Credit Card for my son to purchase 1st car

HappyMJ

swindiff wrote: »

His insurance will be about £150/month, CC payment could be anything from the minimum of £15/month to around £80/month to pay it all off within the introductory period. If it was not all paid off he would switch it. Tax is around £10/month

Therefore insurance tax and CC could be kept to around £200/month, after the 1st year the insurance should reduce allowing a greater proportion of this to be used for the CC, he pays £200/month keep. This leaves him £450/month to do what he wants with. I think that's perfectly reasonable.

I am in a position to help him, in fact I am doing so by posting here. I could buy the car and give it to him if I wanted to. But I want him to be able to do this for himself, I want him to be able to budget, be responsible with money and learn its value just like I had to when I was his age. Far too many are just handed everything on a plate these days.

Whilst you might have fantastic credit and able to borrow thousands on a credit card at 0% it's very unlikely a bank will give a high credit limit credit card to a 19 year old. £2,000 is a high lmiit it's as said more than likely to be £250 for a first card.

So...bank of mum and dad is an option. You take out the credit card. You buy the car. You make him the keeper. He takes out the insurance with you as an additional driver. It is your car. If he fails to pay you you take the car back. Simples.

He's also got maintenance costs and fuel costs. Maintenance could be estimated to be about £600 per year for a car of that age and value. £50 per month. Fuel is about 20p/mile. To be cheaper than using public transport he'd need to be driving at least 6,000 miles per year. That's £100 per month. So his disposable income has now dropped from £450 a month down to £300 a month. This gives him very little to pay for his mobile, computer, clothes and general living costs. If he wanted to move out he doesn't have much room for saving for his rental deposit, fees and first months rent. I just took on a rental property and it cost me £575+£700+£475 to move in...plus a van for the day to move my stuff £50. £1,800...ouch...and that's just a tiny flat.

swindiff

He has no general living costs, he lives at home lol. His mileage will be low I would estimate less than 5000 per year, however this is not about weighing up the break even point between public transport and a car. He is a 19 year old lad, he wants a car. Also he plays Ice hockey, and can get back at 2am after some games. Try getting a bus at that time with sticks and a hockey bag. Even without the cost of a car, renting his own place is just not going to happen on £10k a year.

andyfromotley

He currently has £650 per month disposable income, If he saves £400 pm he will have enough for a car in 4 months, five if he wants to push the boat out.

If he does this he will avoid having a reduced income (on his already small income) over the next two years as he will have no repayments. He will also have learnt and practised some very important lessons about saving for what you want and waiting until you can afford it. I certainly don't hate the plan you have but i prefer the one above.

Semple

I think i would agree with what Andy is saying. You may also require a another plan in the event that the credit limit offered is low. So even if he saves for 2-3 months and sticks the remainder on credit, should lower monthly repayments.

Another thing to bear in mind is a contingency plan in the event that he loses his job/unable to work etc. Having the full value of the car on credit will cost a lot more if the balance isn't cleared in time.

swindiff

The down side to that plan is that his mother and I would have to continue running him around and doing 2am pick ups from the ice rink for another 4 months. We want him to get a car as much as he does lol. If the worst was to happen and he were to lose his job I could clear the credit card but I want him to feel like he is standing on his own 2 feet and being independent.

cats2012

I'm surprised by some of the responses here!

To give my story - I'm 27, but when I was 17 I wanted a car. My parents were exactly like you - could have just given it me but didn't.

As I wouldn't have got a card myself, they did what someone above has said and bought the car themselves but we had basically the same agreement as if it was a card - I had a direct debit set up to go to them every month, no excuses.

Taught me the importance, but also worked logistically for all of us.

PasturesNew

We've all been young once (shame it's just once) ....and we've all wanted a car ...and credit's seemed so affordable.

But this really is a road to ruin on many levels.

Young, first car, first credit card ...... sorry, but with the best will in the world the idea's probably doomed.

Cars are depreciating assets that have huge liabilities such as running costs, breakdowns/servicing/maintenance and the risk of theft.

You're tying yourself into a huge financial commitment over something that's unpredictable.

swindiff

I'll tell him to get a bus pass then, thanks for the advise lol

meer53

He's not passed his test yet though ! Thats his first hurdle, it could be months yet !

My son passed second attempt and we bought him a car, £1800. He paid to insure and run it, he was still in 6th form but had a part time job. It's okay saying they need to stand on their own two feet but if you can help, why not do it ?

swindiff

I have decided to buy the car as from what has been said it seems unlikely that the level of credit required would be granted. Thanks for your input.