The subject came up during my recent conversation with Tom Woods – whom many know as an expositor of libertarian economic and moral principles as well as a man who possesses what some call horse-sense.
We talked about what makes sense when the time comes for a driving-age kid to get his or her own car.
In prior – saner and freer – times, the sound policy was to encourage the teen to begin working and saving for their first car years before they could drive it. Mowing lawns, summer lifeguarding, baby-sitting or a part-time/after-school job, even. If a kid starts working when he’s 13 or 14 he ought to be able to save up a couple thousand bucks by the time he’s 15 or 16.
This used to be enough to buy a beater.
Something that ran, though not necessarily well. Probably rusty, likely ugly. Nothing fancy, certainly. But it beat walking and it built character to own such a first car. Even if it was a blue-smoking, oil-dripping old ’73 Beetle with holes in its floorpans and a passenger side door with a pair of vise-grip pliers in lieu of a window crank, it was their car. Their ticket to ride.
Freedom, at last!
But those were saner – and freer – times.
Beaters now cost more than a new car cost when a ’73 Beetle was new – thanks to the Biden Thing, among other things. Used car prices are up more than 30 percent over the past year.
In addition, there is the cost of insurance – which government-mandating has made so expensive many parents can’t afford it.
More about this, here.
The average “premium” – it ought to be called shakedown, because that’s what it is when you can’t say no to it – for a 16-year-old driver is around $2,000 annually. This is more expensive all by itself than the beater cars bought by teenaged Gen X drivers such as this writer, when he bought his first beater car back in the ’80s for less than half that.
Plus – politically incorrect observation coming – back in the ’80s, insurance was “optional” in that the mechanisms of pantopticonic electronic enforcement did not exist, back then. If you didn’t wreck, who was going to know? Just check the box on the DMV form.
Today, they’ll know if you’re not – as soon as you’re not. Cue the Hut! Hut! Hut! Even if you didn’t wreck.
The eyes of Sauron are upon you.
At any rate, the tag team of exorbitantly pricey used vehicles and unavoidably usurious insurance costs plus inflation in the 7-10 percent range this year alone – thanks to the Biden Thing – have altered the Situation considerably. Adding salt to the wound is the typical teenager’s nonexistent credit rating – and the legal matter of being a minor and thus unable to secure financing, solo.
Financing used cars also usually means paying through the nose for interest – relative to what you’d pay to finance a new car. The catch-22 here being the new car, itself, represents a massive debt-anchor around one’s neck, irrespective of the cost of the financing. But financing a used car at a higher interest rate over a shorter period of time almost always means higher monthly payments, which a high school or college-aged kid probably can’t afford.
Especially if they’re also trying to save for or pay for college at the same time.
Enter the question of buying that first set of wheels for your teenaged driver. Or helping them out with the cost of acquisition – so as to make it financially feasible for him or her to deal with unavoidably usurious cost of “covering” it.
And the cost of fueling it, courtesy of the Biden Thing.
In saner – freer – times, buying a kid their first car was generally considered less-than-optimal parenting in that it encouraged dependence rather than fostering independence. It was considered sound policy to leave it to a teen who wanted to drive to figure out how to acquire the means of driving – on their own. This being readily doable, via after-school and part-time jobs back in the era of widely available beater cars such as this writer’s rusted out, barf green but it ran (and it was mine) ’73 Beetle.
Sadly, that era is gone – along with sanity and freedom.
A sound case can be made, today, that parental help is not a hindrance as regards the fostering of independence. For without a car, a teenager remains a child. Dependent on parents (or government) for transportation. Few sensible people will regard that as optimal.
A parental loan might just be. This enables the teenager to avoid the debt-albatross of new car payments for the next six years (ruinously coinciding exactly with the years during which most teens are spending most of what they earn on their education or on getting their lives going) and the problem of higher monthly payments for a used car, on account of higher interest and shorter loan duration – which leaves them not much left to pay for the “coverage” they’ll be forced to spend more on than they will probably have paid for their first car.
It assumes the kid is a good kid – responsible, financially and otherwise. A good metric of this being their having saved up for a large down payment, say $2,500 or so. That plus another $2,500 in low interest parental financing ought to be enough to allow for the purchase of a functionally viable used car, even in the Biden Thing’s America – while leaving cushion enough for the kid to “cover” the cost of the insurance he’ll be forced to buy and still have enough left over, after that, to cover the cost of gas and oil and tires, etc.
It’s not as independent a trajectory toward adult self-sufficiency as was open to teenagers when this writer was one. But it’s still a great way to fan the flames for that – which ought to be burning fiercely in the heart of every sixteen-year-old. They’ll want to pay you off as soon as they possibly can.
And they’ll be able to pay you off, sooner . . . because they can.
. . .
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