Should I Buy My Teenager a Car?

Should I Buy My Teenager a Car?

Chances are you remember what it was like the first time you got behind the wheel of your first car. The freedom to come and go on your own schedule came with a delicious sense of responsibility, but it was one you were ready to handle.  

If there’s a teenager in your family who’s pining for that same sense of independence — and you’re tired of being a taxi service — then you’ve probably given thought to buying them a car. Here’s what to consider when your teen is ready to hit the road. 

Pros of Buying Your Teenager a Car

No matter if your budget is large or small, there’s no question that buying a car is a big expense. Even after the transaction is done, there are still insurance, repair, and maintenance costs to consider, too. 

Nevertheless, there are several advantages to buying your teen a car: 

  • You can get help when you need it most. Whether you’re stuck at work, in traffic, or out of town, a teen with a car can pick up siblings, run to the store, go to the bank or post office, and more. It won’t take long for you to appreciate the considerable time-saving benefits.
  • You can teach your teen responsibility — and consequences — effectively. All it takes is one traffic ticket, a fender bender, or an empty gas tank for your teen to realize that paying attention while driving is a must, not a maybe.  
  • You can teach your teen the value of money. Teach your teen how to save money to maintain their first car, and your new driver will appreciate the hard work it takes to save that much cash. Every trip to the gas station or mechanic later on will help drive the point home, too. 
  • You can teach your teen the importance of good credit. If you’re planning to loan your teen the money to buy a car, this is a great time to teach them about credit. You already know that good credit could mean better rates on auto loans, but this is your chance to explain why. You can help establish a realistic payment timeline with your teen.

Cons of Buying Your Teenager a Car

Even with these arguments, it’s easy to understand why some won’t buy cars for their kids. Even with the added convenience of having an extra car (and driver) in the house and the learning opportunities it presents, the risks, for many, can outweigh the benefits.

There are several reasons why people don’t buy their teens a car:

  1. “Giving in” is teaching your teen they’ll have access to easy money in the future. Delaying gratification and resisting impulse spending are critical skills for teens to learn early on. Spoil your teen with a new car, and you could set an uncomfortable precedent. 
  2. Your teen will lose an opportunity to understand how much hard work it takes to purchase a big-ticket item. Remember that feeling you had when you bought your first car? You can’t replace it. Your teen will learn the value of money early if you encourage it.
  3. You’re not sure who will handle the ongoing expenses. Cars are expensive and if your teen can’t afford to purchase a car, they may not be ready to manage ongoing expenses, either. Many parents also can’t afford the ongoing expenses of an additional car – or even if they can, don’t want it to eat away at money they could be saving for their own goals (retirement, vacation, etc.)

4 More Things to Consider When Buying Your Teen a Car 

If you believe the benefits of buying your teen a car outweigh the risks, consider establishing expectations before you move forward. A few more things to consider include:

  1. How the expenses will affect your family. Clearly spell out who is paying for the car’s purchase and its repairs and maintenance. You’ll also want to determine who will pay to insure the car and whether you’ll add it to your own plan or have your teen take out their own policy.
  2. Creating a written agreement. This is a great chance to share how contracts work. Write down the proposed arrangement, have you and your teen both sign it, and store it for safekeeping. If part of your agreement is for your teen to borrow money from you instead of saving to buy a first car, include loan length, payment, and any other terms.
  3. Rules of the road. How will you handle traffic tickets, parking infractions, fender benders, and other problems teen drivers sometimes face? Set expectations and establish consequences for breaking the rules. You may also want to set rules about cell phone usage while driving to help ensure your teen is driving safely.
  4. Rules of the wallet. Buying a car is a great time to talk about a budget. If your teen will have a financial stake in the car, how much is the right amount to spend buying it? What’s an acceptable insurance premium? What should your teen anticipate spending on new tires, oil changes, and other maintenance? Figuring this out up front can save you frustration later.

Should I Buy A Car For My Teenager?

5 Next Steps to Take When Buying Your Teen a Car  

If you’ve decided to buy your teen a car, consider the following next steps.

  1. Check your credit, or your teen’s credit, for free by visiting If you’re a PSECU member, you can enroll in our free credit score service* to receive monthly updates to your score.
  2. Establish a budget.
  3. Narrow down the makes and models you like and can afford.
  4. Get preapproved for a car loan through your preferred financial institution.
  5. Start looking, and go for test drives.

For more information about financing or to apply for a loan, see our auto loan options.

*PSECU is not a credit reporting agency. Members must have PSECU checking or a PSECU loan to be eligible for this service. Joint owners are not eligible.

The content provided in this publication is for informational purposes only. Nothing stated is to be construed as financial or legal advice. Some products not offered by PSECU. PSECU does not endorse any third parties, including, but not limited to, referenced individuals, companies, organizations, products, blogs, or websites. PSECU does not warrant any advice provided by third parties. PSECU does not guarantee the accuracy or completeness of the information provided by third parties. PSECU recommends that you seek the advice of a qualified financial, tax, legal, or other professional if you have questions.