Buying your teen a new carRemember your child's first steps? They marked the beginning of a new era: Suddenly, you were no longer completely in control. If you think that was tough, just wait until you get your teenager their first car.

Aside from the obvious emotions -- your fear, their extreme excitement -- it's a situation full of financial implications. Do you buy used or new? Who pays for what? How to get the best deal on insurance? The list goes on and on.

The experts weighed in on this family turning point.

Don't Get It Twisted


"Having a car is not a birthright," says Gail Cunningham, spokesperson for the National Foundation for Credit Counseling, who raised four children. "Today's teens seem to think that they should have a car waiting for them in the driveway when they return home from the Motor Vehicle Department with their driver's license. If that's right for your family, fine. But don't be held hostage to peer pressure, and by that I mean from other families who are buying their teen a car."

Secondly, she says, the teen should not be driving a better car than mom and dad. "Today's high school parking lots look like a showroom with the latest models on display. What happened to handing down a family car from child to child?" she asks.

Thirdly, take advantage of a teachable moment. "The child should have some skin in the game," says Cunningham, who recommends opening a "My First Car" savings account. Let your teen pile up money from summer jobs, allowance, holiday and birthday gifts and more. You can offer to match their money toward a down payment.

New vs. Used


First on your list should be to research which makes most sense for you: buying new or used.

"Buying a new car is insurance against breakdowns and repairs, regardless of the age or experience of the driver," says Bob Gritzinger, executive editor of AutoWeek.com.

While you'll get peace of mind, you'll also pay more for that luxury -- though the prices of used cars have risen in recent months -- as well as more for insurance.

"A first time driver doesn't need a new car, but of course they want one," says Lori Mackey, president of Prosperity4Kids. "The depreciation, probability of fender benders and the price tag [means new] is not the most logical way to go."

Financially, you are almost always better off buying used, says Jack Nerad, executive editorial director for Kelley Blue Book. "If you buy a certified pre-owned car you get the advantages of a new-car like warranty, and perhaps, better financing rates."

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How to pick the best car


Once you've settled on new versus old, then comes the tougher question: Which car? For starters, think about how often and how far the car will be driven typically. Will your child be driving back and forth from college over a great distance? Or will the car mostly be used locally?

Go over safety and crash-test information from organizations such as the National Highway Traffic Safety Administration and the Insurance Institute for Highway Safety, suggests Gritzinger. Go through quality and reliability ratings from a measuring service such as J.D. Power and Associates.

While new cars will have all the latest safety bells and whistles, late-model used cars will have airbags, anti-lock brakes and electronic stability control, and their power and performance won't overwhelm new drivers, says Gritzinger.

Less power in the hands of a young driver is good, regardless of the model. "Choose a car with a responsive chassis -- one with good handling, quick steering and great brakes -- that takes advantage of a teen driver's naturally quick reaction skills," advises Gritzinger.

LeeAnn Shattuck, co-owner and chief car chick with Women's Automotive Solutions, says to forget "image," because it can come at a cost. "I see these young, inexperienced drivers in Mustangs, BMWs, and large SUVs. These automobiles are big, powerful and difficult to control for even experienced drivers. In the hands of a new driver, they can be deadly weapons."

Cars that are too small are problematic too, as they do not protect passengers as well in a front-end crash, warns Shattuck. "Your teen is safest in a mid-sized sedan with a four cylinder engine, airbags and a good crash test rating."

You also want to take into account what kind of gas mileage the car gets, and how much it will cost to maintain and insure.

To check mileage data, go to www.fueleconomy.gov. "This not only allows you to check and compare fuel economy ratings, but give a lot of good tips on how to maximize fuel economy in other ways that everyone can do. You can research vehicles back to 1987," says Michael Rabkin, president, From Car to Finish, a vehicle research firm.

Some cars have safety systems geared specifically toward teen drivers. Hyundai Blue Link, for example, says Gritzinger, can alert the vehicle's owner if someone has driven the car beyond preset boundaries or after certain hours.

Accept the fact that buying this car is going to take a lot of work, research. "Remember, there are a lot of scams and if it sounds to good to be true, it probably is. My son will be driving in four months and he has been researching daily. He found a car that was priced extremely low. After digging deeper, he found out it was a 'salvage' car. I said 'no,' and he argued with me until I said, go research online what salvage means. No further conversation was necessary," says Mackey.

Shop hard and test drive. "Don't feel you have to buy the first car you see," says Nerad, whose Kelley Blue Book is a great place to start, as well Edmunds.com.

Save on Insurance

You've found that perfect ride, but before your kid hits the road, there's the little matter of insurance. A recent Nationwide Mutual Insurance Company found that households shell out an average of nearly $3,100 each year to allow their teens to drive, and some $800 of that, on average, goes for insurance, said Larry Thursby, vice president of auto product and pricing at Nationwide.

The least expensive way to insure your teen is usually to add him or her to your policy, says Chris Kissell, managing editor at Insurance.com. "However, this can be a money loser if your car is particularly expensive to insure. In those cases, it may make sense economically to have the teen buy a car that is less expensive to insure and to purchase his or her own policy."

Capitalize on good grades. Many insurance companies offer "good student" discounts to top students. "This definition varies from insurer to insurer, but it usually is someone who has a B average, is on the honor roll, Dean's list, or ranks in the upper 20% the class. The discount typically ranges between 10-15%," says Erik Larson, president and founder of NextAdvisor.com, a consumer service review site. Nationwide, for example, offers a 25% reduction in premium for drivers under 21 who maintain a "B" average or better.

Beyond that, have your teen study up. A discount of 5% to 15% may be given to those who have recently taken a defensive driving course, says Larson.

