Van Tassel says teens need to learn what it costs to drive. Parents can start the process by telling teens the cost of gasoline, insurance, and repairs as they pay the bills. Ask the teen to help care for the vehicle they eventually will drive by washing it, checking fluid levels, and keeping the maintenance log. "Start these talks half a year, at least, before a teen is actually eligible for a learner's permit," Van Tassel says. Set rules for the teen's use of the family vehicle, following your state driver’s license policies, which include when the teen can drive and who can ride along.
Look for safety
Choose a safe vehicle, using information offered by websites such as AAA, the SaferCar.gov, and the Insurance Institute for Highway Safety. Ideally, the vehicle should have these three safety features:
Understand the cost
The combined cost of owning and operating a car is another lesson to share with teens. The 2019 edition of AAA's Your Driving Costs report puts the average annual cost of driving a sedan 15,000 miles a year at 61.88 cents a mile—$9,282 a year. Put that figure into perspective for teens by converting the vehicle's cost into hours worked. To get an approximate figure, take the number of miles the teen will drive each year, multiply it by 62 cents a mile, and divide the result by the teen's hourly wage.
Make an agreement
If parents have a financial stake in the teen's car—a down payment, loan payments, insurance, or other costs—then they can consider creating a written agreement. The agreement should cover:
Teens also need to learn about dealer practices and negotiating the best price. Parents can help by sharing their experiences and going with teens as they shop. Help your teen get answers to these questions:
Avoid the rush
Many credit union lenders have seen teens rush into "deals" only to find they paid too much, agreed to a loan at exorbitant interest rates, lacked a clear title, or bought a car with serious defects. Parents and teens alike can benefit from taking time to share stories, do their research, and consider what owning a car will cost over time. It saves a lot of headaches in the long run.