How to finance car purchase for teen

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CAsage
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How to finance car purchase for teen

Post by CAsage »

I plan to buy a cheap, bottom-of-the-line, no-frill but new car for my teenager. Wandering by the dealership, the salesman mentioned that I should lease it because then I don't have to pay for any minor damage? I don't believe that... but he did also mention that if I financed it, and cosigned for my son, it would be a good way to start him off with a solid credit history. Can a teen with no income qualify for a car loan if cosigned by his high-score parent?

Note I am NOT interested in whether anyone thinks it's wise to hand over a brand new (albeit entry level) car to a college freshman. I don't like used cars, I don't want to deal with any prior owner abuse/wear and tear, and I think you have the best price comparison shopping with a new car. So that's not open to discussion. Probably a Civic TBD.

Can my teen finance this, or should I look at leasing with the knowledge that he will for sure scratch it up? Do we need to wait until he has some token employment?
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RickBoglehead
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Re: How to finance car purchase for teen

Post by RickBoglehead »

He can't lease or buy with no income or credit history.

Salesman is an idiot.

You can buy it and gift it to him. Co-signing is a bad idea.

Many schools don't let freshman have cars.
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Re: How to finance car purchase for teen

Post by adestefan »

I’ll reserve judgment on the credit issue to other people, but the cheapest car that you can get new is a Nissan Versa. A base model 5 speed manual transmission should be around $11k.
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Re: How to finance car purchase for teen

Post by sailaway »

Wait until he has some actual employment, rather than token employment. At that point, set a budget and let him help choose. A Civic is very odd choice, given that it isn't the base, entry level model that you claim to be looking for. That would be a Fit for Honda and there are other brands that might be even less.

As for not paying for damage on a lease, WHAT?? I can let a scratch go on my own car, but you can bet you will be charged for it at the end of the lease, unless you buy the car at that point. If you talk to that salesman again, ask him to show you the clause in the lease that says you won't be charged.
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Re: How to finance car purchase for teen

Post by CAsage »

Open to cheaper cars! It's been my experience that you can't find bottom-line "base" models that easily used, and the pricing on new cars is at least well documented online (Kelley blue book, consumer reports, Costco etc). Since we parents are footing the bill for college, and the car, and insurance.. It's all one big sucking black hole. I want him to have decent safety features and no maintenance issues. A Civic is a compact, the base model seems ok? I don't want him driving around in something like a Smart car, which looks like a skateboard wrapped in a tin can. Safe, reliable, no frills.

Do they give credit cards to college kids? Do we just wait until he's out of college and employable? My mom dragged me to her bank employer and brow-beat them into getting me my first credit card, I don't remember what age...
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Re: How to finance car purchase for teen

Post by sailaway »

Is he commuting to college? If not, what purpose is the car going to serve? Why isn't he employable during college?

Cars don't cease to be dependable because they are a couple of years old. Smart Cars have excellent safety ratings. If you just want a new car say so, stop with the poor justifications.
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Re: How to finance car purchase for teen

Post by livesoft »

We gave our college graduates the oldest car at home and bought another car for ourselves. That meant they were driving a car that they were used to, but had not driven much in the preceding 3 years.
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Re: How to finance car purchase for teen

Post by delamer »

I am a bit confused.

Do you want to buy the car outright or finance it? Presumably you can do either without your son?

We paid cash for a car for our Kid and put it in Kid’s name and mine. It was a mid-range Civic, BTW.
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Re: How to finance car purchase for teen

Post by mmmodem »

With that criteria, I'd get a Toyota Yaris or Honda Fit. A Civic today is bigger than the Honda Accord that I grew up with in the 90's as the family sedan. I'd even entertain a Nissan Leaf S that can be had for just under $20k after federal and local rebates if you live in the right place. It's an EV but with the limited range will guarantee your child will not be able to drive too far away with their new found freedom.

There's no point in co-signing with your son if you're going to pay for the car. Just sign for it yourself. I got a gasoline only credit card when i was 16. I used the measly $200 credit line to buy gas. As soon as I turned 17 and had a year of credit history, I started receiving offers for regular credit cards. I got a citibank card with a tiny $300 limit and a high APR. By the time, I went to college, my limit was a couple of thousand dollars. Easy peasy, just takes time.
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Re: How to finance car purchase for teen

Post by Grt2bOutdoors »

How old is your teenager? A minor can not sign contracts, they are unenforceable against minors. A co-signed documents means the child would be affixing their signature to such a document.

No finance company will extend credit to someone with no verifiable source of income.

