10 things to teach your kid about good car finance
You’ve probably been driving for years and picked up good financial habits along the way. But while some finanical ideas are second nature to you (like why incorporate in Delaware), a teenager probably needs some guidance to avoid expensive mistakes. Why not take a fresh look at your financial habits and see if you can remember some lessons learned to share with your teenager?
Here are a few nuggets of wisdom to get you started:
- Good credit is soooooo important. Establish good credit practices early and save yourself thousands of dollars over the course of your life (or even in a single car purchase). Credit affects how good a car loan you can get, whether you can get one at all, and your insurance premiums.
- Reckless driving affects your wallet. Aside from the obvious result (getting hurt or hurting others) accidents can be costly in a variety of ways. If you are at fault, then…
- You have to pay the deductible on your insurance (usually $500 to $1000)
- Your insurance premiums will probably go up (easily hundreds or thousands per year)
- You could get a hefty ticket or fine
- You could be laid up and unable to go to work
- You could be sued
- If you’re in a minor accident, consider fixing it without reporting it to your insurance company. Depending on the amount of your deductible it may be cheaper and your rates won’t skyrocket.
- Don’t drive without insurance! Penalties include suspension or loss of license, tickets or fines, and being personally liable for an accident.
- Good grades or a driving class could lower your insurance premiums. Some insurers will reduce your premiums based off of driver’s ed classes or defensive driving courses. Some also offer reduced rates to students with B+ or higher grade averages. It pays to be smart!
- New cars appreciate fast. The second you drive off the lot, the car depreciates 20%. Consider buying used if it’s your first car…you’ll most likely give the car a beating anyway.
- Don’t owe more than the car is worth. Do everything in your power to keep from getting upside down in a loan. It will make your next car purchase that much more difficult. When budgeting for a new or used car, make sure you pay a sizable down payment to help avoid this scenario (you will likely be required to make at least some down payment when you get a loan).
- Take care of your car. Be religious about oil changes, replacing tires and brakes, and other regular maintenance. Letting your car go can cost so much more in repairs, not to mention lowering the resale value.
- Learn how to change a tire (especially if you’re a woman). You never know when you’re going to get stranded and out of cell service. Even if you can reach help, towing is not cheap. Just in case, give your kid a free cell phone so they can call you if they run into trouble.
- Don’t drink and drive. This could literally ruin lives. And if prosecuted, you’ll find legal fees and fines incredibly expensive, not to mention the possibility of jail time. Consider offering a “no questions asked” option to your teen if they find themselves under the influence with no way home. Let them call you for a safe ride rather than risking the drive themselves.
Do you have any other suggestions for new drivers?
Photo by alxbal