To get ahead you have to stay informed.

AUTO

3 Golden Rules for Buying Your Teen Their First Car

EXPECTED READ TIME: 8 MINUTES

Flashy designs and device-filled dashboards are sure to appeal to young drivers, but when it comes to buying a vehicle for your teenager, the old school has its merits — we suggest finding one that's safe, reliable, and affordable. And don't forget to involve them in the process — it's a great way to teach your kid about money.

These three rules will ensure your young driver's first car consistently gets them from point A to point B while putting your mind (and wallet) at ease.

Infographic on what to look for when buying your teen a car

Safety

This one is pretty obvious, but it bears repeating. Safety should be at the top of the list for any vehicle you're thinking about buying for your teen. Start by searching for makes and models that perform well on independent crash test ratings.  

When you're ready to move beyond initial information-gathering, focus on these safety-related variables:

Features and Equipment

Car design has improved in recent years, making newer models generally safer to drive than older ones. These standard and optional features can provide additional peace of mind when your young adult gets behind the wheel:

  • Three-point seat belts restrain occupants across their lap and shoulder.
  • Air bags, including side impact bags and curtains, lessen upper body or head injuries during a crash.
  • Electronic stability control helps maintain stability if they begin losing control of the vehicle.
  • Backup cameras reduce the chances of collisions while in reverse.
  • Blind spot detection monitors for vehicles in adjacent lanes.
  • Bluetooth and hands-free capabilities reduce texting or other distracted driving.
  • Speed limiters establish maximum speeds for the vehicle.
  • Automated braking engages brakes and prevent rear-end collisions.  

Size

A larger automobile or SUV will typically provide more protection than a compact car or small truck if your teen is involved in an accident. But that doesn't necessarily mean you should buy them the biggest vehicle on the market. Try to find a car or truck that's solidly built and provides adequate room for passengers and storage, but not so bulky that it's overwhelming to drive or difficult to maneuver.

Visibility

Although it's natural to focus on styling when looking at a vehicle's design, you should be more concerned with its sightlines and blind spots. Unobstructed views through the windshield, side windows, and rear glass improve safety, whether you're changing lanes, merging into traffic, or backing out of a parking spot. Make sure any vehicle you're considering allows your young driver to see clearly and easily in all directions.

Reliability

If you're buying a new car for your teenager, reliability is a given.

A fresh-from-the-factory vehicle will have virtually no miles on the odometer and be in prime mechanical condition. Plus, it will come with a manufacturer's warranty that will pay to replace most parts and systems if issues arise during the first few years of ownership.

On the other hand, if you plan to purchase a pre-owned vehicle for your kid, you'll need to dig a little deeper and ask some questions. Here are some things to consider:  

Mileage

The "average" automobile is driven between 10,000 and 15,000 miles annually. If maintained properly, you can expect to get 200,000 miles, or roughly 16 years, of reliable performance from a vehicle. So, if you're looking for a car that your teen can depend on for 10 years or more, narrow your search to models with 95,000 miles or less on them.

Maintenance

Generally, a higher-mileage automobile that's been well-maintained is more dependable than a lower-mileage model that's been neglected. When researching a specific vehicle, try to find out if all maintenance is current and where it was usually serviced. If possible, talk to any mechanics who routinely worked on the car to get a better idea of its overall condition.

History

Whether buying from a dealership or an individual, ask for a copy of the car or truck's Carfax or Autocheck report. These vehicle history reports include essential information about previous types of owners, accidents, repairs, and service records. Pay special attention to any issues related to the car title, which could indicate the vehicle has sustained major damage.

If you're looking for a car that your teen can depend on for 10 years or more, narrow your search to models with 95,000 miles or less on them.

Affordability

Safety and reliability notwithstanding, the car or truck you choose for your teenager needs to be one that you can comfortably afford. These factors should influence your decision:

Budget

Ideally, you or your teenager — or the two of you together — will have enough money set aside to purchase a vehicle outright. If not, you'll want to determine how much you can spend.

