Teen drivers are being forced to drive whatever their parents choose, which this year is affordable, small new cars. Wait. Teens are driving brand-new cars in this economy?
Yes, it seems that even though the unemployment rate is still high and teenagers are struggling to find part-time jobs, some teens are still lucky enough to pull into the high school lot with a new car.
As with used vehicles, parents are the ones with the say in what new car or truck their teen buys or is bought for them. In 2005, 91 percent of male and 93 percent of female teens received their first-choice vehicle, according to CNW Research. But in 2010, those numbers dropped to 76 percent and 55 percent, respectively. CNW says the data clearly shows there is a distinct move to putting teens into less expensive vehicles.
Budget-friendly new cars like the Hyundai Accent hatchback, which starts at $9,970, are being chosen for teen drivers more this year compared to five years ago.
The move to cheaper vehicles could be the reason why more parents are opting to pay cash instead of take out a loan to buy their teenager a new car. Teen vehicles bought with cash totaled 18 percent in 2005, and now has climbed to 29 percent, CNW reports. In 2005, 82 percent of teen vehicles were bought with a car loan. In 2010, only 70 percent were purchased with an auto loan.
Sales of budget and compact cars have more than doubled when compared to 2005. Instead of driving a big, shiny, new SUV, teens are most likely driving small, budget-friendly cars now.
And since more teens have seen their hours cut at their part-time jobs or aren’t working at all, more parents are making the entire auto loan payment to the finance company. In 2005, 28 percent of parents made the entire car loan payment to the lender, while 32 percent of parents are now. Fewer teens are making the full car payment to their parents or to the finance company now, when compared to five years ago. But, more teenagers are making partial payments to their parents now.
It’s clear that without the help of their parents, teen drivers aren’t financially able to buy and pay for a new car right now. CNW also released data last month on teens and used cars. The results were very similar. With the unemployment rate still high, teenagers are relying on mom and dad’s financial help to get into a car, whether used or new.