I got over that and realized within a few months that not only was the Fairmont a great car (it had a cult-like following among my high school friends), but that I also appreciated the lesson my Dad had taught me. If I owned it--that is, if I had paid for it--then I would appreciate it more. And I did.

Now, I don't believe that all parents should tell their kids "you're on your own" or that they should expect to be paid back for forking over the cash, but it is important to be smart about not only what vehicle they get, but how they get it.

When you determine that it's time for Junior to get his own set of wheels, consider several situations and scenarios:

New or used? The answer should be simple: Used. However, many parents cringe at the thought of their "little baby" being behind the wheel of a rusted-out death trap, so they opt for the 2009 model with wrap-around air bags, crumple zones and traction control. This ridiculous and paralyzing fear may insure Mom and Dad of their child's well-being, but in the long run, they may have mortgaged their future. The largest group of those that default on car loans by far is among teens whose parents have co-signed. Congrats: that Astin Martin you just bought is wrapped around a tree and insurance shorted you by $8,500 compared to the amount still owed to the dealership. Guess who takes care of the shortfall? You. And, Little Sally wants another ride. Classic. The point is that the used car is always the best option.

Seriously, though...new is better, right? No! Here's another thing to look at. Buy an $800 car. Drive it for two years. How much is it worth? The Kelley Blue Book would say that it's probably not worth much less than $800. Now, snag a new $25,000 ride off the lot. Check the Blue Book in 24 months. The average car at this price will be worth LESS THAN $12,000 just 2 years later. Now, did you pay cash up front for the new car when you bought it? No. So, that $25,000 hooptie costs you nearly $33,000 over the life of the note. Ouch. Did you really want to play $33,000 for a $12,000 car? I think I'd rather bank the $21,000, thank you very much!

Get over yourself! The worry among parents who try to convince themselves of going for the new car is that the vehicle won't last. According to Zeibart, the average car in 1970 lasted less than 5 years. Today, that number is 9.3 years. Let's compare the odometers. An average 1985 model year was expected to last to 100,000 before performance and safety were significantly compromised every 10,000 miles thereafter. Today, those numbers are 200,000 miles and 25,000 miles, respectively. Even a $500 or $1,000 car will surprise you as to just how good and in shape it is. It might look like the previous owners used it as an apartment for a few months, but chances are that it only needs minor work under the hood or behind the wheels.

Still worried? Get some peace of mind by getting the potential buy inspected by a third party. Most garages and mechanics will do a simple inspection for a small fee or even free. They will check the belts, hoses, brakes, fluid levels and potential trouble spots like seams, gaskets and connections. This 30-minute once-over may be the difference between a great deal and a rotten lemon.

Is status an issue? In some (not so) rare cases, parents live vicariously through their children. Take a quick drive during the school day through the Angola or Fremont High School parking lots and you'll see what I'm talking about. True story: I know a 16-year-old with a brand-spanking-new Mercedes. Daddy bought it for her because she's worth it. Are you kidding me? The kicker is that Daddy drives a semi for a living. Does this teach her anything? Can this even help him financially when he's at retirement age? In fact, what Dad has done here is lost about 10 years of saving on his retirement by making a mortgage payment for a car. And this is nowhere near an isolated incident. It happens thousands and thousands of times each year to parents in all 50 states.

The bottom line: Sit down with your kids and set ground rules for the purchase of an automobile before even leaving the house to "window shop." Determine in your head how much is the spending limit if you plan on buying the vehicle for them or loaning them the money. Figure out what is a need and what is a want. Take into consideration taxes, title, license and insurance (and understand that the rates for teen drivers can be anywhere from twice to seven times that of an adult driver). And, finally, discuss with them the importance of saving as much money as they can to purchase the car. Heck, in one summer, a teen can make $3,000-$4,000, which would buy a pretty nice ride. The best part about that for Mom and Dad is that a teen who saves costs the parents nada!