Set the Tone

Before giving them a car, create a "Rules of the Road" contract for them to sign, suggests Cunningham. It can include such things as how many people can be in the car at once, who will pay for gas, insurance, maintenance, what happens to driving privileges if the child gets a ticket or has a wreck, and what time curfew is, among other things.

The last big big issue is how much weight parents have in the final decision about which car to buy. Says Mackey, "If you are paying 100% then you have 100% of the final decision. If your child is not in agreement, then bank the money until they have a certain amount to contribute."







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Nina

Great article, here are several tips from me on how to get cheaper car insurance:
- Use insurance comparison sites like: ---EliteCarInsurance.info--- . Once you register you'll get free quotes from a lot of insurance companies.
- Ask for group discount.Get as many insurances as you need from the same company.
- Always stay insured.If you cancel your plan even for several days, some companies may consider you as high risk and you may need to pay more next time.
- Car Security Devices.Any extra security measures you take to deter thieves from stealing your car will further decrease the risks you pose to the insurance company.
- Good driving records.That will definitely lower your price.

---EliteCarInsurance.info---

January 12 2012 at 4:30 AM Report abuse rate up rate down Reply
thomasva6

you can tell the car isn't moving because the ho isn't texting her pimp.

July 21 2011 at 1:20 PM Report abuse rate up rate down Reply
Patrice Dyal

yeah it is true most of us can save money on our car insurance by making few simple changes look online for "Auto Insurance Clearance" you will be amazed. In this stupid economy we all need to find ways to save. With high gas prices where else can you save for travelling?

July 21 2011 at 2:09 AM Report abuse rate up rate down Reply
concerninaugusta

If you teen cannot afford a car they should NOT have one! I would never purchase a car or insurance for a teen. That is PARENTS number one mistake. They need this step to take the next one successfully out into the world. This gives them confidence they earned and paid for it themselves. So many parents I have seen that bought their child a car, turned out to be MOOCHERs and soon to return home. Its you choice.

July 20 2011 at 5:35 PM Report abuse +1 rate up rate down Reply
jamesbnetzer

I have an agreement with my kids that I will pay their auto insurance until they get their first moving violation. After the first moving violation they are on their own for insurance costs. My insurance guy gives me an estimate each year showing them the cost of having their own policy. Both kids work and understand how long they have to work to pay for their insurance. I believe the financial incentive of not having to pay their own insurance is a reminder to them to drive responsibly.

July 20 2011 at 2:26 PM Report abuse rate up rate down Reply
charpist5

Here is what you need to know. When your teen has saved up and can pay cash for a car, and also pay for the insurance, THEN he or she can go car shopping. Not before. My opinion? NOBODY should be driving a car unless he/she is over 18. Preferably...over 21 with no history of drug or alcohol intake.

July 20 2011 at 1:30 PM Report abuse +4 rate up rate down Reply
Liz

my parents NEVER bought me a car. Sure, they LOANED me the money, but I paid them back in 100/month increments. Even then, I was 18 when I got my license, and I had a job to pay for said car. I wasn't one of those people who just thought they 'deserved' a car. I certainly don't plan on just gifting my child a car either.

July 20 2011 at 1:23 PM Report abuse +2 rate up rate down Reply
Frederick

No one under the age of 18 should be allowed to own a car and drive a car. This crap of having 15-16 y/o driving to school is ridiculous. Their legs don't work? They can't walk or bike to school? Why are kids so fat? They don't walk or bike to and from school. Where are they going that they need to be driven? NO school is that far that they cannot walk/bike. Their accidentr rates are horrendous. They are a danger to society. PArent pay for their car, their gas, their insurance, their accidents.. Kids learn no responsibility and do not have jobs that can support their driving. Stgop the madness. Make cars for "kids" illegal.

July 20 2011 at 1:11 PM Report abuse rate up rate down Reply
2 replies to Frederick's comment
harleydavid105

Under 18 drivers should be required to take a defensive driving course. I know many adults who could learn from one. No Def. Driving course no license under 18 should be a requirement.. It would save countless lives and many parents tears and heartbreak.

July 20 2011 at 1:20 PM Report abuse +1 rate up rate down Reply
oakspondman

You obviously do not live in Calif.

July 21 2011 at 5:24 PM Report abuse +1 rate up rate down Reply
Barbara

If you have a relative that will give your kid a car fine. If you have a 2nd car that is older and safe that you are willing to let them use... fine. I never bought either one of my sons a car. We had an older Camry that we let them use it for work, etc. It held up. In fact, the only accidents were people crashing into them (not serious thank god) but the camry held up with minor repairs while the other cars had substantially more damage. I would never consider buying my kid a new anything even if I had the money.... if you have to get them a car, get one that's used, safe, in good running condition and one that maybe already has some dingies on it. I heard too many stories from my kids about parents who bought their kids really nice cars only to have totalled. By the way.... this camry went to 250,000 miles till the transmission went... and if we had caught the warning signs... it probably could have been fixed and would have gone at least another 50,000. Went we sold it to salvage.... we felt like a family member had died. It was 16 years old.

July 20 2011 at 1:05 PM Report abuse +2 rate up rate down Reply
kitharris1

two of my boys learned driving my old ford four door sedan. they called it pac man. i think they really put it through it's paces. both boys had the same driving instructor and he was very good and taught them defensive driving. pac man was rear ended and the trunk touched the ground after impact. the youngest said he was absolutely not going to drive pac man but admited after the crash that he loved driving that car. ford cars are fairly inexpensive and if you buy a 3 year old sedan with low miles you can save a bundle. i find their reliability comparable to all the others.

July 20 2011 at 12:25 PM Report abuse +2 rate up rate down Reply