When most budget conscious parents think of buying a car for their teenager, purchasing a used vehicle comes to mind. But if you're only looking for a set of wheels to get your kid through his or her senior year of high school, you may want to consider a short term lease.
As you probably know, most leased vehicles come with at least a two year agreement. But what you may not be aware of is that a driver can transfer his contract to another person if he wants to get out of his deal. The new "buyer" then simply makes the remaining payments until the car needs to be returned to the dealership.
While this may sound compelling to anyone in the market for a car, it's especially intriguing for teenagers (and their parents) since they can avoid making the down payment that comes with most leases. Families also get to return the car around the time their young driver is ready to leave for college.
Right now LeaseTrader.com (a website where sellers post their leased vehicles) says there are a handful of car models that are safe, affordable and readily available for teenagers that range in price from $185 a month (for a Mazda 3) to $235 a month (for a Nissan Maxima).
So how does the process work? It starts off simple enough. You go onto LeaseTrader.com and start looking for a car you like in your area. If something catches your eye and you want to talk directly to the seller, you sign up for the website's service and pay $39 for a two month membership. Once you've negotiated a deal, it's recommended that you take the car for a spin and consider having it inspecting. (LeaseTrader.com provides third party inspection reports for $99.)
Now LeaseTrader.com gets back involved in the process and facilitates the transaction. (You'll pay the website $149 for this service and hand the bank that owns the car a transfer fee of between $75 and $600, depending on the lender.)
Then there's just one final step. You'll need to register the car in your name and add it to your insurance.
In general, I'm not a huge fan of leasing. (I like to buy a new car and drive it into the ground.) But when I did the math, I realized that short term leasing could make a lot of sense for the right situation. A Mazda 3, for example, would only cost you just over $2,500 (plus the registration fees) for 12 months. And once your kid is off at college, you won't have to worry about paying the insurance or getting the oil changed.
Would you consider a short-term lease?
Stacey Bradford is the author of The Wall Street Journal Financial Guidebook for New Parents.
Another Teen Driver image is courtesy of Flickr, CC 2.0.
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