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A Decision Made

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As you all know, I have been living without a car since the first week of April when my car was totaled in a wreck on our way home from Spring Break in Texas. And really, it hasn’t been too bad.

It has saved me money on gas, insurance and just general get up and go spending. Now anything I want to do that requires a car must be planned. Both of the twins have cars and my grandmother has a car which I can use at times. I have not felt deprived at all.

My original plan at the beginning of the summer was to save up and buy a car when we returned from Texas in mid-July. As I was considering cars and long term needs, I finally settled on a type of car and was prepared to purchase a decent used car this month.

But the more I have thought about it, the less I want to buy a car. So I have decided…I will not buy a car. At least not for the foreseeable future.

Day to Day Car

My plan is to use Sea Cadet’s car when he leaves (end of July.) And since he was planning to sell it, I am going to “rent” it from him. I figure if I pay for standard maintenance while I’m using it and put $100 a month into a savings account for his next car, that will compensate for the additional miles I will put on it.

If I reach the amount that he is wanting to sell it for, we will transfer it to me. If not, we will sell it when I am ready to buy another car and that money will also go into his savings account.  I think this is fair for both him and I, thoughts?

In the meantime, we will keep getting by as we have all summer. Planning and borrowing as needed. I truly do not mind being carless and I LOVE not having a car payment or extra insurance costs!

 


31 Comments

  • Reply Walnut |

    Seems messy. Seems like you should just buy the car from Sea Cadet for the price he wants (assuming it is market value) and avoid this weird family financing strategy. It also locks in a decision for you and eliminates the temptation of buying a more expensive vehicle when you’re not in a great position to make that purchase with cash.

    • Reply Cwaltz |

      I ‘m going to clarify what I think you mean by saying you like not having to pay for the extra insurance, you mean that you intend on covering the insurance costs for this vehicle instead of Sea Cadet and what you mean by extra is paying for full coverage on a vehicle that needs full coverage because the bank still owns it and is usually more costly. Am I correct? It sounds like you and Sea Cadet have pretty much made up your minds in this so I wish you both well and hope this works out the way you both want.

  • Reply Anne |

    Additionally, if Sea Cadet owns the car, he has to carry insurance, which is an expense he would not have if he sold it. You should buy the car from Sea Cadet for a fair price and carry your own insurance.

  • Reply SMS |

    As the others have said, this is way too complicated. Why not just buy it from him and carry your own insurance?

    • Reply Hope |

      I already carry insurance.
      We just insure the two cars – Sea Cadet’s and History Buff’s. We are all listed as drivers on them. So we are all covered completely.

  • Reply Tootsweet |

    Yeah, I think you should buy it. Let’s face it, you don’t have the best driving luck so I don’t think it would be in Sea Cadet’s best interest if you are driving his car while he is the legal owner. You don’t address the insurance issue, but I hope you would be getting your own policy, instead of just being on his. That’s not really fair to him in the long term.

    If you need to rent a car, go to Avis. This isn’t fair to Sea Cadet.

  • Reply Laura |

    Smart choice not buying a new car. I would agree if possible it would be less messy if you just bought his outright, if I recall it was an older car so it probably wouldn’t cost that much.

  • Reply Angie |

    It sounds like a good compromise on the surface…. But also a conflict between you and your son. I’m assuming it was your plan that you proposed to him? He’d be carrying all the risk of the car with minimal upside and I’m wondering whether he is aware of this (are you even aware of this?). Or if he felt obligated to say yes to your proposal because you’re his mother. If he wanted to “rent” out his car it would be better to do it through official channels just for insurance reasons. Plus he’d make at least the 50c per mile or whatever. $100 is not enough.

    Buy the car from him outright (with potential for him to rebuy it) or let him sell it. Due to insurance, liability, and your recent driving record I would strongly suggest you do not “rent to mom”. If you did decide to go down the “rent to mom” path, then Sea Cadet gets to decide where the $100 is going (not you!). It’s a payment to him (not a specified saving). And you do not get to count on that “rental money” as a downpayment if you decide to buy it outright down the line. This type of arrangement gets murky pretty quickly. I’m actually kind of appalled how you set up the payment. “…. put $100 a month into a savings account for his next car….” This is a typical arrangement discussed for kids paying “rent” on their bedroom before leaving the family home. Not an arrangement between a son and his mother.

    Beyond the car itself, Sea Cadet is becoming an adult. I’d hate for this to be the start of a cycle strange/murky family money arrangements. It would be a shame if someone else in his life pointed out how one sided the arrangement is and he loses some trust in you. Even worse, if he starts to expect these whacky financial propositions from you throughout his adult life.

    • Reply Angie |

      I’m sorry. Appalled was a little harsh of a word. I’m just suprised that you are proposing something that mainly benefits you and then taking it a step further to designate where the money goes. It seems like a good opportunity for you to encourage independent adulting. And to do so by setting a good example.

      • Reply Hope |

        The money designation is actually something we decided on as we formed the plan for his move. He will need a car when he is done with his year commitment so the original plan was for me to sell his car after he left and put it in savings account for his return.

    • Reply Laura |

      I agree he should decide where the money goes. He could use it to help pay his medical bills that we never heard about again.

      The more I think of this, the more potential I see for conflict. What if you get close to paying for the car with your $100 a month and he decides to sell it to someone else? What if it is totaled while you are driving it and he has nothing to show for it ?

