Chances are you remember the feeling of getting behind the wheel of your first car. The freedom to come and go on your own schedule came with a lot of responsibility, but you were ready to handle it.
Now, if you have a teenager of your own who’s pining for that same sense of independence — and you’re tired of being a taxi service — you’ve probably given thought to buying them a car.
As with many parenting choices, there are pros and cons to handing your teen the keys to their own car. We've compiled them here to help you navigate this decision.
Pros of Buying Your Teenager a Car
Whether your budget is big or small, there’s no question that buying a car is a large expense. After the initial purchase is complete, there are still ongoing costs like insurance, repair, and maintenance to keep in mind.
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 post office, and more. It won’t take long for you to appreciate the assistance your teen can provide if they have their own vehicle.
- You can give your teen a hands-on lesson in responsibility. All it takes is one traffic ticket or an empty gas tank for your teen to realize that paying attention while driving is a must, not a maybe.
- You can drive home 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 manage money on an ongoing basis. Every trip to the gas station or mechanic will reinforce that point, 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 future auto loans, but this is your chance to explain why. Don’t just buy the car and hand over the keys. Take time to explain the process and different payment scenarios based on creditworthiness.
Cons of Buying Your Teenager a Car
Despite the pros above, you may be hesitant to buy a car for the new driver in your family. Even with the added convenience and the learning opportunities it presents, you may feel the risks outweigh the benefits.
For this reason, you'll want to consider these common reasons for not buying your teen a car.
- You don’t want your teen to think they’ll have access to easy money in the future. Gaining financial independence is important for teenagers, as they’ll soon be out on their own in the “real world.” You may worry that buying them a car will lead them to assume that you’ll foot the bill for their large costs down the road, as well.
- You want your teen to experience the pride of saving for and making a big-ticket purchase on their own. You likely remember the way you felt the first time you bought a big-ticket item after saving for what felt like forever. While it certainly would’ve been easier if someone had covered the cost for you, there was probably a big sense of accomplishment knowing you had done it on your own.
- You’re concerned about the ongoing expenses. A lot goes into maintaining a car and if you’re like many people, you don’t have the extra cash to cover the cost for your teen, even if you’re able to help with the upfront purchase cost.
Additional Considerations for Buying Your Teen a Car
If you decide the pros of buying your teen a car outweigh the cons, make sure you set expectations before you move forward. Get started by:
- 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.
- Spelling out who is covering all expenses. Make clear who’s paying for the car’s purchase, repairs, insurance, and maintenance. You’ll also want to determine whether you’ll add your teen’s car to your own insurance plan or have them take out their own policy.
- Setting rules of the road. How will you handle traffic tickets, parking infractions, fender benders, and other problems teen drivers sometimes face? Establish expectations and consequences for breaking the rules. You’ll also want to make clear that cell phone usage while driving is unacceptable to help ensure your teen is driving safely.
- Budgeting with your teen. 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 oil changes and routine maintenance? Figuring this out up front can save you frustration later.
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.
- Establish a budget. Determine how much you’re comfortable spending and whether you’ll be paying cash or taking out a loan.
- Narrow down your options. Decide what makes and models you’re comfortable with your teen driving.
Get preapproved for a car loan. Going to the dealership with a preapproval in hand can give you negotiating power when you’re ready to start shopping around for a car. Get started today by checking out our auto loan options.