auto

Can your car budget handle a teen driver?

Car choice is a big part of that message, she says: "What are the values you're trying to put out there? Is it safety? Is it frugality? Or is it keeping up with the Joneses?"

Rader says car choice is also important from a safety perspective. The IIHS' annual analysis of fatal crashes on U.S. roads found that 4,054 teens died in traffic accidents in 2008.

While that number was significantly lower than the year before -- thanks to graduated licensing laws put in place in many states -- teenagers still accounted for 11 percent of vehicle crash deaths.

When deciding what car your teen will drive, keep three words in mind, Rader says: "Big, boring and slow."

That may not jibe with what your teen wants, he says, but it's the best way to boost the odds that your teen will walk away from an accident if their fledgling driving skills fail them.

Rader adds that "big" doesn't include pickups and SUVs, because of their higher risk of rolling over in an accident. Instead, choose "a midsize or larger sedan that has a good crash-test rating," Rader says. You can find crash-test ratings for new and used cars at IIHS.org.

Rules of the road

Finally, before you hand over the keys, make sure to make your expectations clear, Lawrence says.

She says giving a teen a car raises a couple of important financial questions: Where will they get the money for operation and upkeep? And if they already have a job or another source of income, will they follow through on contributing willingly or will it be an endless battle?

Lawrence recommends writing out a contract with expectations spelled out in black and white that addresses some potential points of contention.

The contract should clearly state what times of day the car may be used, how many passengers can ride in the car at one time and who those passengers can be. But it would also include answers to some money-based questions, including:

  • Who pays for damage to the vehicle in the event of an accident?
  • What maintenance tasks will the child need to perform or pay for?
  • What amount of money, if any, needs to be contributed by the child for the car's purchase or upkeep?

Be sure to spell out the consequences for breaking any of the established rules, Lawrence says.

Godfrey adds that while a child may bristle at some of a parents conditions -- financial or otherwise -- "any child who is privileged enough to have (a car) needs to have the responsibilities that go with it."

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