Cheap Kid Car?

Cheap Car For a First-time Driver.

At my age or at least at this stage of my life, my number one request from my friends is:  “I need a cheap car for my kid”.  My two kids have now finished both high school and college but it seemed like for maybe a ten year period - once a week somebody somewhere would ask me for a cheap car for their kid.  Of course that car came with a long list of "wants and must have" items but priority one is always related to safety and reliability.  

Obviously one’s version of “cheap” is different than the next person so I have to ask, “what do you consider cheap?”  That number always seems to land around the $10,000 range.  

Putting our kids in the safest and most reliable cars goes without saying.  Not a single one of us want our children in a vehicle that has poor crash ratings, poor reliability, bad gas mileage and the list goes on.  Therefore, I’m constantly tasked with finding the right car that fits all those needs, all the while finding something the kid thinks is cool and would be proud to call their own.  I assure you, this is a difficult task.  

So, $10,000 for your kid’s car is the budget?  Think of this as the car you “may" have to buy twice.  What do I mean?  If a car new is $20,000 and you want to buy that car as a $10,000 car (half its value when it was new), it’s going to be half used up, half mile(d) out, half (maybe) not serviced properly, half the tire tread gone, pretty much half of everything, not to mention - no warranty.  You’re going to have to buy the second half of that cars life.  If that same new car is $30,000 and you want a $10,000 version of that, you’ll be buying one that instead of half as mentioned above, this one is 2/3’s used up.  Anything those cars need from a repair standpoint is on mom and dad and as you know, those bills can pile up (back to my 'buy it twice' reference).  Don’t get me wrong, they’re plenty of $10,000 pre-owned cars on the market that will make a great car for your child and many are very reliable and safe.  We check them out and sell them all the time. Here’s another option to consider: 

Lease a new car - now hear me out….  The way a lease works, the finance company on average has a 50% residual (or buyback) at the end of 36 months.  That means you pay for half of that $20,000 NEW car (the same $10,000 you budgeted for your kid) but you get to do it with the FIRST half of the car’s life.  The half that’s under full warranty, the half that’s never been used, the half that you know where it’s been since day one.  Leasing (in Texas anyways) seems a little unorthodox in that it’s not as common as it is in other states but we’re gaining on those states with its popularity. Lease contract numbers are growing rapidly here in Texas (it might be simply because of the influx of people moving here from other states where leasing is more common). 

Like I mentioned above, safety and reliability are priority when it comes to putting our children in their first car.  The budget for that car is a real thing for most of us.  Comfort and peace of mind play a huge roll when making that investment - so my thoughts here are simply to give you one more option.  Either option can be a great choice, we as parents just need to discuss all the options and make an informed decision.   I’m not selling one way or the other but if I’ve given you one more thing to think about when making that decision than my job here is done.  Questions are always welcome and we’ll be glad to help.

Thank you,

John Chauvin, GM

Hewlett Volkswagen, LP