Buying a car for your child  

For teenagers getting a first car is a huge milestone in the journey to becoming independent, and is often an exciting time!  For some parents it’s also a time of mixed emotions, as it raises all sorts of safety worries and practical concerns they may not have had to think about before. Nationwide, drivers aged between 16-24 have long been considered high risk: drivers on their restricted licence are seven times more likely to crash. Parents are also left with decisions to make about the details: such as driving lessons, when to schedule driving tests, rules and driving curfews for their child, and of course insurance. There are all sorts of considerations to factor into account when selecting a vehicle and preparing your child to hit the road.  

Before you buy  

Make sure you shop around, as there is a car out there to suit almost every budget. Many first cars are second hand, and it is possible to pick up a good, reliable car for around $5000. Unless you have some mechanical knowledge, is usually recommended that you buy from a dealer rather than going private. It might initially seem more time-consuming and expensive, but it can save you and your teen a lot of money and hassle in the long term and you have more protection if things go wrong. If you do buy privately, getting a vehicle history check is a good idea: there are ways in which you can check whether the vehicle has money owing or is registered as stolen.  

Before you buy, for peace of mind you can also do a quick Google search of the make, model and year of the car: you don’t want to spend thousands of dollars only for your teenager to be stuck with a vehicle that is unreliable or has a bad safety record (particularly if you decide to invest a lot of money). You will soon get an idea of which options are popular and which to stay away from. Before you purchase your car for you teenager, make sure you take it for a test drive to check how well it handles.  

Getting ready to drive  

Teenagers can apply for their learner’s license from the age of 16, their restricted licence six months later, and their full licence usually 18 months after that: check out the NZTA site for details of assessments. Depending on where you live and how confident you are teaching your child to drive, lessons through a driving school might be a great idea for your child, whether it’s to fine-tune their driving or to get them confident enough to practice with you or another family member.  

Also remember that people with a learner’s licence should never drive without someone who has had their full licence for two years in the car. The same goes for people on a restricted licence: during the day, from 5am to 10pm they can drive alone (or if applicable with their own children, or dependent relatives, or their parent/guardian), but at night they need a supervisor. However much your child wants to take their friends in their new car, they shouldn’t break the rules! They risk being fined if they do, and if they crash, they may not be able to make an insurance claim.  

Some schools also encourage their students to attend advanced driving programmes (such as defensive driving) to teach them what to do in emergency situations. Students can move from a restricted to a full licence more quickly (in 12 rather than 18 months) if they have done an advanced driving course, so if your child is interested in this, it is a good idea to encourage them to take advantage of it.  

It goes without saying that drivers need to be aware of how alcohol can impair their ability to drive and that young drivers should also be taught the importance of staying within the speed limits. However not only alcohol and speed but “driver inexperience” is a significant cause of accidents. Learner drivers need to be aware of the importance of driving to the conditions, and ideally before they go it alone they should feel completely in control of the vehicle and comfortable behind the wheel.   

Insurance and risk  

When a driver under 25 is driving, the unfortunate reality is insurance companies are taking on more risk: for both males and females, the number of young drivers being involved in crashes is still very high.  

How you deal with insurance depends on whether the car is in your name, or your child’s. If you are an adult over 25 with a comprehensive insurance policy, you can usually lend a car to other people over 25 without worrying about losing your coverage if they are involved in an accident. But if you want your child or someone else under 25 to be able to drive your car, you need to formally add them to your policy for them to be covered. Once they are added, higher excess usually applies if they do have a crash and you will also have to pay higher premiums.  

If you transfer the ownership of a car to your teenager (or if they have purchased the car themselves), they will need to get their own insurance policy. Some providers offer specific “Young Driver’s Insurance” for people under 25. The amount your child will pay depends on a few different factors, including how old they are and how long they have been driving for. The excess or premiums for someone under 21 can be higher than the excess and premium level that applies to someone between 21 and 24.  

As an example you can compare insurance policies on the same cheap, 1995 Toyota Corolla Hatchback from State Insurance quick car insurance calculator:  

• For a 19-year-old driver on her restricted licence, premiums are $463.27 per year while the excess is $450.

   

   

   

• For a 23-year-old driver with her restricted licence, premiums are $332.61 per year, with an excess of $400.

   

   

• For a 30 year-old driver with her restricted licence, premiums are $284 per year with an excess of $400.

   

   

While insuring a young driver is more expensive than getting a policy for a driver over 25, insurance policies for young drivers can come with some perks: such as a 50% “no claims bonus”, whereby your premiums are reduced by 50% if you don’t claim within a certain period of time. Take a look at the fine print of your policy to make sure you understand exactly what is on offer before you make a decision.  

Third-party insurance is a cheaper option, but this will be of limited use as your teenager will not be able to claim for any damage caused to their own car: it only covers them for damage to someone else’s. The exception is when their car is damaged by a driver who does not have insurance and you can show they are at fault; in this case they may be able to claim money from the insurer for repairs.  

For more information on car insurance, take a look at Quashed’s quick guide: if you or your child already has insurance, then you can use Quashed’s Market Scan tool to compare your current deal to others on the market.