Should You Pay For Your Kid’s First Car?
It can be an exciting time for parents when your child gets their driver’s license, freeing you up from being their constant chauffeur. But it also proposes new concerns, not the least of which is: Who should pay for your child’s first car? While some parents pay for a kid’s car outright, others make their child save up to buy their own, and a lot of options in between. Here, experts address some of the pros and cons of parents buying their kids their first car.
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Buy a Car, but Don’t Spend a Lot
Some experts believe that you should pay for your child’s car outright, particularly if you have good financial stability. Matthew Roberts, COO at My Choice, said, “What’s good when you pay for everything is that you have the chance to choose a suitable car for your child. It also gives your child the opportunity to reserve their money for something different. The downside is that the child could not fully appreciate saving up and working hard for something. A big purchase like this could also affect your family budget.”
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Andrew Latham, a certified personal finance counselor and managing editor of SuperMoney.com, also believes it’s a good idea to purchase your child’s car, but only for the right price.
“I recommend helping your child buy a safe but inexpensive car if you can afford it. If your child wants a nicer ride, they can work for it.”
Latham strongly cautions parents against buying a new or expensive car, even if you can afford it. “It just doesn’t make financial sense. Buying a new car is a terrible investment in the best of cases, but it’s even worse when you have an inexperienced teenager in the driving seat.” He points out that four out of 10 drivers get into a crash the first and second years they start driving.
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Buying a Car Allows Kids To Save
Another pro of buying your child a car is “that it gives them the opportunity to save up for other expenses, including car care, insurance and gas. In addition, it’s an excellent lesson in responsibility,” said Brad Cummins, financial expert and owner of Insurance Geek.
By purchasing the vehicle for your child, Cummins said, “you can also implement rules regarding driving privileges to reinforce good behavior and ensure other responsibilities are being met outside of driving.”
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A First Car Is a Starter Car
Scott Hasting, of Betworthy.com, bought his son’s first car because he wanted him to have a reliable and safe car, but it was second-hand. “Since it’s his first time owning and driving a car, if he damages it…I did not shell out much money for that car. The idea is that his first car should be his learning car on how to be a responsible car owner. He should learn that he needs to maintain it so it will continue working properly.”
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When Kids Buy Their Own Cars, They Learn Responsibility
Not everyone agrees that parents should finance their kids’ cars. Matt Weidle, business development manager at Buyer’s Guide, said, “One of the reasons you shouldn’t purchase your child a car is that they need to learn how to work for it. Teaching your children responsibility is an important part of your role as a parent.”
Additionally, Cummins points out that buying a car for your kids can lead to them taking it for granted.
“When you choose to let your child pay for everything, that will teach your child goal-setting, managing their finances, working hard and taking care of their assets,” Roberts said. “In this kind of situation, as a parent, you need to guide your child throughout the journey and make them understand that purchasing one’s car comes with a lot of responsibility even after purchase – the insurance, repairs and maintenance. This could be frustrating and affect them if they are also trying to save up for other things.”
Read: What You Need To Know About Buying Your First Car
Split the Cost With Your Kids
“Who should pay? Just like many parenting topics, there are many theories on it and there is no real right answer,” said Pam Liyanage, the co-founder of MoneyPrep Inc. When it was time to get her son up and running with a car, she said, “We found the most pros were with the half and half approach. We pay half and you pay half.”
This approach worked for them because it taught their son the benefits of hard work to earn more money for the car he wanted. It also taught him responsibility. “He researched how much cars cost and what he could realistically expect for his dollar… Proactive learning and awareness helps develop appropriate insights,” she said. And because he had invested in it himself, he took good care of it. “Pride in ownership comes from contributing to the purchase.”
A 50/50 split, or some variation in between, can still teach responsibility but also allow parents some control and say over the process.
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Last updated: Sept. 21, 2021
This article originally appeared on GOBankingRates.com: Should You Pay For Your Kid’s First Car?
