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Should You Help Your Teen Buy Their First Car?

Your baby is becoming an adult. It’s a bittersweet time for parents, watching their children blossom and grow. We parents want to help our children turn into responsible and caring adults. Once our teens get their driver’s licenses, we have to face the question “Should I help my teen buy their first car?” The answer will depend on your unique circumstances.

Does Your Teen Really Need a Car?

Cars are cool, but does your teen need (versus want) one of their own? If you live in a rural area where longer drives to work and school are required, then it might be a good idea.

However, if you live in or near the city and have access to public transportation, that might be a cheaper way for your teen to get around.

Of course, if your teen works but is struggling to find rides to work, getting a used car with a moderate number of miles on it might be an ideal solution.

Contributing to the Costs

If you feel that your teen needs their own car, come up with a plan for covering the costs. Discuss the amount you are willing to contribute with your teen driver. Tell them what your expectations are for their contributions.

Remind them that insurance is really the burden of cost when it comes to buying a car. Teen drivers are considered risks, and the cost of insurance is higher the younger the driver. For those aged 16-19, the average annual cost of insurance is a whopping $2999. Ouch.

Who is going to contribute to the cost of insurance — you, your teen, or a combination of both? What percentage are you willing and able to cover? If you and your teen don’t make enough to cover insurance, then a car might not be a wise investment at the moment.

Buying the Right Vehicle

Your teen might think that getting a truck or SUV is the best way to go, but the safest cars for teen drivers are mid-sized sedans. They offer a good amount of space and tend to have some of the safest stopping distances when you need to make a panic stop. SUVs and trucks have much longer stopping distances. Finding pre-owned Fords for sale, or other makes of cars might be the right route for you.

Saving Up for Rainy Days

Break-downs happen, especially if you’re driving a used vehicle. Some repairs just cannot be foreseen. But that doesn’t mean your teen shouldn’t have money set aside just in case.

How much can you teen afford to set aside per paycheck? How can they build up a savings account at a bank? Devise a smart savings plan with your teen should you decide to help them buy a car.

Teens crave independence, and cars can satisfy that craving. However, not all teen drivers are ready for the responsibility of owning a car once they have their license in hand. Prepare yourself and your teen for car ownership by creating a financial plan that you can both agree to.

Tim Esterdahl

Tim Esterdahl is the editor of IFCS blog. He is a married father of three and enjoys golf in his spare time.
Tim Esterdahl

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