Home > Auto Loans > 4 Tips Before You Buy Your Teenager a Car

Comments 2 Comments

Recently, I was outside and couldn’t help but notice, across the street, a group of teens gawking over a brand new 2013 white Honda Accord in the driveway.  The oldest teen said proudly, “I got a 92 on my learner’s permit test and my father surprised me with a new car.”

We live in an age where “keeping up with the Joneses” has taken on a whole new meaning.  It seems sooner and faster than ever our children outgrow the basic doll and big wheel and beg for the latest iPod, iPad, flat screen or motor scooter. It’s no wonder why at age 16 some parents would think the next logical “toy” would be a brand new car.  However, as we all know, a car is not a toy; it is a serious responsibility — both on and off the road.

Before you buy your teenager a car, it is important to discuss the following:

1. The Cost

Explaining to your teen that a car is a financial responsibility and not a birthright will set the tone for the purchase. After carefully reviewing your finances, it is important to discuss with your teen how much is available for a down payment and how much is available for a monthly car payment. If your teen has a part-time job or money set aside, clearly state how much you would like them to contribute. This will narrow the car choices down before you even leave the house.

2. The Gas, Insurance, Maintenance and Repairs

It’s important to discuss with your teen the financial costs of owning a car, such as who will be paying for gas, insurance, maintenance and repairs. If you don’t discuss it, your teen will automatically assume it is you for the life of the car. Often, owning a car is the first opportunity for your teen to actually have a bill. Don’t miss this chance to instill some financial responsibility.

3. The Accidents and Tickets

It’s bound to happen; the first traffic ticket, the first fender bender in Target. It is important to communicate the consequences. Decide ahead of time whether you or your teen will pay for these incidents and what driving privileges may be suspended if your teen is at fault.

4. The Rules

Motor vehicle crashes are the leading cause of death for American teens. Discuss with your teen your expectation of 100% compliance to basic safety rules such as wearing a seatbelt, no texting and no phone conversations while driving. Let your teen know you will pick them up any time if he or she has been drinking, is otherwise impaired, or doesn’t feel comfortable in a friend’s car for any reason. The Centers for Disease Control and Prevention has published an excellent contract that you can print out and sign with your teen.

Good Luck!

Image: iStockphoto

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Credit.com receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team