When your child wants to buy a car, don’t take the back seat| Smart Change: Personal Finance
It’s time for your teen to buy a car. You’ll want to set some ground rules. The last thing you want is to put your child in the driver’s seat in the wrong car.
The best way to avoid conflict is to set clear expectations and boundaries with your teen before they start surfing the car. While reining in your teen may dampen his enthusiasm at first, it can become a valuable learning experience that you will guide him once you leave the nest.
4 No-guss to choose a car
In many cases, budgeting will limit the options available. But once you have roughly decided on your price range, you can tactfully mark the restricted areas for choosing a car.
Here are the four things to avoid:
big horse power
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The statistics about young drivers are alarming enough. According to the Centers for Disease Control and Prevention, “the risk of malfunctions is particularly high during the first months of licensing.” The younger the driver, the higher the risks. The chance of an accident is one and a half times higher for a 16-year-old driver than an 18 or 19-year-old, according to data from the Insurance Institute for Highway Safety.
Today, we put our children behind the wheel of cars with unimaginable power a generation ago. For example, the Toyota RAV4 Prime Hybrid produces 302 horsepower, about what Ferrari made in 1990. The Tesla Model 3 sedan produces nearly 500 horsepower and reaches 60 mph in less than four seconds — faster than the Corvette that She made the year 16- they were born from a year old.
When inexperience meets temptation, bad things happen. Faults are more expensive at higher speeds and accidents are more serious. What’s worse, street racing has spiked during the pandemic, the Associated Press reported. Your kid can still decide to race a family Honda Civic, but the Dodge Charger V8 invite is hard to resist.
Speed is more than just a horse of course, but choose the slowest car possible. You will probably still be faster than you did when you were a teenager.
Luxury cars are beyond their heyday
It’s surprising how quickly the price of a luxury car can drop, especially when there is no shortage of new cars. In a non-pandemic environment, some high-end cars lose about half their value in just three years, according to car search engine website iSeeCars. This might lead your teen to suggest an affordable vintage Mercedes as a good option.
Unfortunately, these cars have a hidden cost: repair and maintenance.
Take a lesson from Carvana, the powerful online company that sells hundreds of thousands of cars annually. If you buy a 2013 Honda Fit with 96,000 miles from a Carvana, the two-year base powertrain warranty will cost $1,150. Buy a 2013 Mercedes C-Class with 96,000 miles on it for just a little money, and the powertrain warranty is $4,300.
This cost will cover the unexpected big things. Doesn’t include maintenance—oil changes, filters, coolant coolant, wiper blades and the like, which CarEdge.com puts at around $2,000 a year for a 10-year-old C-Class, twice its estimate for Fit.
Moral of the story: Stay away from used luxury cars unless you have the money to maintain them.
Unless your young driver is also an experienced mechanic, buying a project vehicle that doesn’t work, or has serious problems, is a bad idea. While cars sold “as is” have low asking prices, it’s hard to know how much it will cost to run. Moreover, without the benefit of a test drive, as soon as the repair process begins, additional problems may be revealed.
As the old saying about used cars says, you don’t want to buy someone else’s problems. If it “only needs a battery”, the owner has probably replaced it.
It’s tempting to buy a big car that will fit your little siblings, all their sports gear or whatever else they need to carry around. While this might make your life a little easier, you’ll want to be mindful of how many friends – read “Distractors” – your child can put in the car.
That’s because the CDC has found that the presence of teenage or young occupants increases the driver’s crash risk. In fact, the CDC has found that “the risks increase with each additional teen or young passenger.”
How to buy a car with your teenage son
Now that you’ve eliminated the negatives, here are some of the positives to making this a collaborative project for you and the first time buyer.
Decide who will pay for the car—parent, teen, or both—and what your price range is. If you want to finance the car, your child will get a great introduction to learning how to choose an affordable car payment and shop for a loan.
Find out the total cost of owning a car to ensure your teen understands this financial commitment and budgets appropriately.
Get pre-approved financing
Applying for a loan early will reveal what you, your teen over 18, or both of you will qualify for, if you sign, and give you details of your monthly interest and payments. In addition, the loan offer at hand will become a useful bargaining tool to get the best interest rate for the agency.
Choose target cars
Finally, here’s the fun part. Now that you know how much you can spend, you can start looking for specific cars. Think about how you use it and how often you use it. Check safety and fuel economy ratings, and estimate insurance costs.
The car buying app is a good starting point. It is a good idea to search for several target cars because you never know what you will find near you and what they look like. You have to choose from what is available.
A pre-purchase inspection for a used car costs between $80 and $200.
Watch the deal
Your child may want to lead the negotiations, but you will want to keep an eye on all the paperwork. Review everything: deed of sale, title, and contract of sale if you’re financing. Whether you’re buying from an agency or a private party, you’ll need to negotiate smart and check the numbers methodically.
It will be a learning experience for both of you.