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Home > Loan to the kid? Or not?

Loan to the kid? Or not?

August 21st, 2009 at 01:39 am

Big financial crisis in my house. My youngest girl got a Summer job to save money for a car. She has been a great saver, but doesn't have quite the amount that she wants to spend. So she would like to borrow a few hundred dollars to get the used car that shes been shopping for. So, do we lend to her, or should she have to deal with the budget that she already has. Hubby is on the No side, we didnt lend to any of the other kids, I am leaning towards Yes, I would rather that she had the best car possible. And to be truthfull, we didn't have the money to lend to the other kids, even if they had asked for it. So I don't know which way we will go. Decisions, Decisions!

10 Responses to “Loan to the kid? Or not?”

  1. mrs. Says:

    Does she have a job to repay the funds? Would you charge her interest (nominal)? Is she responsible?

    I'd learn toward yes if it is for reliable transportation.

  2. creditcardfree Says:

    Welcome to SA!!

    I say lend it, with the condition that she pay it back at x%, for $XXX/mo, for x months! Taking a loan out is a good experience...even if it is with your parents!

  3. Analise Says:

    mrs. is asking some good questions that you should consider when making your decision.

    If it were me, I would lend DD the money, especially since she is only a few hundred short and has shown diligence in working and saving the majority of what she needs. Personally, I would not charge interest, though... I just don't feel comfortable making money off of someone who has so little and I'd be happy just getting the money back. But you have to do what feels right for you.

  4. girltherapy Says:

    I am still sort of on the fence (surprise, surprise!) I like the idea of working with what you have to spend, after all, I have to do it every day. But as you all know, theres that invisible line in used car buying, where you just know that its going to be costing you more to keep fixing things, than if you had just spent a little more, and gotten a car in better shape. This is the story of our financial life. I am from plan ahead, agonize over every possibility Venus, and Hubby is from just get it done, you think too much already Mars. I'll let you know what happens.

  5. campfrugal Says:

    I would lend and not charge interest. Especially if she had worked so hard at saving for a car.

    It also would benefit me - I would not worry (as much) and loose sleep over her driving something "maybe not as safe", that she would have to buy, by using only what she saved. I am a big worry wort.

  6. CouponAddict Says:

    Is she going to be allowed to work during the school year parttime if her grades stay up???

    If she is going to have a job, why not jump start her credit history by cosigning for a car loan in the difference between what she budgeted and what a reliable car costs?

    I once cosigned for a car loan that was only $800 so I know some banks will do small car loans since usually the car is worth much more than a few hundred bucks. I believe the monthly payment was $50. Which I am sure if she only worked weekends during school she could afford to pay.

  7. monkeymama Says:

    I am with campfrugal. I have never borrowed for ANYTHING (else), but my parents gave me a $1500 interest-free loan to buy my first car.

    LEt's face it - it was just as much for them as for me. I mostly drove to work, to pay for the car. It saved my parents a LOT of driving me around.

    I am pretty anti-debt, and my parents never handed me much financially. But I always appreciated the help. Let's face it, most teens don't have the money for a car and the ability to work often depends on a car.

    I don't think charging interest is a half bad idea either. I would have been just as grateful for an interest-loan.

    I would make clear that this was a special exception when it came to debt and borrowing.

  8. monkeymama Says:

    I have one thing to add - if she can find a perfectly acceptable (reliable) car without borrowing, I think she should work within her means.

    I am getting the feeling that is your husband's angle and I am afraid I would probably side with him. You didn't mention price range of car, so I Assume much.

  9. baselle Says:

    How many months of saving will it take? If its only a couple, I'd lend it. If its more than six, probably not.

  10. crazyliblady Says:

    I hate to sound mean, but I would go with not lending. The reason is that unless she is also going to be working during the school year, I would have to wonder why she needs a car. I am sure you are aware of the extreme interest rates that anyone under 25 has to pay. Will she being paying for it, and how? Who pays for gas and other maintenance? It seems like an awful lot of expense for a teenager.

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