The weakening economy and low incomes are having a major impact on how much parents are willing and able to save and spend on their teen’s cars and related expenses. Allstate recently conducted a survey, which found that nearly 75 percent of families with an annual income of less than $30,000 are spending or saving less on their child’s driving. Only about a third of households with more than $75,000 coming in each year reported similar behaviors.
When it comes to buying the car, only 27 percent of parents reported being willing to pay for their teens’ vehicles in their entirety, while many others expect their children to contribute financially for their own cars. This is especially true among parents who paid for their own cars when they first began driving.
Families who may not be able or willing to save money for a car for their teen driver, may want to consider car financing, especially as the federal government has driven down interest rates to historic lows. A car loan can be a good opportunity for teens to learn some fiscal responsibility and begin building credit.