At a certain age, every teen reaches a point when they are ready for the freedom and responsibility of driving their own car. Parents, on the other hand, may feel like they will never be ready for this. Handing them the keys can be difficult and requires a lot of trust and preparation, but there can be many more challenges when it comes to buying them their first car.
Not only are there new rules and safety regulations, but purchasing a new vehicle for a teen driver can be costly. If your teen is ready for their very own ride, here are some tips to save you money and give you peace of mind.
Buy Used, But Reliable
Your child may have his or her heart set on a brand new truck or trendy sports car, while you have a sturdy, economical mid-size sedan in mind. Still, there are ways to compromise and stick to your budget. Buying the latest model for your teen doesn’t make much sense, so stick to searching for a certified, pre-owned car with high safety ratings and fuel efficiency.
You will have more options this way and can keep payments and insurance costs down. This doesn’t mean finding a boring car your kid will hate. Bankrate.com suggests some ideal cars that will bring a smile to both teens and parents alike, including a reliable Honda Accord, funky Kia Soul or sporty Mazda 3.
Handle Credit Responsibly
Most teenagers do not have a long credit history, if any at all, and won’t be able to finance a new car without a parent co-signing. Part of the responsibility of driving is learning to manage payments and interest rates while sticking to a budget.
CarBuyingTips.com suggests establishing credit six months to a year before your teen is ready to purchase a car, and suggests opening a student credit card or another type of payment plan.
Teach your teen how to keep a low credit card balance and always pay their bill on time. This way, they can start building positive credit that will reflect well when they are ready to sign a car loan.
Look Into Insurance Discounts
Insurance can be pricey for inexperienced and teen drivers, with rates commensurate on what type of car they own. Luckily, there are several discounts available for young drivers to keep their insurance at an affordable rate. According to DMV.org, teens with good grades on their report cards can earn discounts on insurance.
And if they don’t drive very often, you can get a reduced rate for low annual mileage or pay-as-you-need insurance. Another valuable discount for teens is a driver’s ed discount, which some insurance providers offer if you take a qualifying driver’s education course in your state. Have your teen use online resources to help them become a safe driver.
A Penny Saved is a Penny Earned
It can be difficult to save up to buy a car on your own when you’re a teen. But helping your teen save some money, even if it’s just a down payment, will take some of the financial burden off you and give them a greater sense of pride and accomplishment when they sign the car title in which they worked hard to earn.
Whether they have a part-time job after school or make extra dough helping with chores or babysitting, motivate them to save the money they earn for a car. The New York Times’ blog, Motherlode, recommends offering a dollar-per-dollar match. So if your teen earns $50 from an odd job they did for a neighbor, you can match it for a total of $100 they can put toward saving for that new ride. This exercise will make their goal a little more achievable and keep them motivated to work for their new vehicle.
