Ideas on first car for kids

[JoeP]

As my kids get older and approach the ages where they are ready to buy a car, we thought it might be a good idea to help them with the purchase. Here are some of the terms:
1. We'll match dollar for dollar
2. We have final say in the car itself (quality, safety, practicality, age, condition, price)
3. You have to continue to pay into a "car fund" after the purchase, toward your next car
4. We'll put you on our insurance (how long is TBD)
5. You are responsible for maintenance, tickets, etc
6. We'll purchase AAA for you

The thought on item #3 is to put them in a position where they can hopefully avoid having to get a car loan for the vehicle after this one. If they avoid having an accident, keep this car well maintained to preserve some residual value, and can build some cash in an account earmarked for their next car, then their next (used) car might be able to be paid for with cash. It is my belief that if you pay yourself instead of paying a bank principal+interest, it is possible to put yourself on a path where car loans can be avoided.

Looking for thoughts from parents who have gone through this, thanks.

[bjl584]

I have not dealt with this situation, because I don't have kids, but your plan seems pretty sound to me.

I like #3. It will help to teach your kid to save. And, he will be the only one in his social circle that doesn't have a car payment when he and his friends graduate college and go out into the world.

[Joan.of.the.Arch]

We outright bought our son a used small truck a couple weeks before he left for college. We paid insurance. This worked well for us. Actually I would not have wanted him to work a whole lot of hours during college, as he had a tough program of study.

His school was 4+ hours away. Owning a vehicle simplified getting home for visits and summers. He did his own maintenance, but nothing serious was ever needed. He still has the truck as he goes into his 3rd year since graduation, but he barely uses it as public transportation suits his daily needs. I think he will have the truck several more years.

I didn't really think I needed to teach him any financial and responsibility lessons with the vehicle purchase and ownership. He already had a good head on his shoulders.

[cooliemae]

While I won't have to face this situation for several years yet, I can speak about what my parents did for my sisters and I. My parents passed on their old cars to us as we left for college. For instance, when I left for college, my dad signed over his 92 ford ranger which was 6 years old and perfect for me. He got the new Dodge Ram he wanted/needed (needed bigger truck for hauling trailer). They kept me on their insurance until I graduated, but I had to pay for everything else. I like the idea of #3 as I didn't do that and when I had to buy a new truck in 2003 I didn't have much to put down on it (though I was smart enough to buy a used truck).

[greenskeeper]

my son is 3, so a while yet for my turn at this.

However, my parents gave me nothing towards a car and I thank them for it. I saved my money and paid cash for my first car (or clunker) so I could drive when I was 16. Parents made me pay for insurance (on their policy) and all costs related to the car.

Again, I thank them for it and am glad I wasn't "given" a car to drive. You appreciate things a lot more when you have to earn them.

As far as type of car, I'd recommend a large vehicle (truck or SUV) if fuel costs aren't an issue. New drivers are going to crash and there are a lot of nuts with cell phones at the ready to be distracted and crash into your child.

[disneysteve]

I thank them for it and am glad I wasn't "given" a car to drive. You appreciate things a lot more when you have to earn them.

I know this is the standard answer, but I think this really depends on the kid.

My parents gave me a car to drive when I got my license. They paid for everything - the car, the gas, the insurance, the maintenance. I had no income and wasn't expected or required to get one in order to cover my car costs. But I was very appreciative. I was a hard-working, straight-A student very active in both school and community activities. And I think I turned out okay as far as financial responsibility is concerned even though I was "spoiled" like that.

As far as type of car, I'd recommend a large vehicle (truck or SUV) if fuel costs aren't an issue. New drivers are going to crash

Yes, just what we need, a bunch of new inexperienced drivers operating the biggest, heaviest, most dangerous vehicles on the road. I'd have to disagree with that.

[thekid]

i like your approach.

btw, i've done 3 myself and find it great as it allows me to earn interest instead of paying it and, this is more important, to take advantage of manufacturer cash purchase rebates when available (3k$ on my wife's last car and 4k$ on mine).

[MonkeyMama]

We were expected to work from a young age - paying for our first car was a big motivator.

As a female, and very concerned with my safety, my parents did sell me their car. One they knew was in tip top condition (though quite old).

Anyway, I think your plan sounds great and is very similar to how we were treated when we were 16.

This just reminds me one argument I had with my spouse when discussing what we would do with our own kids (7 more years...). His parents bought him a REALLY crappy car and had him pay ALL the expenses. I don't remember for sure, but believe my parents paid the insurance the first year because like my entire paycheck went to the car purchase. But after that I did pay all costs. Dh is of the strong belief that one should not own a car if they can not afford the costs, where I felt one should not own a car if they could not contribute towards the purchase. I finally asked him one day how much the insurance was. He says $100/month. (Probably worse as a male). I said, "Okay - that is how much I paid for my car - took about a year to pay off." Honestly same freaking difference! I refuse to argue over logistics like that with our kids. They need to learn responsibility and there are different ways to do that. We have male kids so maybe it will be the same difference to let them pay the insurance. Quibbling over the fine details just strikes me as kind of silly and useless. Plus, every kid and parent is different. Some parents can afford more; some kids do fine with a little spoiling.