Do not go with a "fleece", the car company will give you a pass on some customary wear, but after a scratch or two, you will be on the hook for repairs to restore it to like new condition.

If you want to buy him a new car, pay for it with cash or you finance it. Another thought could be a certified pre-owned vehicle with low mileage (think car that has come off lease with low average mileage) - you can find them, civics are highly popular cars and its not uncommon to find a car with less than 20K mileage with an extended manufacturers warranty. A new car is great, and the car insurance industry thinks so too, that is why they will gouge your child - new car, lack of driver experience, age and if a male, add another ding. Keep good grades might get you a discount, take a drivers safety course could get you a discount on liability and/or collision coverage.
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Re: How to finance car purchase for teen

Post by DIFAR31 »

mmmodem wrote: Thu Feb 21, 2019 8:36 pm There's no point in co-signing with your son if you're going to pay for the car.
Sure there is, as long as the co-signing parent understands that both parties are fully responsible for the debt and the parent is ready, willing and able to assume timely payments if necessary. The child's name on the loan will help to establish a credit record, and the discipline required to make regular payments on a debt can be a good way to learn financial responsibility. Is this a good thing to do with every kid? No, of course not. But dismissing it out of hand can very well be a wasted opportunity.
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Re: How to finance car purchase for teen

Post by Typ997S »

So, I know you don't want to hear about used cars, and probably do want to hear about safety, but let me give you some real world experience. :oops:

This was a 2011 Honda Civic: Image

My 20 year old son fell asleep at the wheel and crashed into a light post at about 40 mph. The car was totaled. The car performed very well from an engineering and safety standpoint. Three airbags deployed, the crumple zone worked as intended, and there was no intrusion of structure into the passenger compartment. My son was lucky, and got away with only 1 day in the hospital and a broken sternum. Broken sternums are very common in crashes of this velocity because of the deceleration against the seatbelt.

This happens to be the second car he's totaled in about 3 years of driving...teenagers do tend to get in accidents.

My takeaways, for anyone in a similar situation with one or more teen drivers:

1) It's quite likely your kid is going to get in an accident. I think it's wise to have them drive a car that is already somewhat depreciated, so that your financial exposure is limited. However, I wouldn't go more than 5 or 6 model years old, so that the car's safety systems are reasonably up to date. How did I come up with 5 or 6? I'm an engineer...gut feel and I guessed!

2) I don't fully subscribe to the bigger is better philosphy of car safety (let's not start that thread again,) but I would get them a car that is one or two sizes above the smallest...I'm glad my son wasn't in a Honda Fit when he hit that pole.

Ok, hopefully that was helpful and not too random...
Last edited by Typ997S on Fri Feb 22, 2019 12:47 am, edited 1 time in total.
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Re: How to finance car purchase for teen

Post by RickBoglehead »

CAsage wrote: Thu Feb 21, 2019 8:16 pm Open to cheaper cars! It's been my experience that you can't find bottom-line "base" models that easily used, and the pricing on new cars is at least well documented online (Kelley blue book, consumer reports, Costco etc). Since we parents are footing the bill for college, and the car, and insurance.. It's all one big sucking black hole. I want him to have decent safety features and no maintenance issues. A Civic is a compact, the base model seems ok? I don't want him driving around in something like a Smart car, which looks like a skateboard wrapped in a tin can. Safe, reliable, no frills.

Do they give credit cards to college kids? Do we just wait until he's out of college and employable? My mom dragged me to her bank employer and brow-beat them into getting me my first credit card, I don't remember what age...
You can make them an authorized user on a card of yours. That will help build his credit history.
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Goal33
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Re: How to finance car purchase for teen

Post by Goal33 »

I’m confused. If your son is 18, put the money in his account and have him write a check?

He doesn’t need a car loan for credit. I never had one and bought a house right out of college. I only churned credit cards during college and my credit was good enough. This was only a few years ago.
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Re: How to finance car purchase for teen

Post by Goal33 »

I’m confused. If your son is 18, put the money in his account and have him write a check?

