Hypothetically, let’s say you know a guy who owns a 2010 Prius. The car is mechanically reliable, fully paid off, and lightly used.
Then one day, this hypothetical guy gets a phone call from his wife’s parents … They want to buy him and their daughter a new car, free and clear, as a gift. This gift car would be larger than the Prius, have more modern and awesome features, and would be perfect for future road trips that this hypothetical guy and his wife are planning to take.
This guy you know is loving the thought of having a newer whip, especially one he can fit all of his surfboards inside plus have plenty of room in the back for his hypothetical German Shepherd!
On the other hand, this guy and his wife are mostly minimalists, and don’t need a new car. Upgraded versions of the consumer items they already own don’t add a huge amount of value to their lives.
Help this hypothetical guy out. What would you advise him to do in this situation? Should they accept the new car as a gift, or politely decline the offer?
Accepting BIG gifts Is Hard, Especially Cars!
Now, you might be thinking that this friend of yours is a complete idiot! Why is this such a tough decision? Take the car, you moron!
If it was me making the choice (and it’s definitely not me or anything …) I would be hesitant because:
- Owning newer stuff increases my cost of living. A new car would add to my annual expenses, and it’s why we just got rid of our previous spare car.
- Our 2010 Prius works just fine and isn’t due for an upgrade for at least 5 years, or probably longer.
- My wife and I have a lot of self pride. Accepting handouts and large gifts is uncomfortable because we feel we haven’t earned it ourselves.
- I’m a personal finance blogger, and many readers would never be in a position to be gifted a car. Accepting expensive gifts kind of makes me feel like a fraud, because I preach to others all day about saving and investing — and here I am getting stuff for free.
All that being said, I also believe …
Part of Giving Is Receiving
I’ve given away decent sized gifts in my life, and it feels GREAT. I love acts of kindness, showing love, helping others, sharing wealth, and all that good stuff people do when they have an abundance of something.
By refusing the car, I’m kind of belittling the process that I love so much. So here are some supporting points for why we should accept the car:
- If the situation were flipped, I’d probably do the same thing. Sharing my wealth is what I plan to do in the future — probably with my kids in the form of things they wouldn’t buy themselves.
- Not accepting gifts robs the giver of a good feeling. Generosity should be encouraged, not discouraged.
- Although we don’t need a bigger car, it certainly would come in handy. Road trips, more room if we foster kids soon, and also it solves a problem in the coming years when the Prius dies.
- When I left Hawaii in 2012, I gave away my car and motorbike to others (they were only worth a few thousand each). The car went to a work colleague who had 5 teenage daughters, and the motorbike went to a friend with no transportation. Is this the universe paying me back 9 years later? The more you give, the more you get.
Financially Speaking …
Let’s help this hypothetical friend work out how much his annual expenses would increase by taking on a newer car. Maybe that would help his decision-making.
Let’s assume the current 2010 Prius gets swapped out with a gift of a new (used) 2018 Ford Explorer.
Registration costs: I believe California has a flat registration fee/taxes for standard vehicles so I’m going to assume no change here. Annual reg is currently $186.
Car Insurance: A quick GEICO quote shows me a 2018 Explorer would be $741 for a 6 month insurance policy. That’s an increase of $440 compared to the current Prius policy of $301 for 6 months.
Gas Mileage: The current Prius is averaging 46 miles per gallon and I’m gonna assume that the new Explorer will get approximately half that. Therefore, gas prices would double. Looking back at my past annual gas expenses, we spend an average of $1,245 in gas each year (not including 2020, we didn’t travel). All in all, the new car would ADD $1,245 annually to our fuel expenses.
Maintenance: For the simplicity of this exercise, let’s assume both cars have the same annual maintenance costs. The Prius just got new tires and has no mechanical issues. I’m assuming the new car won’t have any issues over the next 5 years either. Annual maintenance: $368
All summed up, looks like accepting the new car would add $2,125 in expenses annually. Or broken down per month this would be $177 per month!
Financially worth it? Well, just looking at annual cost isn’t the complete story … Upgrading cars this year means not having to upgrade later. Paying the extra $2,000 per year now might save a once off $15,000 replacement cost for upgrading the Prius in 5 years. 🤷♂️
Other Random Thoughts
Thinking outside the box, this might not have to be a binary decision. There could be options other than just “car or no car.” A few things come to mind:
- What if we accept the new car on the condition that we get to gift our current car to someone else in need? Paying it forward is a beautiful thing.
- We could also accept the new car, then buy a large unexpected gift in return for the parents later. A vacation? A surprise party where we fly in relatives and pay for expenses?
- This is kind of rude to request … But we could ask the parents if this gift car could wait a few years. It would be much easier to accept if our current car were dead and needed to be replaced! I feel dirty just typing that thought.
- Instead of a car, what about something the entire family can all enjoy together? This would allow the giving to take place, and more people can receive a benefit. Could that be a win/win?
Would You Accept a Car as a Gift?
