OK, I admit it, I have teenage kids, so this topic is very relevant to me right now. I’m not struggling on the subject either. I know many people buy new cars for their teenagers, especially where I live, but my wife and I won’t be joining them. Both kids will drive a used car, and here’s why.
Vehicle cost
When they’re 16 or 17, very few teenagers are in a financial position to contribute significantly toward the purchase of a new car costing $15,000, $20,000 or even much more. That’s serious money, and it will have to be paid either in cash, with financing or, more likely, with some combination of both.
Just as important, a teenager may not have a serious economic use for a new car. Driving to school and back (when they can easily walk), to hang out with friends or even to a part time job may not justify an investment of many thousands of dollars in a brand new vehicle.
Insurance cost
Because of the higher cost of new cars, they’re also commensurately more expensive to insure. You’ll have to maintain collision coverage on a new vehicle, and that in combination with the teenage factor will result in a very high premium.
Teenagers are expensive to insure as a rule, especially teenage boys. But a new car will make it even more expensive.
Scratches, dings, dents and unexplained damage
Do you remember when you were a teenager and you first learned to drive? Teenagers aren’t seasoned drivers—it’s more accurate to say that they’re cutting their teeth on their first car. And “cut” them they will. Whether it’s new or old, a car driven by a teenager will have more than it’s share of scratches, dings, dents and other unexplained damage.
It’s not necessarily due to recklessness—though that’s a typical cause too—they make more mistakes driving because they don’t always know what to do.
Damage to a ten year old car doesn’t have the depreciating factor that it does on a brand new car. A teenager can incur a number of these in the first year of driving. Yes, you can repair these, but it will cost money every time you do, and that’s in addition to the purchase price you’ve already paid for a new car.
Accidents
We never like to think about this—we prefer to think that our kids will be good drivers, especially if we’re the ones who trained them! But accidents can never be discounted when it comes to teenagers, we just have to hope and pray that no one gets hurt.
But damage to a car can be substantial, and it’s much less expensive to replace a older car than a new car, especially one that’s more than a few years old. A used car is something like preparing for an event that we hope will never happen but does all too often.
Personal responsibility
Giving a new car to a teenager does little to encourage thrift. In a teenagers mind, the fact that he’s driving a brand new car might lead him to believe that if anything happens to it, it’ll just be replaced with another brand new one. No, that’s not the message an adult will give a kid directly, but it’s how it can be interpreted subliminally. Actions do speak louder than words, and few events in a teenager’s life shout quite as loudly as getting a new car.
Should that even matter? I think so. Even though you may be able to well afford to provide your teenage son or daughter with a brand new car, it’s entirely possible that he or she will lack the ability later in life. If so, transitioning to a used car could be difficult. If we teach our kids to do things in small steps, like buying a used first car, they’ll always have that experience to look back on if things don’t play out quite the way everyone hopes they will.
What kind of car would you buy for your teenage son or daughter?
Kevin Mercadante is professional personal finance blogger, and the owner of his own personal finance blog, OutOfYourRut.com. He has backgrounds in both accounting and the mortgage industry. He lives in Atlanta with his wife and two teenage kids and can be followed on Twitter at @OutOfYourRut.