He doesn’t need a car loan for credit. I never had one and bought a house right out of college. I only churned credit cards during college and my credit was good enough. This was only a few years ago.
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Re: How to finance car purchase for teen

Post by Dottie57 »

Typ997S wrote: Thu Feb 21, 2019 8:45 pm

1) It's quite likely your kid is going to get in an accident.
I am confused because the kids of friends and family must Be exceptional because there was one fender bender among 20 plus kids.
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Re: How to finance car purchase for teen

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Re: How to finance car purchase for teen

Post by Jack FFR1846 »

Dottie57 wrote: Thu Feb 21, 2019 8:59 pm
Typ997S wrote: Thu Feb 21, 2019 8:45 pm

1) It's quite likely your kid is going to get in an accident.
I am confused because the kids of friends and family must Be exceptional because there was one fender bender among 20 plus kids.
Were they ever allowed to drive in weather that wasn't perfect? My son was driving my Wrangler Unlimited where the temp was warm for a winter night. Near a hill top, flash frozen. He went off the road into a pole. Totaled the Jeep. The Jeep was in 4 wheel drive with 4 snow tires. Oh....the tow truck went off the road nearby. So I don't blame my son. But he was out just cruising around for no reason.

A bunch of his friends' parents all of a sudden had stories of their own kids....probably to make us feel better. Never heard of even a fender bender before this. Come to find out, some friends had totaled 3 cars. Lots of near total wrecks. So maybe out of those 20 kids, you simply haven't been told about the wrecks.
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Re: How to finance car purchase for teen

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no
no
yes
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Re: How to finance car purchase for teen

Post by CAsage »

I hope to God that all we are expecting is the usual backing into block walls, missing the tight turns at In'n'Out, bashing into car doors in tight spaces, gouging over high curbs ... Not crashes! The car is intended to provide transportation during college and an expected year of Grad School, possibly just summers (initially) with part time employment, and later an off-site apartment and work study. So, I fully expect it to depreciate to very small sums over the years of ownership, but serve my son well as transportation. Then he can buy a "real" car when he gets a "real" job.
But I'm gathering the alleged credit-building is probably not valuable, and certainly don't get a lease. I do not anticipate doing any repair bodywork for small dings, unless we have to pry off a fender or two to drive it home! Since I don't foresee him buying a house (ha!) in the early years after college, perhaps we can worry about building credit later. And just buy the darn car and let him have it. Will have to see which way it's cheaper to insure...
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Re: How to finance car purchase for teen

Post by mmmodem »

DIFAR31 wrote: Thu Feb 21, 2019 8:45 pm
mmmodem wrote: Thu Feb 21, 2019 8:36 pm There's no point in co-signing with your son if you're going to pay for the car.
Sure there is, as long as the co-signing parent understands that both parties are fully responsible for the debt and the parent is ready, willing and able to assume timely payments if necessary. The child's name on the loan will help to establish a credit record, and the discipline required to make regular payments on a debt can be a good way to learn financial responsibility. Is this a good thing to do with every kid? No, of course not. But dismissing it out of hand can very well be a wasted opportunity.
No disagreement here. There may be good reason to co-sign for a vehicle. But if the goal is to build credit history. I've already outlined another method that will work. The internet is littered with stories of co-signers going off to college and not doing the things the parents had intended. As they are legal owners of the vehicle, the parents have little recourse. The unlikely risk is the OP's to take.
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Re: How to finance car purchase for teen

Post by Watty »

CAsage wrote: Thu Feb 21, 2019 7:56 pm Wandering by the dealership, the salesman mentioned that I should lease it because then I don't have to pay for any minor damage?
Nope, but the lease would probably make the dealership more. If it is a three years lease then it would also end before your kid graduates. A lease is a bad idea in so many ways.

If you can't pay cash you might want to reconsider financing it since on most college campuses you can get by OK without a car. Building the kids credit history sounds good but if there are problems with paying the loan it could also trash their credit history.

If your kid is not 18 they cannot sign a contract yet so it could be a moot point.

It might be less expensive to insure the car if it is in your name and your umbrella policy might cover it too. You do not want your kid to have some minimal insurance policy that could leave them in debt for life if there is a large lawsuit.

Be sure to get insurance quotes on different cars before you buy because the differences may be more than you would think.

Figuring out the insurance will likely be a at least as important as getting a good deal on the purchase.

Research how the car will need to be registered and sales tax will work especially if the kid will be out of state. It might make more sense to buy the car in the other state.

It might seem obvious but before you buy the car also be sure that your kid will actually have a parking space for it. On some campuses it can be very difficult or expensive to get a parking space. If they will be living off campus they will need two parking spaces, one at their apartment and one on campus.
CAsage wrote: Thu Feb 21, 2019 7:56 pm Note I am NOT interested in whether anyone thinks it's wise to hand over a brand new (albeit entry level) car to a college freshman. I don't like used cars, I don't want to deal with any prior owner abuse/wear and tear, and I think you have the best price comparison shopping with a new car. So that's not open to discussion.
Depending on what you drive you might consider giving your kid your car and buying yourself a new car.
CAsage wrote: Thu Feb 21, 2019 7:56 pm Probably a Civic TBD.
Just FYI Toyota added a lot of advanced safety features to the Corolla as standard equipment(I have one), you should check which safety features the Civic has. At least in 2018 I think many of the safety features were optional on the Civic if they were available at all.

