Teen Auto Agreement

We have entered a new stage of parenting: a newly licensed teen driver with her own car!

VW Beetle Teen Driver

We agreed to match Lindsey’s savings towards the purchase of a car, and then agreed to loan her the remainder of the money needed to buy the car she wanted. We finally found a good used vehicle after many weeks of searching, and I typed up an auto agreement to make sure all expectations and requirements are crystal clear.

There is no one “right” way to do all of this! It totally depends on the individual child and circumstances. However, I like hearing other parents ideas on things like this because even if I choose to do it all differently, it at least gives me something to build from — so that’s why I’m sharing this!

Details of our Teen Auto Agreement

First, we outlined the details of what money was coming from where to pay for the car. Then we spelled out who was paying what expenses. And finally, the conditions required for all these things.

FINANCING
Total purchase price of 2002 VW Beetle is $ XX00, to be financed as follows:

Lindsey’s savings = $ —-
Matched by parents = $ —-
Gift from Grandpa = $ —-
Total of above = $ —-, which leaves remaining amount of $ —-. This amount to be paid by Lindsey to Parents, in payments of at least $200/month with 0% financing.

EXPENSES
Lindsey agrees to pay all car-related expenses, including but not limited to:

  • emission testing
  • tag and title fees
  • gasoline
  • all maintenance and repairs, whether mechanical or cosmetic
  • towing fees
  • traffic tickets or accidents, etc.

INSURANCE
Parents agree to pay liability auto insurance, as long as Lindsey meets the following conditions:

  1. Live here at home.
  2. Be diligent in schoolwork, doing all that is required, within the timeframe specified, and to the very best of your ability in order to maintain a “good student” discount.
  3. Keep a job and meets any and all other financial obligations
  4. Contribute to the upkeep of the house (regular chores and anything else needed).
  5. Maintain a clean driving record.

{Of course we signed the document to certify that we agreed to all stipulations therein.}

There is a whole lot of life learning in there. For instance:

  • What the phrase “including but not limited to” means.
  • How awesome we are for giving her 0% financing.
  • How awesome we are for paying her insurance.
  • How diligence in work and school actually matters in real life.
  • How many different things in real life cost money and need to be planned for.
  • How many hours of work it takes to pay one car payment.

Our state allows teens to get a learner’s permit at age 15, and a provisional license at 16. However, we waited until Lindsey was almost 16 to get her learner’s, and she’s now been driving our cars (with us) for 21 months. Last week, Lindsey took her driving test — in her own car — and is now a licensed driver. For those of you who aren’t there yet, I have to tell you: it was a very strange feeling the first time Lindsey drove out of the driveway — alone!

teen driver parent agreement

A few more thoughts:

Right now we are in a situation where we can pay Lindsey’s insurance, and thankfully, some of her friends have told her how much they pay for insurance, so she seems to appreciate this. Quite frankly, I like the leverage it gives us —  but I don’t think it’s something kids are entitled to. Cost for auto insurance varies greatly depending on type of car, age/gender of the driver, type of coverage, so I’d recommend checking with a few companies for liability-only or full coverage auto insurance quotes.

For the record, I don’t think kids are entitled to cars either! We chose to match her savings in order to encourage her to start planning ahead, but we would’ve set an “up to X amount” limit if she had thousands in the bank!

–> What about you? Have you hit the teen driving stage of parenting, and how did you (or will you) handle licenses and cars? I’d love to know, and your ideas help other readers, too!