Can You Afford to Buy Your Teen a Car?

Despite the current market being one of the worst to buy a car in decades, kids are still growing up, getting licenses, and perhaps getting on your case about buying that car they want. Sometimes, the logic makes sense; you won't need to drive them to practice, work, or school. They can run errands, go grocery shopping, and just be more independent overall. But can you actually afford it?

The price of a car purchase is only one component of the expense of purchasing a vehicle. Your insurance costs will go up. If your teen isn't self-reliant, you'll have to pay for gas, repairs, registration, and smog emissions testing. Luckily, these expenses are no longer the guessing game they once were; you can break down the annual costs to effectively determine if purchasing your teen a car is something your paycheck and bank account can handle. 

Filling up your tank once or twice a week doesn't seem like a heck of a lot of money, but $25 or $30 here and there certainly adds up—and quickly. As you plan for your teen's future and contemplate whether a vehicle is something you can afford, it's important to consider real-world fuel costs, and how that affects your budget. You might even choose a different car than your first choice if the fuel efficiency just doesn't work for you. 

The average American driver drives 12,000 to 15,000 miles per year. Depending on the length or frequency of your teen's commute, they may stack up miles faster, or be well below average. In order to determine costs, I like to use Consumer Reports to research my vehicle choices. Consumer Reports has a section on fuel efficiency, and very clearly outlines fuel costs per 12,000 miles on almost any car you can think of.

Fuel cost, of course, makes a huge difference in overall vehicle ownership costs. For example, the 2021 Toyota Avalon starts at about $1,000 less than the 2021 Nissan Maxima. Both are top rated, with the Avalon scoring a bit higher than the Maxima. But the difference in annual fuel costs? That one is pretty astronomical: $1330 for the Maxima versus $690 for the Avalon, according to Consumer Reports. 

There is nothing like buying a car only to get piled high with repair costs. Once a vehicle is out of the initial manufacturer's warranty—36,000 miles or three years for most vehicles—most of the car repair cost lands squarely in the lap of the vehicle owner—or, in the case of your teen, in the lap of Mom or Dad.

And while in the past you just had to guess how much it would cost to maintain and repair your car (and hope that you picked the right reliable car in the first place) Repair Pal changes that. With its network of quality repair shops that offer superb customer service, fair prices, and most importantly, trained professionals with the tools to perform the work your car actually needs, Repair Pal can be a lifesaver for the average car consumer.

The brand's reliability calculator is part of that mission; this tool helps determine a vehicle's average annual repair and maintenance cost. It bases its information on real-world data from its network of shops all over the U.S., making it a reliable resource for determining overall repair costs. As an example, the Toyota Avalon mentioned previously has an annual repair and maintenance cost of $463, while the Nissan Maxima comes in at $540. Determining what it's going to cost to take care of your car using RepairPal's reliability tool will ultimately help you budget and make better buying decisions.

Of course, don't forget about insurance. While your car insurance will go up once your teen is added to your policy, it will also go up if an additional vehicle is purchased and insured. You can prepare for costs after you've narrowed down the vehicles that you're considering purchasing. Call your insurance agent, if you have one, or your insurance company, and mention the hypothetical vehicle that you are considering purchasing. This way, you can get their estimated costs for insuring your teen as well as the additional vehicle. Read more about insuring teens here. 

Annual registration costs tend to sneak up on folks, and are often an expense that's not worked into your annual budget. So before buying your teen a car, prepare yourself for both registration and inspection costs. These costs vary based on where you live, but also can vary based on the age of the car you buy. 

Let's take the State of New York as an example. The state requires a $37 emissions and safety inspection on cars over three years old. The safety inspection is quite extensive, requiring things such as tires, wiper blades, and other safety components to be in order. The state even requires the vehicle window tint to meet certain guidelines. 

If you don't pass the inspection, you have to pay the inspection fee regardless. In addition, if you don't repair the components that caused the inspection to fail, you won't be able to renew your registration, so it's best to be prepared. 

Your state's DMV website has significant information on the subject of inspection and registration costs, which will allow you to incorporate the estimated costs into your budget. In addition, more information about how the inspection process works will help things go smoothly as well.

Buying your teen a car is complicated, but understanding the full financial impact of the purchase will keep you prepared—and keep your budget intact if you move forward with the purchase.