An exciting highlight for many teens is earning the privilege of driving, and possibly buying their first car. If you have a teen driver, eager to get behind the wheel, now may be a good time to start a series of important conversations about the process of buying a vehicle. From creating a budget to understanding the hidden costs of owning a car, here are four tips for helping your teen purchase their first car.

Determine who will be paying for the vehicle.
The first thing you’ll want to determine is who will be responsible for paying for the vehicle. Have you or your teen saved enough funds to purchase the vehicle outright? If paying for the vehicle outright isn’t an option, you may want to consider taking out a loan. If you decide to finance, who will make the monthly payments—you, your teen, or a combination of both? Whatever your choice, it’s important to make sure everyone is in alignment before proceeding.

Create a financial plan.
Regardless of who will be financing the vehicle, a budget will help you and your teen stay on track financially. Creating a budget is essential as it will serve as the financial roadmap for tracking all things finance. Important categories to consider adding to your auto budget are monthly payment, insurance, maintenance, and the cost of fuel, just to name a few. If the vehicle your teen has in their sights requires a down payment, now may be a great time to teach them the importance of creating savings goals. These goals should be specific, have an end date, and be trackable.

Explain the hidden costs of car ownership.
Car ownership comes with many costs, some obvious and others not so prominent. It’s no secret that purchasing a vehicle typically comes with a car payment, but what about other costs? When the time comes to pay for the vehicle, you’ll want to prepare your teen for the cost of taxes, title, and tags as well as any add-ons that could potentially drive up the advertised price. Other additional costs to consider when considering car ownership costs are fluctuating fuel costs, maintenance, and insurance.

Consider the pros and cons of new and used vehicles.
Educating your teen on the various advantages and disadvantages of purchasing a new versus used vehicle will help better inform their purchasing decision. A new car may have lower miles, but it could also come with a higher payment or sticker price. On the other hand, a used vehicle could save you money upfront, but may require additional maintenance sooner, which can be costly. No matter your choice, a new or pre-owned vehicle each come with their own distinct benefits and drawbacks.

Buying a car for the first time can be a challenging process, but a little due diligence can go a long way in helping you better prepare.  With the tips above, you’ll be ready to help your teen get one step closer to getting behind the wheel of their very own car. 

This article is for informational purposes only, and not intended to provide specific advice.