Liz Pulliam Weston

The Basics

Should you buy your kid a car?

Continued from page 1

What to consider

If you're considering buying your teen a car, here are some things to think about:

Get real about what you can afford. If you're deeply in debt, not saving enough for retirement or way behind on college savings, skip the car. Keeping your priorities straight ultimately will set the best example for your children.

Consider waiting. You might want to give your new driver a few months or more to build up driving skills before deciding whether to hand over a car. That means putting your own vehicle at more risk, of course, but you'll have a better sense of his abilities and how responsible he would be with his own wheels.

Involve your child in the process. You -- and she -- may get a huge rush out of a surprise purchase, with you casually tossing her the keys and her discovering the car waiting in the driveway with a bow on top. But if you go for that not-so-cheap thrill, you're missing some valuable teaching opportunities, Buffone said.

Taking your child to a couple of dealerships and letting her talk to the salespeople can provide lessons in comparison shopping, haggling and sales techniques. Discussing loans and finance arrangements can help her learn to evaluate lending costs. Even if all you teach her is that it's better to pay a loan off quickly, rather than make smaller payments over a longer period, she'll be eons ahead of most of her peers in money management.

Make your child at least partly responsible for the costs. There will be many, besides the cost of the car: insurance, gas, maintenance, repairs, perhaps a speeding ticket or two. Figure out in advance which costs your child should cover, and make those expectations clear in advance.

(If you decide to co-sign a loan, write the checks yourself and get reimbursed by your child. One late payment can lead to repossession and wreak havoc on your credit rating.)

Be clear about the rules. A zero-tolerance policy for alcohol and drugs should be a given. As bad as teenage drivers are, they're even worse in altered states. But you should also decide upon and discuss the consequences for other common car-related breaches, such as staying out too late, getting tickets and carrying passengers if it's a violation of your state's graduated licensing requirements.

Consider investing in a defensive driving course. Standard high-school driver education classes typically focus on the basics of operating a car, said Perry Stern, editor of MSN Autos, and may fall far short of what a young driver really needs.

"There are many driving schools that offer defensive driving classes geared specifically toward new drivers," he said. "This is where teens can learn how ABS works, understand the abilities of their car and most importantly learn how to best avoid the accident."

Think about safety. Those big old junkers may be cheap to insure, but they probably lack some basic safety features that could keep your child alive in the greater-than-average chance he'll be involved in a crash. Anti-lock-brake systems can help an inexperienced driver avoid an out-of-control skid, and air bags can turn a potentially fatal accident into a survivable one.

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Kids, cars and college
While they're away, you might be able to save a bundle on insurance. Here's how.

Consumer Reports advises against buying larger trucks or full-size SUVs for inexperienced drivers because of the higher rollover risk. Also inappropriate: sports cars and any vehicle that can zoom from zero to 60 mph in less than eight seconds. (See "Some new cars are too hot to handle.")

To compile the following list of good cars for teens, Consumer Reports reviewed its own test results as well as government crash tests and picked cars that did well on its 2007 reliability survey. Its winners include:

Consumer Reports' top cars for teens
Make and model Make and model

Acura RSX

Mazda 3 (with side air bags)

Acura TSX

Mercury Milan

Ford Focus sedan (2003 or later)

Pontiac Vibe (2006 or later)

Ford Fusion

Subaru Impreza (not WRX)

Honda Accord (4-cyl.)

Subaru Forester

Honda CR-V EX

Toyota Camry (4-cyl.)

Honda Civic EX

Toyota Corolla

Honda Fit

Toyota Matrix (2006 or later)

Hyundai Sonata (4-cyl., 2006 or later)

Toyota Prius

Hyundai Tucson

Toyota RAV4 (2001 or later, no third row)

Kia Optima (2006 or later)

Liz Pulliam Weston's new book, "Easy Money: How to Simplify Your Finances and Get What You Want Out of Life," is now available. Columns by Weston, the Web's most-read personal-finance writer and winner of the 2007 Clarion Award for online journalism, appear every Monday and Thursday, exclusively on MSN Money. She also answers reader questions on the Your Money message board.

Published March 3, 2008

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