Car Buying For Your Teen

August 20, 2008 By Tisha (Kulak) Tolar

Ahh…sweet sixteen! An exciting time for kids - not so much for parents. Of course every kid dreams of opening up their gift to find the keys to a brand new ride. While many parents wish they could honor that dream, few have the resources to do just that. Planning for the time your children will start driving can help ease the financial burden.

Here are some ways to help combat the teen car buying saga that may one day infect your household on a daily basis.

Buy Used

Some may argue that buying a car for a teenager refuses them the opportunity to learn about money, savings, and working towards goals. However, for many parents, there is a sentimental value in buying their child’s first car. Buy a quality used car and kids can learn to work towards saving for a better model or the car of their dreams for the parents who are in a position to buy them a car.

If you have had a savings plan in place for just this occasion, put your money where your research is. Check out Consumer Reports for the ratings on vehicles in your price range. Look and compare used vehicles online to be well-informed before stepping foot on the lot. Have the car you choose checked out by a trusted mechanic before making a commitment.

Create a Contract

This is an excellent opportunity for parents to teach their kids about money and responsibilities in the adult world. Developing and implementing a plan to have your child share all of the expenses of getting a car is a good way to save money and teach a lesson or two. Calculate on paper the cost of operating the car, maintenance, gas, insurance, and repairs to share with your child. Then divide the costs in half. A teenager is capable of working several hours a week and should be expected to live up to the contract in order to keep the car. This will help train your child to manage their finances at a young age and give them a better understanding of the need for budgeting.

Match Their Money

If purchasing the car is a financial strain, opt to match the contribution of your child. Make an agreement and set a timeline to give you both a chance to save the most money. Match your child’s money dollar for dollar. Teens who have jobs can also be encourage to find their entrepreneurial spirit in order to maximize their contribution, thus getting a large selection of vehicles to choose from.