[snafu]

While in high school, both sons completed driver's ed course and got licenses which are two tier here. They both had decent marks, PT jobs and were involved in sports. They shared my car [hating it], paid for gas and differential in auto insurance. Fast forward, both in university, younger bought an older Honda CRV and somewhat shares it with elder bro. They now go to university in a large city with great subway service and impossible parking so the car stays here. This summer they're working in the Oil Sands - no roads, no car but terrific hourly wage.

DH and I made it clear that driver licenses and car keys would be relinquished if marks dropped, tickets issued, or they suddenly got stupid.

My mom hated driving so the instant I got my driver's license I got her car, older but hardly driven. The deal was I paid gas and insurance cost difference. I drove mom where-ever, when ever she wished. My friends contributed gas $$$ as I was the 1st in our group to have wheels. I also had a PT job during high sch. but older brothers continued to do the regular maintenance on mom's car.

[marvholly]

For OUR convienence we got both our DDs cars shortly after they got their DL. Both were involved in sports & activities that meant 6 am practices/meetings daily and WAAAY late (9-10 pm) returns home several times/week.

We bought the car & licensed it. It became our back up car so we paid for some insurance but they had to pay the underage kick up. They paid gas and routine maintenance. We never hit major costly stuff.

We chose to have them in larger, older cars (liability insurance only). DD1 had a 10 y/o Olds 88. DD2 had a bout the same age Buick Riv.

[greenskeeper]

Yes, just what we need, a bunch of new inexperienced drivers operating the biggest, heaviest, most dangerous vehicles on the road. I'd have to disagree with that.

Only dangerous to the other guy in the mini-cooper

The "dangerous" vehicles out there on the roads are one driven by distracted drivers, whether car, truck, SUV, or mini-cooper!

[Joan.of.the.Arch]

You all must have read stories about how uninterested in driving and car ownership today's teenagers are. What if your kid turns driving age and they are not motivated to sink money into a car because they don't care about driving?

They can and do hang out with their friends, play games, go shopping, meet new people, even "date" without leaving their wifi spot! So what if you want your kid to drive and have a car, do errends for themselves and the family, get themselves to & from school, take themselves to sports and community events?

Are you go to make them drive? Make them have a car? Make them work for payments, insurance, gas, and maintenance on a car they don't even care if they have? Where would their motivation come from?

Is being a young car owner going to be just another dreaded chore for some kids? Like having to clean their room or mow the grass on Saturdays?

Your kids may not have the same kind of motivation that you had. Mine did not and that was true of a lot of his friends. They've already got a certain kind of independence and satisfaction without a car.

[disneysteve]

Joan, I've read those articles, too. It is a different time today and nobody is really sure why. When I was 15, I couldn't wait to turn 16 and be able to drive. As soon as my older friends started driving, we were off going places and doing things on our own, whether it was cruising the mall, going to the shore or whatever. We had independence once we had wheels.

My wife and I are facing a different situation with our daughter. She is 16 and has her permit and is driving but really hates doing it. At age 6, she and my wife were involved in a serious car accident. She was badly injured and 10 years later still has psychological issues stemming from that experience. She doesn't want the responsibility of driving and being responsible for the lives of her passengers and others on the road. So we're dealing with getting her past that but it's a challenge.

[LizfromtheBronx]

When we were new drivers, my parents "gave" us our first cars. But to elaborate, my brother's car was a 12 y/o sedan (that a family friend gave us)...my sister's was a 15 y/o sedan (same scenario), and mine was my mother's 12 y/o sedan (she got a slightly newer car).

They also paid for our first year of car insurance (liability only, as these were some pretty cheap cars), but I was a slick negotiator and asked for an extra year of car insurance for my high school graduation. Having been burned by my siblings' terrible driving records, my parents wisely got me my own policy so it wouldn't affect their insurance.

A few months after I got my car, my dad was doing a routine check of it, and saw that the bottom was rusting out. I then bought my mother's car at the time from my parents for $500, and my mother finally got a new car (her first ever). That car didn't last very long due to age, and I went through of series of crappy (ie, free) cars. My dad wanted me driving a more reliable car, since I spent a lot of time driving a few hours alone by myself at night (I was very involved in a youth group, and due to a high position in the organization, spent a lot of time traveling to different "branches"), so he decided to buy me a car for about $2k. That one lasted me for a few years, and once it finally died, I bought my own car (I was about 21 by then).

[bones72]

Being a car dealer, I "allowed" my kids to purchase very nice trade-ins. They get to pay 1/2 insurance and taxes. They pay for the cars, and I buy them some gas. We do live in a very small town, so they don't have to drive every day. The best lessons are those that are self-taught, and they are learning that debt SUCKS! as they so eloquently put it.