the need to actually go out and spend time with one’s friends has become less pressing. Since it is so easy to chat with people wherever you are and wherever they are, you no longer need to get in your car and go to where they are. The research confirms this interpretation too: the percentage of young drivers is inversely proportional to the percentage of internet users. Another possible explanation for the decline in young drivers is that a generational shift has taken place. Young people just do not view cars in the same way that their parents did. They prefer alternatives like public transport. This is confirmed by the fact that cities that show the sharpest declines in young people driving do not have greater unemployment compared to cities that have not seen such a great decline. However, one of the other important factors that may have contributed to young people not wanting to drive is just how expensive it is.

The economic crisis that started in 2008 with the collapse of Lehman Brothers hit a lot of people hard. The United States is still trying to recover. An encouraging sign occurred this week when unemployment fell as low as 4.3%, its lowest level in 16 years. However, a lot of Millennials struggled to find jobs during the last decade, and the reality is that running a car is an expensive thing to choose to do. In 2013 for instance, the cost of running a car in the US rose relative to all metrics. Research conducted by the AAA and published in the ‘Your Driving Costs’ of that year show that the costs of maintaining a car rose by a startling 11.26%. This was accompanied by a nearly 2% increase in fuel costs, a 2.76% increase in the cost of insurance, and the cost of depreciation rose 0.78%. These may not seem too expensive, but the reality is that every cost adds up and finding money that you did not need to find last year just to have the same privilege, driving a car, is difficult for a lot of people. However, these costs are worse for young people. The cost of a driving license is pretty modest, but taking lessons can cost up to $1000. There is then the issue of actually buying a car which costs just as much as you want to spend. Insurance is more expensive for new drivers too. The rationale is that they are more inexperienced and will, therefore, have more accidents. To cover the cost of the increased risk of having to pay out, insurance companies will charge more. It is no wonder, therefore, that a lot of young people are not that bothered about getting behind the wheel.

However, if you are one of the few that still want to learn to drive, you will need to think carefully about the costs involved. The expenses described above will still be in force. If you do not have all the money right now, there is always the option of getting a job and working until you’ve saved up for a car and the insurance. However, if you want to get one sooner, or you need one for a job, there is always the option of borrowing money. You will need to approach a bank or other lender. To be approved, you will need to not only describe your intentions in detail (including what car you’d like to buy and how much it costs) you will need a good enough credit rating as well. If you have had debts in the past that you did not manage to pay off that quickly, your credit rating might not be as good as it could be. You are, therefore, not likely to be offered a loan from a bank. In that case, there are other options open to you. In order to get a loan without good credit, you may want to check out companies which offer short-term loans of up to $1000. However, you should be careful. Short-term loans often have rather steep interest rates and unless you are perfectly confident that you will be able to pay it off quickly and without any delays, you should look to other sources of revenue. Finding yourself in more debt is not going to further your ambition of getting a car, or a house for that matter, when the time comes. Carefully assessing the viability of a loan is crucial. If it is too much right now, you should wait. It is, by far, the more sensible option.

Once you have bought a car, you still have to worry about lots of other things too. Modifying your car may be something that you are interested in doing. It can be expensive, but if you want to tell everyone how slick your car is, there is nothing better. Whether you want to install a turbo kit in your engine, or concentrate more on the aesthetic elements, the reality is that it can be a lot of work. You also have to be cognizant of how these modifications will affect the viability of your car to drive on the roads. If you tint your windows too much, for instance, you could attract a lot of unwanted police attention. In California, there are strict rules about what you can do: the top four inches of your windshield cannot be tinted at all, while your driver side and passenger front windows must let in at least 70% of the available light. The windows at the back of your vehicle can be tinted as much as you’d like by law, but if you do it too much, it may make your car more difficult to drive. In any case, none of the windows can be more reflective than regular windows. This is stipulated because you do not want to impair the visibility of other drivers who may get light in their eyes, or prevent the police from seeing into your vehicle.

Buying A Car: The Numbers

While you may think that these sorts of changes improve the appearance of your car, they will not improve the state of your bank account. A lot of modifications can seriously increase the amount of insurance that you can expect to pay. For example, if you put a turbo kit or nitrous into your vehicle, the cost of your insurance could increase by as much as 132%. Tinted windows can see you have to pay 16% extra, while something as modest as stripes, decals or badges, which do not affect the performance of the car at all, will increase your insurance by 22%. The difficult thing about this is that car insurance is a legal necessity. Your only recourse for reducing these costs is to try to negotiate with insurance companies and promise them your business if they offer a better rate than their competitors.

Buying and running a car can be expensive but certainly not impossible. You just need to be smart about your investment and know what to expect.

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