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How to Help Your Teen Purchase a Car

Brittney Monteith | May 1, 2019

Their first big purchase.

When you have a teen driver at the same stage of life where they’re starting to need more transportation than ever before – sports, friends, a part-time job, babysitting – it may be time to look into getting them a vehicle of their own.

But there are so many things to consider when helping a teen through their first major car purchase. Will you pay for the car? What about the insurance payment? What cars are the safest but don’t break the bank?

We’re walking you through all steps of the decision in this blog post chock full of car buying advice.

Considerations Before Purchasing a Car for Your Teen

  1. Get them involved in the research process. It’s better for them to start learning how to investigate making a smart purchase, what considerations are important (safety), and those that are not (being brand new).
  2. Focus on safety. Teen drivers between the ages of 16 and 19 are four times more likely to crash than other drivers. Research crash test results from the National Highway Traffic Safety Administration and review quality and reliability ratings. While a new car is not a good idea for most new drivers given the likelihood of accidents, more recent models will come with equipment such as air bags, anti-lock brakes and electronic stability control. If you can find a good deal, you may be able to find a used vehicle with blind spot sensors, which can be very useful for a new driver.
  3. Research features that may be helpful for a teenage driver, such as Hyundai’s Blue Link, which notifies you if the car has been driven beyond certain geographic boundaries or after certain hours.
  4. Look into fuel efficiency. As your teen gets older, the miles they drive will only increase, especially once they’re driving to college or taking road trips.
  5. If you’re buying from a dealer, look up its Better Business Bureau rating and read the comments to be prepared. Only work with a dealer with a good rating.

Planning the Money

  1. Discuss how much both you and your teen will put toward the car. Even if it’s not a large amount, having your teen pay for some of the vehicle will help them learn to protect and take care of their possession. Many financial experts recommend a match plan. Have the teen save their part-time job, or yardwork or babysitting earnings, and whatever they can come up with, you can match.
  2. Discuss the other ongoing costs. Car insurance can be high for a teen driver – will you help them make their monthly payment? If they can’t afford it, it might be a good idea to put a plan in place where you can pay a portion of their insurance monthly for a set amount of time – the first year, or something similar. You can investigate together whether they can have their own policy or be added to yours. And estimate with your teen how much they’ll need in gas money.
  3. Make sure they plan to save regularly for ongoing maintenance costs, as you never know when something unexpected will need to be fixed.

Getting Ready to Purchase

  1. Get a Carfax report using a vehicle’s VIN number to investigate its history (if the owner won’t share the VIN, walk away).
  2. Look into financing options if you’re not paying up-front for the car. If you take out a loan, a minor under 18 cannot co-sign. Once 18, they can co-sign with you. You should have a credit rating higher than 680 to get a reasonable interest rate. And it’s best to come into the car purchase having already shopped around to find the best rates with a bank or credit union.
  3. Pay attention to financing terms. Getting a better deal on price can be great, but if the interest rate and payments are high, the down payment isn’t enough, etc., it can be a bad decision. Avoid a dealer who’s trying to confuse you by layering on complications to the loan terms.
  4. If you’re buying from an individual, get a pre-purchase inspection from an Automotive Service Excellence-certified mechanic.

You might also consider giving or selling a car you already own to your teen. If that’s the case, you should weigh many of the same things: safety features, quality, insurance costs, maintenance costs, and having your teen pay you for the purchase. Maybe not the full price, but enough of their savings to feel true ownership and inspire them to take care of the car.

It may take several months for a teen to save enough to purchase a car that will be safe enough and last long enough for them to use. A hardworking summer job this year could earn them enough if they put in the time.

If you’d like more help walking through the process of buying a car with your teen (or for your own car purchase!), you can check out our Auto Buying Guide. For assistance understanding auto financing or to discuss other smart money tips, contact us today!