Vroom! Vroom! Helping Teens Get Their Own Set of Wheels

Teenage Girl Standing Next To Car Holding KeyEveryone remembers their first car. Whether it was a hand-me-down beater or a shiny, new thing, those first teenage adventures behind the wheel of your very own car were a very big deal. Finally…you were alone, wind in your hair, music pumping, on the road to anywhere.
Perhaps you saved your fast-food paychecks and birthday card cash for a few years before scraping together a decent down payment on a used truck. Or your parents gifted you the 90,000-mile family station wagon (remember those?). If you were extremely lucky, you woke up on high school graduation day to find a completely paid for, fresh-off-the-lot hatchback that already had custom vanity plates. No matter how you got your first vehicle, it was memorable.
For John Larson, a parts inventory analyst for Butler Machinery in Fargo, his 1979 two-door Dodge Magnum is still a source of pride. “It was my brother’s car. I had it for five years. I did blow up the engine once, so I learned that that cost a lot of money,” says Larson. “But I did learn how to maintain it myself and how that pays off in the longevity of owning a car.”

Owning a Car in Today’s World.
Even though costs have increased and technology has improved, the basics of car ownership have stayed roughly the same for the past few decades. You need a hefty chunk of change to buy a car. It needs gas to run. Insurance and registration are a must. It’s unlawful to operate a motor vehicle without a license, and the car needs to be maintained.
However, there are factors creating new challenges for both parents and teens. The expectation by teens that they will get a car when they earn their license is a hurdle for many families, and distracted driving is a huge worry with the prevalence of smartphones, Bluetooth, GPS units, and DVD players already installed in vehicles.
Vehicles are only as safe as the people driving them and teens, unfortunately, continue to have a dangerous track record. Statistics from AAA and the Insurance Institute for Highway Safety indicate:
• Motor vehicle crashes are the leading cause of death among 15- to 20-year olds.
• Per licensed driver, teens are two to three times more likely to be involved in a crash than adult drivers.
• When driving with a friend, the crash risk for novice drivers increases 30 percent.
Helping your teen get his or her own set of wheels is a huge accomplishment—for both of you. Here’s what you need to know before you start hitting the dealerships.

Rite or Privilege?
You may think your teen has a full grasp on this concept, but without an open and honest conversation about it, you may be in for a battle once he or she finally does earn a license.
It starts with a talk with your parenting partner—are you both in agreement on how car ownership and/or driving with your teen should be handled? If you’re not on the same page from the outset, do not proceed with purchasing your teen a vehicle just yet. If you are a united front, however, sit down and have a discussion with your teen about money, expectations, rules, safety, and any other parameters you feel need to be covered before he or she gets a license. Be clear about how you view car ownership. In most families, having a car once you can drive is not a birthright simply because it’s too darn expensive. A 2011 study by Nationwide Mutual Insurance Company found that households dole out roughly $3,100 annually to allow their teens to drive.
Experts, however, warn that parents and kids alike may feel held hostage to peer pressure to get that first car. An article on DailyFinance.com says parents may be tempted to buy their teen a better car than Mom or Dad drives because of what the Joneses down the street bought their rookie driver. Although it may feel awkward and hurt your pride a little to explain to your teen you can’t afford to buy them a nice, new car, it’s crucial your teen understands money and cars don’t appear by magic. They both take a lot of work to obtain.
Use this car purchase conversation as a teachable moment and always keep your word.

Safety Check – Where to Look For Vehicle Safety Ratings
• The Insurance Institute for Highway Safety – www.iihs.org
• Safercar Sponsored by National Highway Traffic Safety Administration –
• Consumer Reports – www.consumerreports.org/cro/index.htm
• Motor Trend –
• Kelley Blue Book – www.kbb.com
• J.D. Power and Associates –

Set the Tone.
Having a car will undoubtedly give your teen a great sense of freedom, and you may feel a certain amount of dread knowing you can’t control what happens once they put that key in the ignition. Parents, especially those helping their teen foot the bill to pay for the car and its upkeep, have a right to establish rules of the road and should make their expectations transparent. AAA recommends creating a written driving contract parents and children both sign that outlines such things as:
• Who will pay for gas, insurance, and maintenance
• How many people are allowed in the vehicle at any one time
• Under what circumstances the car will be taken away (poor grades, ticket, accident)
• Where their phone should be stored while driving
• What time curfew is
• If there are any restrictions on driving during inclement weather or at night
The idea here is to establish boundaries and build trust between you and your child so when they say they’re ready to operate a motor vehicle without a contract, you have more to go on than just their word—you have their actions.

