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Parents giving $10k towards kid’s first car

A young woman sits in her car

A young driver sat in her new car

Survey shows 60% of parents are giving kids $10,594 to buy their first car.

According to research conducted by RateSetter, parents are stumping up $10k to get their child their first set of wheels.

The bank of Mum and Dad

RateSetter found that among parents who bought their child a car, 15% chose a new model, 71% opted for a used one and 14% donated their own vehicle. The majority of families could afford a car under $10,000, while 26% spent between $10,000 and $20,000. A lucky 12% of kids were gifted over $20,000 towards their ride. Parents in Victoria spend the most on their child, up to $13,386. In NSW, the average outlay was $10,404.

Children are living at home longer

RateSetter’s CEO, Daniel Foggo, said that children are living at home in the burbs for longer, leaving them farther from university and work in the city.

“With property prices out of reach for most first time buyers in the big cities, kids are living at home longer and often travelling a considerable distance from the suburbs for university or work. At the same time, car financing has never been more affordable, putting parents in the driving seat to help their kids with a set of wheels.”

Most popular cars with P-Platers

Novice drivers favour smaller cars, with two Toyota hatches, the Yaris and Corolla, selling well. The Toyota Camry was also in the top five as was the Hyundai ix25 SUV and the i30 hatch.

What if I’m buying my own car?

If getting a loan or cash injection from mum and dad isn’t an option, Foggo gave some tips for that first car purchase.

“For those millennials who won’t be getting a boost from the Bank of Mum and Dad, it’s important to drive a hard bargain on the car and to shop around for the best finance option. For example, the interest savings on RateSetter’s low-rate car loan versus a secured loan with some of the big banks could be hundreds of dollars.”

How much does a RateSetter loan cost?

Based on RateSetter’s most common loan term and value, of 40 months and $10,500, first-time car buyers would spend $11,932.72 overall or $298.32 monthly. These figures use the company's average interest rate of 7.67%. Upon application, you may receive a different interest rate depending on your circumstances.

RateSetter is a peer-to-peer lender, where investors loan funds directly to borrowers. You should read our RateSetter guide, examining the pros and cons as well as related fees and qualification criteria.

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Picture: Shutterstock

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