Helping your child with their first car purchase

There comes a time when children become of driving age. Needless to say, the desire to have their own vehicle is almost immediate as well. That leaves parents or mentors with the difficult question of how they are going to participate (if at all) in getting the appropriate vehicle for the child.

Children often have visions of Escalades, Ferraris and other sparkling eye candy in mind for a vehicle. But, the reality is that unless there's a significant bank account, those choices are not necessarily attainable for many, even with parents or mentors supporting them.

Some people have the means to purchase a new vehicle for their child. Many don't. So, here are a few things to consider for that moment in time when your child comes asking for their own keys and you're trying to figure out how to be involved in the transaction, or not be.

Parents or Mentors Purchase the Vehicle

• The parent or mentor can ensure the child doesn't go into debt earlier than necessary.
• The parent or mentor can ensure the child doesn't make an irresponsible choice that would be regrettable such as a poor vehicle choice that has swiss cheese rust throughout.
• There is a measure of freedom for the child, and the accompanying sense of maturation, but there's always a "Go-To" if the child has concerns along the way.

The Child Purchases the Vehicle

• In this scenario the parent or mentor has no oversight.
• The child takes on responsibility for their purchase in full – good, bad, ugly, or salvage – including self or bank financing, insurance, registration, inspection, etc.
• Unfortunately, inexperience with the auto industry can lead to the child being taken advantage of by the odd ball unscrupulous seller or banking institution.
• Total freedom for the child, and the accompanying sense of maturation with shouldering the responsibility on their own.
• If financed, the child has a great opportunity to build their credit early. Or,...
• Unfortunately, without the guidance of parents or mentors, some may find this a quick way (not always though) to repossession and ruined credit for the child.

Purchase with Help from the Parents or Mentors

• Here, the child and parents or mentors partner together to get the deal done.
• The child may take the responsibility for some (or all) of the purchase including self or bank financing, insurance, registration, inspection, etc. But, it's under the tutelage and maybe some of the financing of the parent.
• If financed with the parents or mentors, the child has a great opportunity to build their credit early in life.
• In this situation, both parties are often found on the loan or title together. So, if one is late, the other covers the payment. This gives the parent the opportunity to take the vehicle if the child is late with a payment or acting irresponsibly – like drinking and driving. When the child pays up again, or straightens up, the child typically gets the keys tossed back to them. This saves the child from situations with legal consequences or repossession and also adds a parental or mentoral buffer to the valuable credit the new driver is trying to build.
• There is a measure of freedom for the child, and the accompanying sense of maturation, but there's always a "Go-To" if the child has concerns along the way.
• The parent may like this measured approach to loosening the reigns to their child. It's an opportunity to gauge over time how well the child has accepted the new responsibility before eventually cutting them loose all together.
• Repossession is still a possibility, but not as likely because two parties would have to default first.

The reality is that there is no one-size-fits-all approach that will work for everybody. This is a serious decision that requires discussion, time and planning. Regardless of the size of the pocketbook, there is more than the initial purchase price that's involved, the ongoing maintenance, ongoing hours or training behind the wheel, and sadly for many there are ongoing payments for the rest of their lives. The payoff however is rewarding as the child shoulders more and more responsibility. It is pre-adulthood happening right before the eyes of the older, more seasoned drivers that have navigated these waters before, and also a moment of pride for having been able to influence the younger generation.

These three different ways of helping your child each have their own gravity. No doubt wisdom will be attained with either of the choices through the experience called ownership. But, don't rush the decision. Discuss it. Plan it. Enjoy the ride afterward!

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