Buying a car is a hefty responsibility, regardless of who it is! The initial purchase is not only a monumental one, but the aftermath of car upkeep, perhaps a monthly payment, and of course weekly commitments such as a full tank of gas can be overwhelming. And of course, the unforeseeable car mishap—needing a new transmission, the random breakdown, or maybe just a twist of poor fate needing a new car altogether. Needless to say, purchasing a car is a financial responsibility from the moment you sign the title.
So what happens when your new driver has this responsibility so that they can have transportation for school, work, or a social life? Should you help with this, or chalk it up to a learning experience and have them pay for it all on their own? Here are some tips and things to consider as your kid moves towards the purchase of their first car, and the involvement you may or may not have with it.
Do they have a job? Take a step back and reflect on where your kid is at in life. Are they pulling their weight with their finances? Are they holding down a job, and showing responsibility? If they are focusing on school and academics, how are they fiscally contributing to their present and their future? It's so important to hold your student responsible for fiscal burdens, even if it's not entirely—this allows them to wean into the pressures and predicament of adulthood so that they can mature properly. It's also a hope that your student has been able to watch your smart fiscal decisions as well,
Bryan Camper, certified financial planner and wealth manager with Camper Rogers explains, 'Parents don't always understand how their example sets the tone their kids will follow. If they spend more than they make, their kids will too. If they live frugally, so will their children. Their 'financial DNA' is established early.' (via MSNMoney)
What has been the 'Financial DNA' in your family? How is your child's? Are they ready for such a big step?
Is it safe? Most kids who purchase their first car look at one thing: the price tag. This being said, it's typical and logical (in their mind) that they would search for a car that's cheap, perhaps a used car with 200,000+ miles and a dent or…..five. But is it a safe vehicle? Is your student driver sacrificing their safety for a steal of a cheap buy? It's important to have this conversation with your kid and make sure they know and understand the possible risks of purchasing an older car with more miles on it—more miles usually means more problems.
Can you negotiate? There are plenty of terms you can come to with your student as they move towards the purchase of their car. Consider negotiating with your child as you work towards assisting them or coming to an agreement on the car of their choice. Can you match what they've saved for this purchase? Can you assist with the car payment (if leasing/taking out a loan for their vehicle) or perhaps allow them to make the initial purchase of the car and help with maintenance issues along the way? Or, maybe, for whatever reason your child will be purchasing their car solo and you can offer your support and wisdom in the car shopping part of this process. That can sometimes be just as helpful (so that they don't purchase a lemon!) as fiscal support can be.
We're curious, how did your parents handle you first car purchase? How do you plan on helping your student with their first car? What has worked with your other children?
And as always, a friendly reminder: for all of your student's car needs, turn to the Car People for help! www.thecarpeoplellc.com