Cambridge-based car shopping site CarGurus has some encouraging news about the financial habits of college graduates, but there seems to be a few gaps in their knowledge, as well.
Buying – On the right track
A survey of college students who plan to graduate this year indicates the current generation of students will exercise financial responsibility when it comes to car-shopping. Almost half expect to spend $15,000 or less on a vehicle.
Most students (57 percent) plan to get a new car and pay for the entire purchase themselves, and two-thirds understand they’ll need to get a new car payment plan to make that happen.
Meanwhile, a much smaller portion (13 percent) expected their parents would buy them a car.
“We are pleasantly surprised to learn that today’s college students have relatively rational and moderate expectations toward the cars they’ll buy after graduating and how much they plan to spend,’’ said CarGurus editor Steve Halloran in a statement.
Owning – A few pointers
However, the survey also found many college graduates should do more research into the cost of maintaining a car. Many have especially unrealistic expectations about auto insurance.
The survey found the average of auto insurance for college graduates is about $2,000 a year, but 25 percent of those surveyed thought auto insurance would cost $250 or less per year. Another 28 percent thought it would cost $500 per year.
“We also found that this group has a lot to learn about car ownership costs, but our survey demonstrates they clearly want to be financially independent and make sound decisions,’’ said Halloran.
Mike Quincy, automotive editor of Consumer Reports, echoed Halloran’s sentiments when it comes to advice for new grads. He says it’s important for college grads to bear in mind the total costs of owning a vehicle.
“Be aware that the costs of a new car don’t end with the monthly payment,’’ said Quincy. “Owning a car also means paying for maintenance, tires, and fuel costs.’’
Where you live can also affect how much your car will ultimately cost you, he said.
“If you live is a city and have to pay for parking, keep that in mind before you drive away in that new BMW 3 Series,’’ he said.
Because the cost of insurance can catch many consumers off guard, Quincy urges graduates to research what they will end up paying for their new or used vehicle by consulting an insurance agent.
“Keep in mind that the costs to insure, say, a Mazda3 will be a lot less than a Ford Mustang GT,’’ said Quincy. “Talk to your insurance agent and find out where the cars you’re interested in stand.’’
The survey, conducted using Google Consumer Surveys, looked at responses from 300 college students who plan to graduate within the next year.