You can see crash test ratings at this web site.

https://www.iihs.org/iihs/ratings

Here is a post that I did about my car buying experience with buying a car online and lots of people have been able to get good deals on cars this way.

viewtopic.php?f=11&t=239526&p=3746230
CAsage wrote: Thu Feb 21, 2019 7:56 pm I plan to buy a cheap, bottom-of-the-line, no-frill but new car for my teenager.
That would not be a Honda or Toyota since they are pretty much a top of the line brand that you will pay a premium for. I have not owned one by I have heard some favorable comments about Hyundai cars and they come with a full five year warranty, and a longer powertrain warranty, that would stay in effect all the way through college. You might also consider the Hyundai Accent.

I would be concerned about how safe a bottom of the line car like a stripped down Nissan Versa would be.
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Re: How to finance car purchase for teen

Post by teen persuasion »

Definitely search out the parking situation on/near campus. Having a car at college can be more trouble than it's worth.

When my dad replaced his car, he let me take the old one to school with me in my sophomore year, so I could drive home on weekends for a part time job. Even with a parking pass for on campus, finding a parking spot was challenging. The pass only granted me the opportunity to park in certain lots on campus, not a guaranteed spot. Most of the time I had to park on city streets, with sides switching Wednesdays at 4pm. Of course, I always had a mandatory lab from 3:30 - 4:30 on Wednesdays. Whether I moved it before lab or after, Public Safety had a ticket on my window. I finally found work on campus so I didn't need the car, and returned it to my parents. It was just too much hassle.

Even later, when living off campus, I had apartments within walking distance, so being carless wasn't terrible. All of the colleges my kids have attended (4 so far) have much better shuttle service (around campus and to outside locations like shopping) than in my college days. DS4 spent 2 years living in the south campus dorms while attending classes on the north campus of his large university.
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Re: How to finance car purchase for teen

Post by Dottie57 »

Jack FFR1846 wrote: Thu Feb 21, 2019 9:15 pm
Dottie57 wrote: Thu Feb 21, 2019 8:59 pm
Typ997S wrote: Thu Feb 21, 2019 8:45 pm

1) It's quite likely your kid is going to get in an accident.
I am confused because the kids of friends and family must Be exceptional because there was one fender bender among 20 plus kids.
Were they ever allowed to drive in weather that wasn't perfect? My son was driving my Wrangler Unlimited where the temp was warm for a winter night. Near a hill top, flash frozen. He went off the road into a pole. Totaled the Jeep. The Jeep was in 4 wheel drive with 4 snow tires. Oh....the tow truck went off the road nearby. So I don't blame my son. But he was out just cruising around for no reason.

A bunch of his friends' parents all of a sudden had stories of their own kids....probably to make us feel better. Never heard of even a fender bender before this. Come to find out, some friends had totaled 3 cars. Lots of near total wrecks. So maybe out of those 20 kids, you simply haven't been told about the wrecks.
Maybe they didn’t tell, but I do know the vhicles. Another thing I don’t understand is cruising for no reason. In my long ago childhood both my brother and I had to have a need for the car and had to be home when parents wanted us.
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Re: How to finance car purchase for teen

Post by Nissanzx1 »

No he won’t get financing for a $15-$20K car with no money, no job, and no credit. Unless I’m missing something, he’s going to struggle to make the payments anyway. That’s quite a bit of responsibility for such a young person to be saddled with. What sort of lesson would it teach him? Just trying to understand the big picture.

Just buy him the car and keep it in your name if you don’t mind being responsible, or buy it for him and place it in his name.
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Re: How to finance car purchase for teen

Post by Typ997S »

Dottie57 wrote: Thu Feb 21, 2019 8:59 pm
Typ997S wrote: Thu Feb 21, 2019 8:45 pm

1) It's quite likely your kid is going to get in an accident.
I am confused because the kids of friends and family must Be exceptional because there was one fender bender among 20 plus kids.
Well, here's what the CDC (https://www.cdc.gov/motorvehiclesafety/ ... sheet.html) has to say:

"In 2016, 2,433 teens in the United States ages 16–19 were killed and 292,742 were treated in emergency departments for injuries suffered in motor vehicle crashes.1 That means that six teens ages 16–19 died every day due to motor vehicle crashes and hundreds more were injured.

