The True Cost of Teen Drivers

Your teen is almost certainly anticipating the moment you hand over the car keys. You, on the other hand, are probably dreading doing so. It’s only natural that you would worry. Even if your teen is a confident and capable driver, they are exposing themselves to great risk on the road. There’s also the matter of financial concerns, and while these pale in comparison to the safety of your teen, they are still no less valid. Supporting a teen driver is as great a financial expense as it is an emotional one, especially once you consider all of the minutiae involved.

Cost of a new or used car

Earning a driver’s license is a momentous occasion in everyone’s life, especially for teens who are eager for a sense of independence. Part of that independence is your teen’s aspiration to own their own car. If you plan to gift or help your child acquire a new or used car instead of sharing yours with them, the cost can be substantial. Even a used car can put a major dent in your finances, and that’s before you begin to plan for maintenance expenses, fuel costs and insurance fees.

Whether you choose to invest in a new or used car, Consumer Reports writers Jeff S. Bartlett and Jen Stockburger advise against settling for the least expensive option available. Instead they recommend purchasing a newer vehicle that boasts the most advanced safety technologies and reliability scores yet fits most comfortably into your budget. Safety features that are top priorities for your teen’s new ride include curtain airbags and electronic stability control. If you can afford them, automatic emergency braking and forward-collision warning are also musts for young drivers learning to find their confidence behind the wheel.

Bartlett and Stockburger also urge you to investigate what ratings the car you’re considering has earned from the Insurance Institute for Highway Safety and the National Highway Traffic Safety Administration. If possible, aim only for vehicles that have earned the IIHS’ TOP SAFETY PICK or TOP SAFETY PICK+ or NHTSA’s 5-Star Safety Rating. It’s also recommended that you steer away from a large SUV, pickup truck or sports car for your teen. The first two can be unwieldy and difficult to maneuver, while sports cars are designed for high speeds and are likely too tempting for cautious driving. What’s more, those vehicles tend to carry higher prices than simple sedans or hatchbacks.

When considering the price of a vehicle, it’s important that you also consider financing costs as well as taxes and applicable fees. The final purchase price will likely be quite a lot higher than what you see on paper when everything is settled.

Cost of insurance

Insurance is a requirement for all drivers, and although it’s expensive to purchase insurance for your teen, he or she may qualify for specialized discounts. A report card of As and Bs can equal significant savings on insurance, writes The Balance’s Emily Delbridge. By earning good grades, your teen driver could earn you a potential savings of 20 or 25 percent depending on the state you live in and the insurance agency you work with, according to Kiplinger contributing editor, Kimberly Lankford.

If your teen will be driving their own car, safety features can also earn you savings. The more current safety features, the better — a newer vehicle with driver-assist technologies will likely get you a better rate than one without features like forward collision warning and automatic emergency braking. It’s also important to consider the kind of vehicle your teen will drive. A sports car, for example, will carry a much higher insurance cost than a regular sedan.

If your teen will only be driving your car occasionally, you might also be eligible for insurance discounts. Even if your teen has their own wheels, research conducted by NerdWallet suggests that it will generally cost you less money to add your teen to your insurance policy than it would cost to purchase a separate policy.

If your teen is getting ready to get behind the wheel, do your due diligence. Knowing how much you can expect to pay and how you can minimize the financial impact will make putting your teen on the road all the easier — at least financially.

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