Buying or Co-Signing: A Parent’s Guide
Buying or co-signing on a vehicle for your child is a major milestone — for both of you. Whether you’re footing the bill entirely or helping your young adult secure a loan, it’s important to approach this financial step with care, clarity, and confidence.
Understand the Costs Beyond the Loan
Monthly payments are just one piece of the puzzle. Make sure you also budget for:
- Insurance premiums (which are typically higher for younger drivers)
- Maintenance and repairs
- Registration and taxes
- Fuel and emergency expenses
Should You Co-Sign?
If your child has little or no credit history, co-signing a loan can help them qualify for better rates. But be aware: you’re equally responsible for repayment. Missed payments can impact your credit score as well as theirs.
Pro tip: Only co-sign if you’re confident in your child’s ability to make payments — or if you’re prepared to cover them if needed.
Building Credit Responsibly
Helping your child build credit is one of the biggest long-term benefits of financing a car. To keep it positive:
- Choose a modest car with manageable payments
- Set up automatic payments to avoid late fees
Buy Smart, Not Flashy
Encourage your child to prioritize reliability over appearance. A used vehicle with a good maintenance record may offer better value than a brand-new car. Look for:
- Low mileage
- Good safety ratings
- Certified pre-owned options
Final Thoughts: Teach, Don’t Just Spend
Financing your child’s car is a great opportunity to teach financial responsibility. Involve them in the process—from budgeting to comparing loan options—so they understand the true cost of ownership.
Mutual Savings Credit Union offers affordable auto loans, online applications, and friendly advice to guide your family through every step. Whether you’re buying or co-signing, we’re here to help.