In 2016, young people ages 15-19 represented 6.5% of the U.S. population. However, they accounted for an estimated $13.6 billion (8.4%) of the total costs of motor vehicle injuries."

I humbly submit that as parents we should do our best to prepare our kids for safe driving, and get them an appropriate car.
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Re: How to finance car purchase for teen

Post by ohai »

That dealer is loading you with BS. Are you telling me that if your kid bumps the car into something (99% chance he will), the dealer will repair it free of charge? You don't need a $20k loan to start establishing a credit score either. You should probably just do some NPV analysis and see whether financing or buying outright makes the most sense. And maybe find a dealer whose sales people aren't spouting crap to get a sale.

Yes, you can get a credit card with no history. The limit will just be rather low, which is probably a good thing. When I was 18 years old and just got off the boat with zero income, assets, and obviously no credit history, I had no problem getting a credit card.
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Re: How to finance car purchase for teen

Post by Misenplace »

ohai wrote: Fri Feb 22, 2019 1:40 am That dealer is loading you with BS. Are you telling me that if your kid bumps the car into something (99% chance he will), the dealer will repair it free of charge? You don't need a $20k loan to start establishing a credit score either. You should probably just do some NPV analysis and see whether financing or buying outright makes the most sense. And maybe find a dealer whose sales people aren't spouting crap to get a sale.

Yes, you can get a credit card with no history. The limit will just be rather low, which is probably a good thing. When I was 18 years old and just got off the boat with zero income, assets, and obviously no credit history, I had no problem getting a credit card.
+1
Your bank will be happy to set your teen up with a teen checking account, which you will sign for as a co-owner. Then, they will offer him a college credit card. He will be really good about paying it off every month until his sophomore year,when his girlfriend suddenly breaks up with him out of the blue. Then he will use the credit ( which has been increased from an initial 1k as a HS senior to 3k as a college sophomore) to assuage his hurt feelings and charge all manner of s—-t. Then he will spend the next year or two paying off that debt IF he sees the light, understands the effect of compound interest, and his frontal lobe has somewhat developed.

Or, here is another alternative. His parents will bail him out. Their reason is that it is ridiculous to pay such high interest credit card debt rates and he needs to get out from paying interest upon interest. Which is exactly what the credit card company hopes. In that case, he won’t learn a thing except that Dad/Mom will take care of his poor choices.

Also, the credit card offers will start streaming in because those companies know he is a profitable customer.
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Re: How to finance car purchase for teen

Post by celia »

I don’t see a need for teens to own a car, especially when they don’t yet have much life experience. We never bought a car for any of our kids or paid for car insurance or lent them our car. (They all lived on campus at their various colleges and used public tranaportion.) None of their colleges allowed freshmen to own cars as there wasn’t enough parking. But they figured out how to get what they needed by the end of college (job, housing, food, transportation) without any additional help from us.

Let him learn how to take care of himself. A car is not a necessity if there are other methods of transportation.
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Re: How to finance car purchase for teen

Post by mortfree »

Credit card: I had one in college. It had a $500 limit. I used it to buy books and then I paid it off that same month.

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Re: How to finance car purchase for teen

Post by snowox »

Grt2bOutdoors wrote: Thu Feb 21, 2019 8:37 pm How old is your teenager? A minor can not sign contracts, they are unenforceable against minors. A co-signed documents means the child would be affixing their signature to such a document.

No finance company will extend credit to someone with no verifiable source of income.

Do not go with a "fleece", the car company will give you a pass on some customary wear, but after a scratch or two, you will be on the hook for repairs to restore it to like new condition.

If you want to buy him a new car, pay for it with cash or you finance it. Another thought could be a certified pre-owned vehicle with low mileage (think car that has come off lease with low average mileage) - you can find them, civics are highly popular cars and its not uncommon to find a car with less than 20K mileage with an extended manufacturers warranty. A new car is great, and the car insurance industry thinks so too, that is why they will gouge your child - new car, lack of driver experience, age and if a male, add another ding. Keep good grades might get you a discount, take a drivers safety course could get you a discount on liability and/or collision coverage.

