Should You Help Your Grandchild Buy a Car?
Before you whip out your wallet or write a check (and, yes, there could be some good reasons to contribute to the purchase), grandparents should ask some serious questions about money and safety.

Does the thought of your grandchild behind the wheel of a potentially lethal weapon send chills up your spine? In my case, it brings tears to my eyes!
If your grandchild has started to talk about having their own car or driving yours, it’s time to take this topic of teens and cars seriously.
The Good Old Days
Baby Boomers like me couldn’t wait to get our driver’s licenses. It was our coming of age; our badge of honor and a clear sign of being cool. We cruised; we were “free”; we packed our friends into every inch of the car; and, “Yes, Mom, even nice girls parked and made-out.”

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Our grandkids may have seen American Graffiti, but they sure don’t identify with the car culture depicted in that flick. Interestingly, the trend of obtaining driver’s licenses is decreasing. University of Michigan researchers found that the trend now is for fewer teens to drive. Michael Sivak and Brandon Schoettle confirmed this in their study that noted the number of 18-year-olds driving “fell from 80% in 1983 to 60% in 2014, 17-year-olds decreased from 69% to 45%, and 16-year-olds plummeted from 46% to 24%.”
There are several reasons for the reduction in registrations, including the high costs for purchasing a car and the increase in urban living. It is also no longer the “badge of being cool” that it once was. Sivak and Schoettle also found that teens are; too busy to get a driver’s license; prefer to bike or walk; use public transportation and some were concerned about the environment.
For concerned grandparents, all this may mean that you have bought some time before you need to have “the talk.” Driving a car is serious business, as captured by the Centers for Disease Control and Prevention, which noted that “Motor vehicle crashes are the leading cause of death for U.S. teens. … In 2014, 2,270 teens in the United States ages 16-19 were killed and 221,313 were treated in emergency departments for injuries suffered in motor vehicle crashes.”
The thought of more than six teens dying every day from car crashes is tragic. The point is, safety first. Teens can be distracted drivers and thus careless. I am not going to directly deal with those sobering (no pun intended) issues; however, I do want to look at the financial implications of teens behind the wheel. Why? Because your grandchildren may very well hit you up to help buy them a car.
Begin The Car Talk
Start the car conversation by telling the grandkids about your first car and how much it meant to you. Hopefully, you worked and saved up your hard-earned money for this cherished possession. Kids love to hear stories about grandparents. I remember when my husband and I paid $1,600 for a new Triumph. My grandchildren can’t believe a car could ever cost that little. They did remind me that a good lawn mower costs more today.
Make this “talk” a learning moment about safety … and about money. You want them to have skin in the game, even if you end up paying the majority of the cost.
The Car Cost Quiz
Your grandchild may think that since they have been stashing away money for months, they finally have enough to go car shopping. They may have found an online ad for a 1998 Mustang with only 350,000 miles on it for only $5,000 — a steal! But do they really understand the true cost of buying a car?
Here is a short quiz for your grandchild on buying an auto:
- What are all the different costs associated with buying a car? How much are they?
- What are all the different costs associated with operating a car? How much are they?
Go over your grandchild’s list and find out if they left out any of the costs on either list. (Leave off the cost of accidents, for now.) They need to think about all the “upfront” costs when purchasing a car, which include:
- Financing the purchase
- Sales tax (state and local)
- Insurance premiums
- Registration fees
- Inspection extras
With all this in mind, the cost of the car may be more than your teen was expecting. The point of this lesson for your teen is, “Welcome to planet Earth.” Even if you are footing the bill, have your grandkids do online research on all of the costs as if they are paying for the car themselves.
Grandparents Need to Be Tough (and Generous, Too?)
And after all the cost considerations, what if your grandchild still has their heart set on that $5,000 1998 Mustang? This is where you put your foot down. Remember the safety issues? This is time for you to step in and say that, no matter what, you are going to have your mechanic make sure the car is safe.
You may now consider adding some of your money to the pot to increase their car-buying budget, because it is worth it to have all the current safety equipment: new tires, brakes, air bags, etc. There is no price you can put on your grandchild’s safety. (For some cars to consider, check out Kiplinger’s The Safest Cars for $30,000 or Less and The Safest Used Cars for $20,000 or Less.)
The Bottom Line
This car conversation is not easy, and it may take the wind out of your grandchild’s sails. But, as much as a car is a rite of passage to freedom, it is also the rite of passage to adulthood. As a grandparent, it’s your job to make sure that you are the teacher. Just remember the words of Mark Van Doren, the famous poet and professor of English at Columbia University, “The art of teaching is the art of assisting discovery.”
It’s time for your grandchild to discover the full truth — and responsibility — of driving a car.
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.
Neale Godfrey is a New York Times No. 1 bestselling author of 27 books that empower families (and their kids and grandkids) to take charge of their financial lives. Godfrey started her journey with The Chase Manhattan Bank, joining as one of the first female executives, and later became president of The First Women's Bank and founder of The First Children's Bank. Neale pioneered the topic of "kids and money," which took off after her 13 appearances on The Oprah Winfrey Show.
-
‘Are You Better Off Than You Were 71 Days Ago?’ Cory Booker Marathon Senate Speech Highlights Tax Debate
Tax Policy A speech protesting Trump’s policies, including tax plans, breaks U.S. Senate records.
By Kelley R. Taylor Published
-
Stock Market Today: Stocks Are Mixed Before Liberation Day
Markets are getting into the freewheeling rhythm of a second Trump administration.
By David Dittman Published
-
When Your Car Is Fixed, But You've Still Got the Problem
This reader's experience with trying to get squealing brakes fixed under an extended warranty mirrors what others are experiencing these days.
By H. Dennis Beaver, Esq. Published
-
Seven Questions to Ask When Evaluating Personal Loan Options
Taking out a personal loan too hastily could lock you into unfavorable terms with an untrustworthy lender. Ask these questions before signing anything.
By David Kimball Published
-
What Can a Donor-Advised Fund Do for You? (A Lot)
DAFs and private foundations go about helping charities (and those who donate) in different ways. Each comes with its own benefits and restrictions to navigate.
By Julia Chu Published
-
Is Chasing the American Dream Ruining Your Financial Life?
Too many people focus on visible affluence as a marker of success. Here's how to avoid succumbing to the pressure and driving yourself into debt.
By Anthony Martin Published
-
Charitable Contributions: Five Frequently Asked Questions
Make the most of your good intentions by understanding the ins and outs of charitable giving. A good starting point is knowing what's deductible and what isn't.
By Stephen B. Dunbar III, JD, CLU Published
-
Can You Be Fired for Going to Work When You're Contagious?
What's an employer to do when an employee shows up at the office with a cold or the flu and spreads germs to co-workers?
By H. Dennis Beaver, Esq. Published
-
Are You a High Earner But Still Broke? Five Fixes for That
If you're a HENRY (a higher earner, not rich yet) but feel like you still live paycheck to paycheck, there are steps you can take to get control of your financial future.
By Mallon FitzPatrick, CFP®, AEP®, CLU® Published
-
Five Things That Are Spiking Your Insurance Premium
It's a drag, but just as your expenses keep rising, so does the cost of doing business as an insurance company. That means higher premiums.
By Karl Susman, CPCU, LUTCF, CIC, CSFP, CFS, CPIA, AAI-M, PLCS Published