family life

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.

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.

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.

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!

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Barb-Harmony Art Mom

Ahhh…so much I could write about this topic having just licensed my fourth driver. 🙂 Things that take them by surprise: 1. Price of a set of tires…research cost and start saving now. 2. Regular maintenance…teach her to check the oil, water, and tires often. 3. Know where the battery is and know how to jump it with cables. Things we didn’t anticipate: 1. No loaning of the car to anyone…no matter what. 2. Once they have a car it means way more freedom that you think…stick to a curfew, know where they are. 3. We ended up budgeting for… Read more »

Tricia @ Hodgepodge

What a great resource! Pinning for the next year ahead! (and thanks to Barb for her tips too!

Kris @ Weird, Unsocialized Homeschoolers

That is such a great idea and a valuable life lesson for Lindsay. Love it! Oh, and, punch buggy! (Yes, I will probably do that every time you post a photo of or mention her car. lol)


Love the idea of a written agreement. Our oldest daughter has her permit and so the time when she gets her license will be here before we know it! I’m definitely going to be using this!

Amy W

This is a wonderful idea! I also like Harmony Art Mom’s comment about sticking to curfews and not loaning the car to anyone. Our state has a graduated license program. With your first license (at 16), you can only have one person other than a family member in your car and there is a state mandated car curfew (with the exception of coming home from a job or church event). Remembering how I was with friends in the car, I am very glad for the law that limits the number of non-family members in your vehicle.


Loved this! Great ideas. We’re of the “everything is a privilege and you will work for it” mentality.

Robin Cowgill

Thanks for sharing the details, Jamie. It is great food for thought. As you said , a great starting point for those of us entering this season.


I’ve got awhile before we hit the driving years, but I love this idea!


My oldest is 22 and it is still a prayerful experience every time she pulls out of the drive way! Your agreement is so wise. I think I will follow your example and create one for my oldest son. He does better with things in black and white.

Tonya @ The Traveling Praters

One thing you may not have thought about with girls is how many vehicles you will pay insurance on. I have two boys that love hot rods and my oldest son has saved not for one, but for two cars. When my husband and I agreed to pay their insurance, I never dreamed that it would be for more than one vehicle. 🙂 I just spent the afternoon in juvenile traffic court with one of my boys. His first speeding ticket.We had already discussed the consequences that he could expect prior to this happening, so he knew exactly what was… Read more »