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All things considered…

by Charlotte 7 Comments

Like most parents, I’m currently debating with myself about whether or not I should I buy my teenager a car. It can be incredibly complicated to make such a big purchase for a teen. There are tons of things to think about, from financing a car for a teen to dealing with maintenance costs and savings, here is what you need to consider before buying a car for a teenager.

One of the things on my mind lately?  Buying a car for Eva.  Or Eva buying a car for Eva.  Or not buying a car for Eva.  There are so many things to consider and the more I think about it the more I feel like taking a nap and drinking a margarita.  But not in that order…

Blue Mustang

This the car that Eva wants…ahem.

There are several options for the teenage driver when it comes to buying a car:

Financing

This option is probably not going to work for the average teen.  Most companies are not going to extend credit to a teenager.  Period.  Unless the parent co-signs the loan.  If you sign on the loan with your child you must understand that you are legally responsible to pay the payments if they do not.  A general guideline is for the teen to be able to put down at least 20% and finance for only 36 months.  My personal guideline?  No financing.  I cannot afford a car payment and I don’t want Eva locked into working 30 hours a week in order to make a payment on a car she can’t really afford.

Used Car Salesman

Beware the used car salesman – and his financing ‘deals’…

Teen Savings

The teenager is responsible for purchasing their own car.  This means that they need to start saving their money now.  Right now.  They will probably have to buy a used car and it might not be the sportiest car on the block.  So be it.

Red 65 Mustang

Buy the Car For Them

As a parent you may choose to purchase the car for your teenager.  Many of us are not in the position financially to be able to do this.  My parents bought a car for me when I was a teen and paid for the insurance as well.  I think that they even gave me money every week for gas.  It was a ’65 Mustang.  V8.  Cherry Red.  Original everything.  Ahhhh.  Those were the days.  I won’t be able to do this for Eva, but I would definitely consider it if it were within my means.

Combine Forces

This is a great opportunity for teens and parents to work together to get a car.  The teen saves their money and the parent supplements or matches what their child has saved.  I love this plan.  It allows the teen the satisfaction of having worked for the car themselves and encourages them to save as much as possible because they know that their parent is going to help them.  This is also a great way to make sure that they have a safe and reliable vehicle because their budget is a little bit larger.

Just say no

Just Say No

Many families choose not to purchase a car for a teen at all and/or delay the process of getting their drivers license.  They simply ‘make do’ with the family car.  With the rising costs of college this is understandable and a wise decision for many teens.  They can share the family car, use public transit, or pay a friend for needed rides.  It may not be easy but it is possible.

Like most parents, I’m currently debating with myself about whether or not I should I buy my teenager a car. It can be incredibly complicated to make such a big purchase for a teen. There are tons of things to think about, from financing a car for a teen to dealing with maintenance costs and savings, here is what you need to consider before buying a car for a teenager.

Dave Ramsey outlines how he handled this issue with his teens in an article HERE.  I found it very helpful.

Other considerations:

How will you educate yourself and your teen on how to shop smart when looking for a car?

How much will insurance be each month?

What are the average maintenance costs?  Oil changes? Tires?

Are they prepared with an emergency fund is something big goes wrong?

What type of work schedule will be required of your teen in order for them to cover these costs?  How will it affect your financial picture if you try to cover everything?

These are issues that we will take a closer look at in the coming weeks!

Share the Wealth!

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Comments

  1. Pauline

    April 4, 2013 at 8:46 am

    Europe is so different in that matter, I didn’t have a car until I was 28! And I then bought it cash with my own money, we rarely do credit except for a mortgage. I know the US are different because public transportation is lacking, but I don’t think I would buy my kid a car. Let them borrow mine and be responsible for gas money and repairs until they can afford theirs, maybe. My few friends who did have car (and generally a loan) when we were 18 are much behind in term of growing wealth, the car payments set them back quite a lot.

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    Reply to Pauline" aria-label=' Reply to Pauline'> Reply
    • Charlotte Baker

      April 4, 2013 at 12:07 pm

      Wow Pauline, most American teenagers would have a stroke if they didn’t get a car until 28. However, you have made a great point about the cost of a car greatly affecting your ability to save and build wealth. Something that we should consider much more, particularly as so many are going into great debt before they ever graduate from college. Thanks for the comment!

      1.1
      Reply to Charlotte Baker" aria-label=' Reply to Charlotte Baker'> Reply
  2. Greg

    April 4, 2013 at 1:11 pm

    I like the combine forces option if the teen cannot pay for the car on their own. I think it gives more of a sense of appreciation. It also seems to me that this logic could apply to college as well!

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    Reply to Greg" aria-label=' Reply to Greg'> Reply
    • Charlotte Baker

      April 4, 2013 at 2:15 pm

      I agree Greg. Working together is my favorite option and that is our plan. Thanks for commenting!

      2.1
      Reply to Charlotte Baker" aria-label=' Reply to Charlotte Baker'> Reply
  3. www.livetolist.wordpress.com

    April 11, 2013 at 1:08 am

    My father wouldn’t have dreamed of buying me a car! Though we did inherit his ‘run to the station’ mum-mobile which turned into the granny-mobile (the car granny could no longer use). Though neither we purchased (the three children) but we pay all the expenses. At 28, I’ve not yet bought a car. My 26 yo bro did a year or two ago, and I’m not sure he’s thinks it’s been the best $$ but he couldn’t get to his work without it (he could get to work without a car, he chooses work without consideration of the transport as he HAS a car).

    If I were a parent, my child could save for a car, borrow mine, and I’d like to live somewhere where pub transport is a good option for my teen.

    3
    Reply to www.livetolist.wordpress.com" aria-label=' Reply to www.livetolist.wordpress.com'> Reply
    • teensgotcents2

      April 17, 2013 at 5:12 pm

      I don’t think that my mom would let me use the bus because it isn’t safe where we live. However, we may end up sharing a car until I absolutely have to have my own.

      3.1
      Reply to teensgotcents2" aria-label=' Reply to teensgotcents2'> Reply

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Hi guys, I’m Eva!

Welcome to TeensGotCents, my name is Eva Baker and I founded this site when I was sixteen. I'm a complete money nerd and I love helping teens learn how money works. Also, I watch too much Netflix. Although I still have a lot to learn about personal finance I hope you will use my successes and failures to help reach your own goals whether you want to go to college debt free, get a part time job, work on a fun DIY project that will save you money or just read about ways you can learn to manage your money well as a teen. So glad you're here! Read more about my story here.

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