It’s Gonna Cost You.
Regardless if you buy new or used, owning a car takes some serious Benjamins. Let’s tackle a basic car-buying rule first. If you (and by you, we mean parent or child or a combined income between the two) can’t afford to put down at least 20 percent on the car, do not buy it, advises the website Teens Guide to Money (www.teensguidetomoney.com). In the long term, you’ll likely end up owing more on it than it’s worth. Additionally, if you can’t pay off the car in 48 months, don’t move on it! That may take the air out of the tires of those of you holding on to hope for a new vehicle, but it’s the truth. Remember, buying the car is just the beginning of a lengthy expense sheet.
Once you think you know your initial overhead, factor in things like gas, insurance, and maintenance. Larson, who has remained a loyal car enthusiast and expert since his teenage years, says parents and teens have lots of things to consider in creating an overall budget.
“Try to calculate out how many miles you’re going to drive it, how long you’re going to keep the car, and who else may be using it,” says Larson. Consider the not-too-distant future and think about whether your teen will take the car away to college or if it will stay with the family.
Having some idea of what you’ll spend on gas is helpful for a first-time car owner. Once you’ve figured out about how many miles you’ll travel in a year, Larson suggests you take the car’s gas mileage and the current average cost of gas to estimate your gas costs per year.
Insurance is another expense, and insuring a first-time driver isn’t cheap. A 2014 report conducted for the website InsuranceQuotes.com shows that adding a teen driver to a married couple’s auto insurance policy boosts rates by an average of 79 percent. In fact, Minnesota is among the 10 costliest states for families with teenage drivers with average premiums increasing a whopping 97 percent.
Some insurance companies provide discounts for things like making good grades, being accident-free, and taking a defensive driving course to help ease the burden of adding a new teen driver. Each insurance provider is different, so do your due diligence when you collect quotes.
There are many ways families can divide automobile costs. Here are a few examples:
• Parents pay for everything but have stipulations on grades, extracurricular participation, helping with family transportation needs, and errands.
• Parents pay for the vehicle, but the teen is responsible for everything else.
• Parents and teen split the cost 50-50 for everything related to the vehicle.
• Teen pays for the vehicle, but parents take care of the rest.
• Teen pays for everything.

Safety and Reliability.
Aside from money, a vehicle’s safety and reliability will be the most important factors in helping your teen choose a car. While they may be attracted to aesthetics like color, style, and size, it’s up to you to steer them toward a vehicle with features that can help prevent crashes, minimize injuries, and maintain its ability to stay on the road for years to come. Simply telling your teen you don’t want them to drive anything too “flashy” won’t do. Teens crave information and usually want to know the “why” factor when their options are being limited. Don’t be afraid to conduct research with them and teach them about the features that will help keep them safe behind the wheel.
To research safety and crash-test information, DailyFinance.com recommends starting with the National Highway Traffic Safety Administration and the Insurance Institute for Highway Safety. Then you can turn to Consumer Reports and J.D. Power and Associates for reliability ratings. Before purchasing a used vehicle, make sure to get a free vehicle history report from CARFAX.com.
Experts agree the ideal first-time car for rookie drivers is a late-model sedan (nothing too powerful like a sports car, or too top-heavy like an SUV) with modern safety features like:
• Antilock braking system, or ABS, to help drivers maintain stability and steering control during hard braking.
• Daytime running lights to increase visibility.
• Electronic stability control, or ESC, to give the driver more control on slick roads or at high speeds.
• Airbags, preferably front and side-impact.
• Adjustable/lockable head restraints to provide head and neck protection during a crash and to maximize protection against whiplash.
Finally, AAA cautions that before you sign off on any purchase (yours or your teen’s), make sure to investigate any warranties offered with the car and if you’re allowed to have a pre-purchase inspection conducted by a reputable third-party. A certified mechanic you trust should be able to tell you if the vehicle you’re considering is roadworthy, physically sound, and has operational safety features.
Helping teens achieve their dream of car ownership is not easy. You may experience limited financing, unfortunate accidents, faulty machinery, or troublesome behavior. But the lessons they will learn about money and responsibility will likely serve them long after they’ve entered the “real world.” And you know they’ll never forget their first car.
Formerly from Fargo-Moorhead, freelance writer Patricia Carlson writes about baby boomers, parenting, and healthy lifestyles for magazines across the country. Check out her work at www.patriciacarlsonfreelance.com.

Filed Under: In This IssueMoney & Consumer

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