Dear 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?
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?
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.