Keep in mind that the cost of owning a car is more than the price printed on the window sticker. When budgeting, you should account for such added costs as:

  • Insurance premiums
  • Registration fees
  • Property taxes
  • Regular maintenance
  • One-off repairs
  • Fuel

If you're not sure what you can afford, run different prices, terms, interest rates, and down payments through an auto loan calculator to estimate monthly payments. You can also contact your insurance agent and county tax collector to get a better idea of how much it will cost to insure and register the vehicle you're thinking of buying.

New vs. Used

Choosing between a new or used vehicle will impact your budget by thousands of dollars. In fact, the average price of a new car in 2021 surpassed $41,000, while the going rate for a pre-owned vehicle eclipsed $25,000 for the first time ever.

Of course, you'll likely be looking (certainly hoping) to spend decidedly less on your teen's first car. You can find a new car under $20,000, but it will be a base model with very few bells and whistles. Or, you could opt for similarly priced used vehicles, but they won't enjoy the benefits of being the car's first owner.   

It's a huge decision either way. Before making it, you should thoroughly research prices, ratings, and value information from independent resources such as:

Curious about car loans for new cars?

Lease vs. Buy

Determining whether to lease or buy a vehicle for your young driver has a lot to do with personal preferences and individual finances.

If you value being able to keep your kid behind the wheel of the newest makes and models (think, updated security features), leasing is the way to go. Usually, you'll also pay less each month than to finance a car because lease payments are based on the vehicle's depreciation rather than its purchase price.

On the other hand, if your goal is to wring maximum long-term value out of your auto investment, purchasing is the route to take. Whether you pay cash or choose to finance, you'll eventually own the vehicle free and clear.

If you really aren't sure which option is right for you, compare the total cost of leasing versus buying. 

Additional Considerations

Although the quest for your child's first car should center on the "big three" elements of safety, reliability, and affordability, there are a few other considerations to bear in mind.

Insurance

Your car insurance costs will go up when your teenager starts driving. Dramatically. Data from CarInsurance.com shows that adding a 16-year-old to your policy will increase your annual premiums by roughly $2,000, or more than 130%.

Fortunately, rates will decrease as your child gets older and gains driving experience beyond loops in the parking lot. Until then, you can insure your new driver and keep costs as low as possible with the following tips:

  • Compare quotes from various insurance companies.
  • Take advantage of any discounts available through your provider.
  • Buy a car with less horsepower and more safety features.

Negotiations

For better or worse, car negotiation is a key facet of the car-buying experience. It can also provide numerous teachable moments for your teen.

Encourage your young driver to get as hands-on as possible with bargaining, both at home and later in person.

  • Do research and use information to justify your asking price.
  • Compare lending options and secure financing in advance.
  • Be patient and walk away when progress is stalling.

Sharing the negotiation process can transform what's typically the least appealing aspect of purchasing a vehicle into a bonding experience that produces positive outcomes for everyone involved.

Extended Warranties and GAP Coverage

Safety and reliability often converge at the intersection of affordability, making extended warranties and guaranteed asset protection (GAP) insurance valuable add-ons for many purchases.

An extended warranty lengthens the coverage period of a factory warranty, which usually expires after five years or 60,000 miles. You can purchase these supplemental plans through the dealer for roughly $2,000 to $3,000 or look for a reasonably priced option from a separate provider. Make sure the plan covers everything you'll need and doesn't add unnecessary costs for features you'll never use.

GAP protection may make sense if you're financing a vehicle. Available through the dealership, your lender, or an insurance company, this coverage will help pay for your car if it's stolen or totaled in an accident and you owe more on your loan than your vehicle's replacement value.

Breaking it Down

No amount of planning or preparation will take away the butterflies you'll feel the first time (and many others) you see your child driving away unaccompanied.

However, by putting them behind the wheel of a vehicle that checks the boxes for safety, reliability, and affordability, you'll know you've done everything possible to keep them rolling smoothly down the highways and byways of life for years to come.

Get Started With PenFed's Car Buying Service

Discover the diverse offering of products, services, and support available to our members.

PenFed PenFed, Inc FREE - On Google Play