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Let's look at this from another point of view.  Besides meeting the immediate transportation need, what does actually purchasing a car for your son or daughter do for them?

What if, instead of purchasing or leasing or giving a car to your kid, you purchase one WITH them?


Now, we're not talking a brand new BMW.  Probably not even a new Hyundai.  But, a decent sized down payment on a good quality, newer model, low mileage, pre-owned vehicle gets you a lot more than a set of wheels.

Let's look at that Honda Civic certified pre owned again.  Only, this time it's certified pre owned about three years old with 30,000 miles on it so it's priced at $13,995.  You have $4,000 to put down, and you also have your credit record so you can get a loan.

Financing $10,000 at 4.25 percent, for five years, means a monthly payment of $185.30.  But, your interest rate is going to be a little higher because your co-signer, your kid, has no credit history.

If the interest rate is 5 percent then the monthly payment jumps to $188.71.

Why would you do this?  Because, your kid doesn't just need a safe, reliable car for the last few years of college.  They need a car that will get them to their first "real" job, and a credit history that will let them move into the grown-up world with a good financial record.

What if you purchase the car between their second and third year of college?  When they graduate, they will have a five year old car and owe three more years of payments.  You can keep paying (since your name is on the loan) until they can muster up the $188.71.

And, truly, don't they plan to pay that much in smart phone and high speed internet charges?

Did you know that in most areas you can't get a smart phone, or high speed internet services, without a credit card or credit history?

If all goes as planned, the car is paid off three years after graduation, but should last another year or two beyond that.  Plus, with average use, it shouldn't have much more than 100,000 miles on it.

That gives your kid a chance to save money for the down payment on their next car, and gives them a decent car to trade in. They may be on their own, but when they go for that first car loan, a year or two out from college, they will have the income and the credit history to support the purchase on their own.

What's the downside?  Well, clearly, you just put a lot of trust in your college student  ability to drive safely, graduate, and earn some income after graduation.

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Bill DeBoer

Written by Bill DeBoer

William J. DeBoer (Bill Jr.) is Co-owner and Vice President at DeBoer’s Auto. As the company’s General Manager, Bill has been responsible for bringing innovations in daily operations to the full-service, high-tech auto repair facility for 20+ years. Passionate about computers from an early age, Bill’s interest in technology gravitated to cars while he was in college. By obtaining a Certificate in Automotive Technology followed by a B.S. in Business Management from Penn State, Bill was able to fuse his interests into a car technology specialization and join the family business shortly thereafter.