Kid at College: Car Ownership Question

Our 18 year old daughter goes to school in Austin.  For the next four years she will live in an apartment, right next to campus, with a parking space.  She currently has no car on campus but uses Uber constantly. She has asked to purchase a used car with some of her college money. 

I have calculated the annual expense of her Uber usage vs. the expense of car ownership ($0.58/mile for 2016 according to AAA) and they are similar.  She would use the car only in Texas and only for the next four years. 

Would it be a good financial exercise for her to purchase  (in her own name), maintain and then, by necessity, sell a vehicle?

As young adults, my siblings and I bought and sold cars all of the time but that was years ago. It was a great way to learn to research a product and negotiate a deal. I am wondering if the same lessons could be learned today.  I would love to hear your thoughts!

how used of a car?  if it is really old, maintenance can be high....and you have to have a good mechanic you trust to check it before buying it.  If you can manage about $12,000 for one that is just off lease, it shouldn't need much maintenance and would last a good 4 years without a lot of major work.  

Personally, I do not feel safe with Uber and would not want my teen daughter using it.  There is a case in Union County of an Uber driver charged with raping a passenger.

Is this is non college owned housing with a year round lease and considered to be her 'permanent address' or is it considered to be temporary address with NJ still being her permanent address?  I would check with my insurance in NJ to see if they would cover adding  it...and also check with a couple Texas insurance companies before making a decision.

I believe the AAA average cost is based on 15,000 miles per year.  I doubt your daughter would come close that mileage total.

You should also further research the insurance and liability issues.  Even if the car and insurance are in her name, I think you still may be liable potentially for her actions since she is 21.

If it's legal to register the car in Texas it would probably be best, and the costs of car insurance are most certainly much lower there than if the car is registered in NJ.

1)  Why do you assume that the car will be sold in four years?  
2) She is 18, can own her car without asking your permission.  She is
asking for buy-in for when she needs to ask you for money for the car.
3) Whatever your mileage assumption for the car is compared with Uber, you should expect it to be exponentially higher.
4) Young drivers are super inclined to having an accident.  Are you prepared to deal with this long distance?
5) Young drivers are also not well versed in maintaining a vehicle.  (I know.  I have my own experience.)  Are you ready to hear that the engine has unexpectedly blown and needs
to be replaced?
6) College buddies are always asking to borrow a car.  Danger may ensue.  Can you reasonably expect her to refuse this request for four years?
7) I will not bring up the topic of college parties and automobiles.

You have much to consider before enabling this proposition.

Great points.  She is now a Texas resident because she owns a portion of the apartment (condo.) I will call insurance folks today.

Yes the AAA average cost was based on 15,000 miles per year so the $0.58/mile is likely quite a high estimate. Even with trips to see Grandma 300 miles away I doubt she will to 5K per year.

I was just thinking about getting a car off-lease; she is going to flinch at the unattractive (practical) ones I have in mind.  

Luckily, Uber in Austin is absolutely part of the culture.  If she has ever felt unsure of a driver a second driver is always just a minute away.

Side Note: Austin also has Lyft and Lyft just announced that they will launch their first FLEET of totally driverless taxis in Austin in the very, very near future! THAT will take some getting used to. Which is worse a possible "bad guy" driver or no driver at all?

@mrmaplewood.  Many good points.  

To cover her college expenses she will need to either sell me back her car or sell me her share of the condo unit.  I will let her choose.  After graduation, her plan is to return to NYC and I she will not want a car.

Maintenece is a concern, I would prefer newer models with all sorts of scheduled maintenance alarm bells.

The reality is that she will continue to use UBER on party evenings.  I will encourage that.  CHS had a great "Safe Rides" option while she was in school and she learned early on how to make decisions when to drive and when to not even think about it. Today, CHS kids use UBER after parties.

OK, it sounds like you have your mind made up.  That was fast.  Lots of luck in this decision.

Not made up by a long shot... just trying the scenario on for size.

Yes, I think it's a good idea. My wife told her father she was buying a car. He protested but she went ahead. She got a big red van that had two purple propane tanks on the roof. These were the hippy days. She drove it across the continent twice and has fond memories of it.

I loved having a car in college and can't imagine what life would have been like without it.  I used it to get back and forth for visits home and to see friends at other colleges. But I also most importantly used it to get away from the stress of school and would go on long drives listening to music and decompressing. Wish I had the time in my life to do that now!!!  

We are dealing with a similar request and will probably allow the kid to have a car although I am nervous about it. Rather than replace short Uber trips, I think it will encourage longer road trips, which makes me a bit nervous. But I am a nervous nellie.

My point was that $0.58/mile is too low.  It will be significantly higher than that.  Costs such as insurance, registration, depreciation, and some maintenance will be spread out over fewer miles.

kmk said:

Great points.  She is now a Texas resident because she owns a portion of the apartment (condo.) I will call insurance folks today.

Yes the AAA average cost was based on 15,000 miles per year so the $0.58/mile is likely quite a high estimate. Even with trips to see Grandma 300 miles away I doubt she will to 5K per year.

I was just thinking about getting a car off-lease; she is going to flinch at the unattractive (practical) ones I have in mind.  

Luckily, Uber in Austin is absolutely part of the culture.  If she has ever felt unsure of a driver a second driver is always just a minute away.

Side Note: Austin also has Lyft and Lyft just announced that they will launch their first FLEET of totally driverless taxis in Austin in the very, very near future! THAT will take some getting used to. Which is worse a possible "bad guy" driver or no driver at all? ">

@yahooyahoo, Yikes! You might be right!  Here is a link to the article I am citing.  Let me go crunch some numbers...

http://newsroom.aaa.com/2015/04/annual-cost-operate-vehicle-falls-8698-finds-aaa/

I guess I'd be looking at what the car or uber service is used for.  My daughter had a car at school her first year, but she needed special permission and it was granted to allow her to get to and from a job.   She was in the minority having a car there freshman year.  I'd try to wait till at least sophomore year.

I was going to say, what is the insurance? For an 18 year old it can be awfully high. Even with a good student discount, car insurance here for a kid ranges from $800-2400 a year. 

OK.  Looks like the estimate of auto ownership costs is OK.  

It is comprised of : 

Fuel  - I will use the suggested 11.2 cents/mile and 5000 mile estimate

Finance charges - will pay cash

Depreciation - should be low since we are buying older model. I will use $1000.

Insurance - I will use the suggested $1,115.  (Kid is a Freshman now.  If she gets a car it will be her sophomore year and she will be 19.5 years old.)

Maintenance  - I will use the suggested 5.11 cents per mile and keep fingers crossed

Tires - hopefully we will not need these with such light use.

Miraculously, the estimate comes out to 0.5861.