This is what I recommend^ +1 I bought a 2016 Toyota Corolla for My Son whos a sophomore and where he is at for College and being an athlete he really needs a car the way the campus is set up. Anyhow I paid for car with 7k miles for around 12k$ I wrote up a 3 year payment contract with a buyout clause when he graduates to make the payments minimal plus I have 3 other kids younger than him coming up. In the meantime he is responsible for any maintenance, gas, etc.. (which must be documented and a picture sent to me) and there are also moral items and GPA #'s that must be met since he is on our insurance written in the contract to be able to keep the car.
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Re: How to finance car purchase for teen

Post by fru-gal »

Having recently shopped for a car, I can tell you that most car salesmen lie their heads off.
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Re: How to finance car purchase for teen

Post by alfaspider »

I wouldn't give a teenager a new car. Something in the ~10 year old rage makes sense- new enough to have safety features like side curtain airbags and electronic stability control, but old enough to be cheap when (not if) it is in an accident. Budget $4-5k and go to town on Craigslist, preferably with a car-knowledgeable friend.
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Re: How to finance car purchase for teen

Post by 260chrisb »

Of course the dealer wants you to co-sign; you, not him or your son, are buying the car. He doesn't need an income, he and the dealer has you so you're good to go. Also, if you lease, this guy will be nowhere to be found when you bring the car back and they charge you for EVERY thing that is not perfect with it. Go ahead, lease or buy him a new car. These are great ways to buy cars especially for 18-20 year old college kids. I know I'm being a bit sarcastic but shouldn't a college freshman be more worried about getting through college than having a credit score?

Sorry, I know you said you didn't want to deal with a used car but dealerships are full of certified pre-owned Hondas with warrantees and low miles that don't include about 25-30% of the depreciation you will lose if he wrecks the car.
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Re: How to finance car purchase for teen

Post by Grt2bOutdoors »

fru-gal wrote: Fri Feb 22, 2019 5:54 am Having recently shopped for a car, I can tell you that most car salesmen lie their heads off.
They all do, even the sales manager. It's in their self-interest to make the sale, as a good chunk of their earnings come from commission. If they don't sell, they don't eat.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
mak1277
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Re: How to finance car purchase for teen

Post by mak1277 »

Dottie57 wrote: Thu Feb 21, 2019 10:30 pm Another thing I don’t understand is cruising for no reason.
In my memory, cruising for no reason was precisely the reason to want a car as a teenager.
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Re: How to finance car purchase for teen

Post by sailaway »

fru-gal wrote: Fri Feb 22, 2019 5:54 am Having recently shopped for a car, I can tell you that most car salesmen lie their heads off.
I was a boat broker for a few years. Anytime I complained about honesty, I was told 'you should see the car salesfolk.'
Teague
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Re: How to finance car purchase for teen

Post by Teague »

mak1277 wrote: Fri Feb 22, 2019 10:24 am
Dottie57 wrote: Thu Feb 21, 2019 10:30 pm Another thing I don’t understand is cruising for no reason.
In my memory, cruising for no reason was precisely the reason to want a car as a teenager.
Yes, cruising allows teens to get away from their parents - who don't understand them. :happy
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Dottie57
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Re: How to finance car purchase for teen

Post by Dottie57 »

mak1277 wrote: Fri Feb 22, 2019 10:24 am
Dottie57 wrote: Thu Feb 21, 2019 10:30 pm Another thing I don’t understand is cruising for no reason.
In my memory, cruising for no reason was precisely the reason to want a car as a teenager.
But not as a parent. Wants versus needs you know :happy
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Re: How to finance car purchase for teen

Post by Dottie57 »

Typ997S wrote: Fri Feb 22, 2019 12:50 am
Dottie57 wrote: Thu Feb 21, 2019 8:59 pm
Typ997S wrote: Thu Feb 21, 2019 8:45 pm

1) It's quite likely your kid is going to get in an accident.
I am confused because the kids of friends and family must Be exceptional because there was one fender bender among 20 plus kids.
Well, here's what the CDC (https://www.cdc.gov/motorvehiclesafety/ ... sheet.html) has to say:

"In 2016, 2,433 teens in the United States ages 16–19 were killed and 292,742 were treated in emergency departments for injuries suffered in motor vehicle crashes.1 That means that six teens ages 16–19 died every day due to motor vehicle crashes and hundreds more were injured.

In 2016, young people ages 15-19 represented 6.5% of the U.S. population. However, they accounted for an estimated $13.6 billion (8.4%) of the total costs of motor vehicle injuries."

I humbly submit that as parents we should do our best to prepare our kids for safe driving, and get them an appropriate car.
I don’t dispute the number of accidents. Just that driving for no reason swine and three total wrecks is normal.

