Buying a car is a big decision and it should not be taken lightly. When it comes to buying a car for a teen, it requires even more diligence. As adults, we’re pretty well-versed in the ins and outs of owning a vehicle and it’s our job to impart this wisdom to our kids. From car insurance and safe driving practices to the financial responsibility that comes with car ownership, helping your teen buy a car is a pretty big deal. That’s why it’s important to keep these budget questions in mind when it comes time to purchase a vehicle for your teen.

What are your needs?

Will the vehicle become a second family car? Or is it only going to be used by your teen? Knowing how the vehicle is going to be used will help determine how big it needs to be. If your teen is into sports, they’ll have sports gear to haul around so a motorcycle isn’t likely going to work. Or maybe you live where it snows a good portion of the year and you think a truck with snow tires is a necessity. Getting good gas mileage and making sure the vehicle meets recommended safety standards are also things to think about. Helping your teen determine what’s important will go a long way when it comes time to narrow down your purchase. Whatever your physical needs, don’t forget to consider things like license and registration fees, normal vehicle maintenance, and car insurance in your budget, too.

Who’s paying for it?

Maybe you’ve been tucking away some money for the last 10 years in preparation for the day your teen decides they want a car, or more realistically, when you decide they’re ready. Perhaps your teen has squirrelled away money from a job and they have a chunk to contribute. Or maybe you’re like a lot of parents and thought you had plenty of time to think about your teen becoming a driver and it snuck up and caught you both unaware. No matter the situation, you’ll need to consider these things before deciding on a budget. Either way, it’s important to talk about who’s paying for the vehicle and how much each party is willing to pony up before you take the next step, and that’s deciding what you can afford.

How will you finance it?

When you sit down to talk about the budget for the purchase of a vehicle, you might soon find out that what you’ve saved isn’t quite going to cut it. The vehicle you ultimately decide meets your needs might also lead you down the path of borrowing. Taking out a loan for a vehicle shouldn’t be approached lightly. If you’re like most families, you might not be able to absorb a high payment.

According to the US Census Bureau, the average household earns approximately $67,000 annually. While that might seem like a big number to your teen, we adults know better. Knowing about smart borrowing practices is critical here and while there are many car dealerships that will offer subprime loans for low-cost vehicles to almost anybody, do yourself a favour and see what your bank or credit union has to offer first. Then decide whether your teen has the means to help offset the payments or absorb the financial burden fully. You might have to rethink your vehicle selection if you find that you don’t have the means to pay for it.

Putting it all together

If your teen has just started driver’s education, thanks to the ever-impulsive teenage brain, their mind might be set on having a vehicle immediately. Enter the rational brain. I’m talking about you, the parent. Chances are you’re in no hurry to turn the reins over to them so there’s no harm in taking your time to search for the right car that fits well within your budget.

Remember, there’s no race, and helping them take their time in this process is setting them up to make smarter decisions in the future. After all, they won’t always be living under your roof but with your guidance, you can rest assured that you have prepared them well. Creating a budget for the purchase of a vehicle will take time so be patient with the process. As goes with any well-laid plan, don’t forget to expect the unexpected and set the expectation ahead of time so you don’t wind up searching way outside your budget or financial ability.

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