Deciding to buy your kid a car is a highly gratifying experience. You certainly want to help your children get off to a great start as they head toward adult life, and purchasing them a vehicle is a perfect way to do just that.
No matter what they are setting out to accomplish, it is likely that they’ll need a set of wheels to be successful.
With that said, you don’t want to send yourself deep into debt just to purchase a vehicle for your child. To make this dream come true without paying too much interest along the way, we have outlined five tips below.
1. Buy a Cheap Car!
This might be an obvious point, but it is where this list needs to start. Simply put, you don’t need to purchase a top-of-the-line vehicle right off the dealer lot.
Most teen drivers get started in a used car, and there is nothing wrong with following that trend. The main goal here, obviously, is to find something that is both reliable and safe. As long as the vehicle checks those two boxes, it doesn’t matter if it’s not the prettiest thing on the road.
2. Work Together to Save
If your child has picked up a part-time job, or if they have the time in their schedule to do so, consider creating a plan to buy the car together. Shop the used car ads to find a suitable vehicle and take note of its price.
That price will then become your target, and you can work together to save up the money to purchase that vehicle (or a similar one) with cash. For example, you could offer to match each dollar that your child is able to save, until you have enough money to buy the car.
3. Be a Co-Signer
For cases where your child is making an income but doesn’t have the credit to actually buy a car, you may be able to act as a co-signer in order to close the deal.
This way, you don’t wind up taking on the debt of the loan, but your child is able to make the purchase. Of course, you would be in line to deal with the debt if your child defaults, so have honest conversations about the serious nature of taking on debt.
4. Pass on a Family Vehicle
If you have been thinking about purchasing a new vehicle for yourself or your spouse, consider passing down the old family vehicle to your child. This way, you aren’t taking on an extra payment – you are just replacing your old payment with a new one, and keeping the old car in the family. This won’t always work, however, as you may not have paid off the old vehicle, or it might not be in good enough condition for the job.
5. Don’t Do It
This one might sound harsh, but hear me out. While it is a generous thing to buy your kid a car, it may not necessarily be in their best interest.
It is important for young people to understand the importance and value of money, and that lesson might go missing if they are simply handed the keys to a quality vehicle. Think carefully about the message you will be sending, and the personality of your child, before deciding how to proceed.
Did you buy your kid a car? Did you go into debt to do it?
Photo courtesy of: State Farm