As a teen my dad would tell me “ You’re not much but you are the only Dottie we have. Drive safely!” Then He would laugh! Never amention of the car. I knew his concern for me was genuine. So no accidents for me or my wild child brother.
getthatmarshmallow
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Re: How to finance car purchase for teen

Post by getthatmarshmallow »

Typ997S wrote: Thu Feb 21, 2019 8:45 pm So, I know you don't want to hear about used cars, and probably do want to hear about safety, but let me give you some real world experience. :oops:

This was a 2011 Honda Civic: Image

My 20 year old son fell asleep at the wheel and crashed into a light post at about 40 mph. The car was totaled. The car performed very well from an engineering and safety standpoint. Three airbags deployed, the crumple zone worked as intended, and there was no intrusion of structure into the passenger compartment. My son was lucky, and got away with only 1 day in the hospital and a broken sternum. Broken sternums are very common in crashes of this velocity because of the deceleration against the seatbelt.

This happens to be the second car he's totaled in about 3 years of driving...teenagers do tend to get in accidents.

My takeaways, for anyone in a similar situation with one or more teen drivers:

1) It's quite likely your kid is going to get in an accident. I think it's wise to have them drive a car that is already somewhat depreciated, so that your financial exposure is limited. However, I wouldn't go more than 5 or 6 model years old, so that the car's safety systems are reasonably up to date. How did I come up with 5 or 6? I'm an engineer...gut feel and I guessed!

2) I don't fully subscribe to the bigger is better philosphy of car safety (let's not start that thread again,) but I would get them a car that is one or two sizes above the smallest...I'm glad my son wasn't in a Honda Fit when he hit that pole.

Ok, hopefully that was helpful and not too random...
FWIW, I was broadsided, driver's side by a Dodge Caravan in my Fit, when I was 19 weeks pregnant. Car was totaled, baby and I were fine, and Honda got a customer for life that day.
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Re: How to finance car purchase for teen

Post by bloom2708 »

I will own our 3 kids cars until they are done with college.

Buy new if you want. No justification needed. Keep insurance costs in mind.

Our college age kid was hit by someone running a red light at 35mph. Totaled the car (Ford Edge) but no injuries. Plan/hope for no accidents, but these are young/in-experienced drivers. Driving where there are a lot of other in-experienced drivers. I bought her another $7-8k car to replace the $7 to $8k car that was wrecked.

Our middle kid has a 2005 Lexus ES 350. $7k with 68k miles from Craiglist. One owner who was ~85 and upgraded. 10 air bags, no frills, bland looks, comfortable, quiet ride. Is it her dream car? Nope, it gets her from A to B. The only upgrade I did was add a little bluetooth adapter so she could listen to music from the phone.

If they want to buy new when they fly the nest and have their jobs secure, they can do that. Help them make good choices and understand the impact. Putting an 18 year old in the game with a $300/month car payment isn't my idea of being a grown up. Many paths on this winding road. If you want him to have a new car, then pay for it with some rules and understanding.
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CAsage
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Re: How to finance car purchase for teen

Post by CAsage »

Lots of great ideas and feedback here! Responses in part:
1) He's not getting near my 2018 much nicer car; he may not be allowed to park near it. All prior family beaters have been handed off to other needier relatives the last couple years.
2) If I could find a late model low-feature comparable car at 30% or better off a new one, I would look at that. I keep hearing how well some cars hold their value, and too many of them are "fully loaded!", so I'm not sure.
3) It won't be his money, either way. The only reason I was wondering about putting his name on an un-needed loan is to start him off with some good credit. Sometimes car dealers offer 1% financing, which I might take just because of the interest rate. He won't be making the payments or paying the insurance. I do expect him to work 8~10 hours a week during college, but that's pocket/date money.
4) You've convinced me that he can build credit later, and never ever go near a lease (that part I knew :wink: ).
5) Still probably going to look mostly at new, simply because I feel I can comparison shop much much better on new. I have no idea what the buy/sell spread is on used cars, but I feel (esp being female) I will get ripped off even more there. I'm not inclined to run around looking at used cars, either. This car should get Darling Son through 4~5 years of college and possible grad school, then he do whatever he wants.
6) Whether he can take one to college is definitely an issue. This whole thing becomes much less useful/beneficial if the car is really only used during summer (internships and/or local community college for cheap G.E. classes). Then what do we do with it?
7) If insuring the car costs a TON more than it would if it was older.... well, that might swing me to a dealer warranted used car.
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Housedoc
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Re: How to finance car purchase for teen