    • Reply Cwaltz |

      I am another buy his car outright vote. He shouldn’t need to cover insurance while gone because you will be the primary driver so you should have the expense of insurance for this car, not him. Since the car was his asset then he should have the ability to decide what to do with the funds. A year from now he may decide he does not want a car just like you did. He may want this money to cover phone bills or dates or whatever. In the meantime you driving it and time will cause it to depreciate and lower his ability to maximize value for this vehicle. The money you give him for the car (Kelley blue book) should be his to decide on how to spend whether it be to cover his phone, b uy takeout, or save for another vehicle. He made an adult decision to head out into the world. It’s time to hand over the reins for his own finances. Based on what I have seen you should have faith in his decision making(it’s not like this kid has been doing anything other than busting his backside to succeed.) I want you to think back to how you felt when there were “strings attached” to help from your dad. It was a source of contention. Do you really want that for you and Sea Cadet? It could happen because money is a tricky topic and you are placing a lot of this on him straight down to locking him into renting out a vehicle for less than the monthly cost of insurance. Is the problem that the vehicle price exceeds your savings?

      • Reply Hope |

        He is on my insurance. He will not be responsible for auto insurance once he leaves.

        As far as the money designation, that was a decision we made together. See comment above.

  • Reply Tootsweet |

    Now wait a doggonne minute. I now see that you wrote you “love not having extra insurance costs.” Nope. That is not right.

    • Reply Hope |

      Why? Adding a third car would increase our insurance costs…I’m not sure why keeping that lower is not right.
      The twins and their cars are on my policy. No one is going without insurance coverage nor have they.

  • Reply Cynthia |

    I agree with the others, this does not seem wise. A quick online search (sorry, can’t link on mobile) confirms that there is a possibility that the title holder can be sued (even after insurance, even if they weren’t involved) after an accident. As others are telling you, this could spell financial ruin for him. Whether or not he agreed, or you discussed or whatever, as the parent I think you need to look at his best interest here. Just buy the car at a fair price or sell it to someone else.

    • Reply Drmaddog |

      Yep. I mentioned this in the previous post where this idea was floated. A lot of liability for him especially if damages exceed the policy limits.

  • Reply Kerry |

    If you are doing okay without having a car, why are you concocting this scheme? You are contradicting yourself. Just let him sell the car and either save the money or pay off his hospital debt. It is too big a risk for him to have you driving his car.

  • Reply Jessica |

    This sounds like a terrible, messy arrangement that you’ve already decided on. Also I’m no insurance expert but I thought you couldn’t insure a car you didnt own

  • Reply Angie |

    Since you seem hell bent on following through….

    I would recommend a detailed, signed contract between you two. Outline the scenarios that can happen, who is responsible, and what the limits are. What happens if the transmission goes out 6 months into renting the car? What is the mileage allowance (similar to a lease)? What happens if the car is totaled? Detail what is included in “standard maintenance”? This would be a great discussion and critical-thinking exercise to help with your final decision.

    Creating a contract help you think through the gotcha scenarios. It would also be a good teaching point that any money arrangements between family and friends still needs to be treated semi-formally.

  • Reply Melissa |

    I think you have a good plan – it’s win win for both of you. Good heavens people woke up on the wrong side of the bed today. You are doing a great job.

  • Reply Denise |

    This does seem like a win/win. You are basically renting the car for those times you need it at a low cost. Your son will still have the car ‘sold’ before he returns from his time away and needs a car. Sounds like a family working together for everyone’s benefit to me.

  • Reply Tango |

    If I were advising your son, I’d tell him to sell the car now (whether to you or another buyer). Then he could invest the money for a year and make a small profit. He’s better off financially doing that than getting $100/month in my opinion.

    If you two do decide to go ahead with this plan, I agree with Angie that you need an extensive written agreement detailing every imaginable situation. Too many people ruin personal relationships because they enter a financial entanglement with no written contract and later disagree about how something should be handled. I’m sure the last thing you want is for this to inadvertently cause a rift between you and your son.

    Also, double-check with your insurance agent that there’s no unforeseen ramifications with your son technically renting his car.

  • Reply Joanna |

    The possible financial ramifications for your son are huge. What if you cause an accident while driving the vehicle? He will surely be named in the lawsuit. I have seen this happen personally. This is a win for Mom and lose for your son. Be fair to him and just buy the car outright if you want to be the main driver of the vehicle.

  • Reply dh |

    I just lost a long email.

    The gist of it is by doing this, you’d be taking advantage of your son the same way your Dad took advantage of you with that house.

    Your driving record is VERY poor. What if you kill someone next time?!

    Either buy your son’s car (at market price) or buy another car or do without.

    But this is a terrible folly that could and may well end up very badly, especially for your son.

    I’m very happy to see that your finances are better Hope. Your common sense? Not so much.

    • Reply K |

      I’m not exactly sure her dad took advantage of her. But it did turn out to be a very messy situation for all involved. It is a PERFECT example of why you shouldn’t mix money with friends and family. Especially between two people who don’t really have any excess money to fall back on.

      It can create a lot of animonsity and hurt feelings when it doesn’t go according to plans. Sometimes it doesn’t matter if you have good intentions or not.

  • Reply Louise |

    In essence, what your post says is that instead of buying a car you will be renting one, at below market rates from a family member in an informal agreement.

    It comes with all the same running costs and you have no asset.

    The obvious benefit for you is that you get to avoid the up front cost of a purchase, replacing that with a $23 a week payment to your son (the equivalent of $100 a month).

    He runs the risk of losing his asset or it being devalued, with no recourse. I wouldn’t do this to my child. If you plan for him to get the same financial benefit at the end that he would have gotten if he sold now – just buy it now. Then there’s no more risk.

So, what do you think ?