auto

Crowdfunding your new grad's car?

Tara Baukus MelloDear Driving for Dollars,
My son just graduated from college and will be starting a "real" job soon where he will need to commute. We will be throwing him a party and we'd like to suggest that our family and friends give him money for him to buy a car. Is there an easy way to collect the money and ensure that it gets spent on buying a car?
-- Amy

Dear Amy,
So you want to make sure the money gifted is used to buy a car and that your son doesn't change his mind and use it for something else, eh?

Car salesman in showroom © LifePhotoStudio/Shutterstock.com

What you are talking about is essentially a form of crowdfunding, where the person asking for money uses an online company, usually affiliated with a bank, to request financial support for his project. It works in much the same way an online donation to a charity operates, except that the "charity" is a friend or family member and not a nonprofit entity.

Crowdfunding has been a resource for people to start businesses, raise money for college, pay for a medical procedure and many other needs, and generic crowdfunding businesses such as Indiegogo would allow you (or your son) to start an account to collect money for his car purchase. But there's no requirement that the money raised go toward the car purchase.

Car companies are beginning to offer crowdfunding opportunities as a way to attract young buyers like your son to their brand or even a specific car. Chrysler did this recently with a program called Dodge Dart Registry.

BoostUp is one crowdfunding company that is specializing in working only with individuals for personal use, such as buying a car or home, taking a trip or funding a wedding. It is unique in that it requires the money raised be spent with one of its partners, which "boosts" the amount raised by offering a cash rebate or discounted percentage on the purchase.

As a result, you don't exactly have complete control that it gets spent on a car, but your son won't be able to simply receive a check either. However, there is a pretty substantial incentive for him to buy the car. Currently, BoostUp works with 850 dealers in all U.S. states, covering 13 car brands that offer $250 to $1,000 in matching cash toward the purchase of a new or used car. It also has a national agreement with Hyundai, which is offering a dollar-for-dollar match up to $500 for any new car purchase through Jan. 2, 2015.

Once your son has settled on the car he wants, make sure he negotiates the best loan by avoiding these five car loan mistakes that cost you money.

Get more news, money-saving tips and expert advice by signing up for a free Bankrate newsletter.

Ask the adviser

If you have a car question, email it to us at Driving for Dollars. Read more Driving for Dollars columns and Bankrate auto stories. Follow her on Facebook here or on Twitter @SheDrives.

Bankrate's content, including the guidance of its advice-and-expert columns and this website, is intended only to assist you with financial decisions. The content is broad in scope and does not consider your personal financial situation. Bankrate recommends that you seek the advice of advisers who are fully aware of your individual circumstances before making any final decisions or implementing any financial strategy. Please remember that your use of this website is governed by Bankrate's Terms of Use.

advertisement

Show Bankrate's community sharing policy
          Connect with us
advertisement
 

A little research could save you BIG on interest.

Don't have time? Our rate-tracker tool saves you time and money. Delivered Thursdays.
 
advertisement
Partner Center
advertisement

Blog

Tara Baukus Mello

Labor Day road trips to increase

AAA Travel projects that 34.7 million Americans will travel more than 50 miles from home this Labor Day weekend, the highest volume since before the 2008 recession.  ... Read more


Connect with us