Post by Housedoc »

Depends if you're a type of person that gets upset when the car has a scratch on it or not. College parking lots are not friendly to decent looking cars. Also my kids did not take their vehicles for the first semester based on the faternity they were joining and the mileage abuse the newbies are forced to drive is part of the Pledge ship.
Also parking permits are like $400 a year at the state schools around here. A great Money Maker for the schools. If your child is going off to school it is not going to be driving home every weekend then I would wait to buy a car until you see how things work out.
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Re: How to finance car purchase for teen

Post by mak1277 »

Dottie57 wrote: Fri Feb 22, 2019 11:31 am
mak1277 wrote: Fri Feb 22, 2019 10:24 am
Dottie57 wrote: Thu Feb 21, 2019 10:30 pm Another thing I don’t understand is cruising for no reason.
In my memory, cruising for no reason was precisely the reason to want a car as a teenager.
But not as a parent. Wants versus needs you know :happy
Needs are boring, wants are where life gets interesting. I still enjoy cruising around with no specific destination.
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Re: How to finance car purchase for teen

Post by Dottie57 »

mak1277 wrote: Fri Feb 22, 2019 12:40 pm
Dottie57 wrote: Fri Feb 22, 2019 11:31 am
mak1277 wrote: Fri Feb 22, 2019 10:24 am
Dottie57 wrote: Thu Feb 21, 2019 10:30 pm Another thing I don’t understand is cruising for no reason.
In my memory, cruising for no reason was precisely the reason to want a car as a teenager.
But not as a parent. Wants versus needs you know :happy
Needs are boring, wants are where life gets interesting. I still enjoy cruising around with no specific destination.
You are an adult with lots of experience in driving and paying your own way. Big difference.
mak1277
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Re: How to finance car purchase for teen

Post by mak1277 »

Dottie57 wrote: Fri Feb 22, 2019 12:52 pm
mak1277 wrote: Fri Feb 22, 2019 12:40 pm
Dottie57 wrote: Fri Feb 22, 2019 11:31 am
mak1277 wrote: Fri Feb 22, 2019 10:24 am
Dottie57 wrote: Thu Feb 21, 2019 10:30 pm Another thing I don’t understand is cruising for no reason.
In my memory, cruising for no reason was precisely the reason to want a car as a teenager.
But not as a parent. Wants versus needs you know :happy
Needs are boring, wants are where life gets interesting. I still enjoy cruising around with no specific destination.
You are an adult with lots of experience in driving and paying your own way. Big difference.
I get it now. I thought you didn't understand cruising around...you really meant you don't understand *allowing* a kid to cruise around. Yeah?
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Re: How to finance car purchase for teen

Post by Dottie57 »

mak1277 wrote: Fri Feb 22, 2019 12:58 pm
Dottie57 wrote: Fri Feb 22, 2019 12:52 pm
mak1277 wrote: Fri Feb 22, 2019 12:40 pm
Dottie57 wrote: Fri Feb 22, 2019 11:31 am
mak1277 wrote: Fri Feb 22, 2019 10:24 am

In my memory, cruising for no reason was precisely the reason to want a car as a teenager.
But not as a parent. Wants versus needs you know :happy
Needs are boring, wants are where life gets interesting. I still enjoy cruising around with no specific destination.
You are an adult with lots of experience in driving and paying your own way. Big difference.
I get it now. I thought you didn't understand cruising around...you really meant you don't understand *allowing* a kid to cruise around. Yeah?
You have it.
LiterallyIronic
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Re: How to finance car purchase for teen

Post by LiterallyIronic »

CAsage wrote: Thu Feb 21, 2019 9:28 pm I fully expect it to depreciate to very small sums over the years of ownership, but serve my son well as transportation. Then he can buy a "real" car when he gets a "real" job.
This part made me laugh. A brand-new car right off the lot not being a "real" car.
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Re: How to finance car purchase for teen

Post by Watty »

CAsage wrote: Fri Feb 22, 2019 12:19 pm 7) If insuring the car costs a TON more than it would if it was older.... well, that might swing me to a dealer warranted used car.
It would the place start with. Get quotes for several different types of cars with different permutations of the car being in your, or your kids name.

You also need to be careful since a rate might be acceptable now but go up sharply after a fender bender.

Any car warranty other than a manufacturer's extended warranty is next to worthless. One thing to watch out for is that they long Hyundai warranty that I mentioned is only good for the original owner. If it is sold the second owner only get a more limited warranty.
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