I’d love to hear your thoughts on this totally hypothetical made-up situation that is definitely not happening right now with me and my family. I’ll be sure to pass on all your comments to my friend. 😊
Let’s also hope that his parents in-law aren’t reading this post right now. Just in case, please be respectful in the comments — I’m not really sure how they’d take to their goodwill gesture being splashed around and discussed on the Internet.
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What a difficult question!
Honestly, if I were in your shoes, I would consider 1 of 3 options. First, I would consider simply keeping the Prius, since the Prius is a fantastic car, is reliable and cost efficient when it comes to saving money on fuel. Second, I would consider your “dirty” option and see if your Prius dies. If the Prius dies, of course it will be much easier to accept another car. Although I understand that you don’t feel as great about this option, I do think this is a plausible and possible option to pursue. And third, if you and your wife truly would like a new car, then you could always “pay it forward” and gift the Prius to someone else need. What comes around, goes around.
I would suggest to take some time and think about what would make “your friend” feel the best and then pursue that option.
Good luck to your hypothetical friend :)
Cheers Fiona! There’s certainly no rush to decide, which is nice cause we can think and chat more about it all. :) Have a great week buddy!
If the Prius needed to be replaced now, would they buy another Prius or other very fuel efficient vehicle? Additionally, would “this person” feel less good about driving a vehicle that used a lot more fuel than the current vehicle? If environmental impact is a primary concern, then there is value in spending money in alignment with those beliefs, or not spending money on things that don’t support those beliefs.
Great points – just upgrading the Prius to a newer model is a good idea. That’s what I’d probably be doing anyway if our current one died.
I like the idea of gifting the first car if it means getting something newer. Although the lower gas mileage is a negative tradeoff.
With that being said, for the first car, what upcoming maintenance costs are there? A few years ago, we were looking at getting a 10+ years old Prius (circa 2008 model year), but they either needed the battery pack, drive belt and “fancy” brakes replaced or the owner had done the repairs and was charging more than we thought was a fair price to recoup their costs.
The premium selling price and the open-ended repair costs didn’t justify the hybrid fuel savings in our instance.
The math didn’t add up so we bought a conventional gas vehicle. It was the better financial decision for what was available in our market at the time.
Hey Josh! There’s no immediate maintenance needed on our car, but, you never really know until something expensive breaks! I’ve heard many stories of Prius batteries giving out somewhere around the 7-10 year mark. As far as I know we’re in good shape, but maybe I’m fooling myself to think it’ll be another 5 years without big hassles.
I’d prefer to stay with hybrid. But, like you, if the math worked out the other way I’d happily go with whatever is cost effective in our market at the time. Cheers!
Anecdotal, but my friend’s 2009 Prius’ battery completed died and refused to hold a charge in October. They were having some other minor issues with the car and didn’t want to any money into replacing the battery and replaced it with a new car. That got me thinking about my 2009 Prius and how much battery life I had left. Since I recently paid off our other car, I was willing to take on a new car payment and started shopping around. End of December, we upgraded to a new 2021 Prius and I’m loving it. I hope you get 5 or more years out of your Prius and maybe I would have too, but preferred to replace it while it had trade-in value and when I was financially ready, instead of surprised by a dead battery. A no payments used car from my parents or in-laws would have been even better, even if it meant my insurance and gas expense.
Cheers Matt, and congrats on the new Prius! You’re right about trading in while there’s still a bit of value vs. waiting until it’s worth absolutely nothing. Problem is, there’s no real way to tell when it’s gonna blow up. :)
Have a great weekend!
My first question would be why do the parents want to gift the car? Are they trying to move it on / get rid of it themselves? If so, they probably do understand some of “your friend’s” reason for being a 1 car household currently.
I’d also consider that most people with electric or hybrid cars made that decision consciously, to move away from gas only. Especially with CA’s push to reduce gas cars, I’m not sure the Explorer is a great option if it was me.
I was talking with a family friend who has a hybrid, that when I was in the market for a car 8-9 years ago, the electrics didn’t have the ‘oomph’ and acceleration that one needs on the highways near me. Now they do, and when it’s time, I will definitely be leaning heavily towards a hybrid.
Is there someone else who might benefit from the Explorer? Ex if you would gift the Prius to someone “your friend’s” wife knows…would it be simpler to pass along the Explorer?
Last thought – be cautious about ‘gift’ vs ‘buying for a small price’. Different states for title and taxes this can make a difference.
Hey Jacq! We’re definitely staying a 1 car household. Even outside of pandemic lockdown orders, we can make 1 car work – easily. We first got the Prius knowing that I would be driving a lot around LA for work meetings. Although our daily travel has changed a lot, we have traded daily miles with sporadic long road trips. All in all, I still think the hybrid or electric route will work out better for us!
Love the gift vs. purchase thought. I didn’t even consider that! It’s a big tax and hard to finagle. Thanks for bringing that up!
Hmmm… I’d be cautious. What is their reasoning for wanting to gift you a car?
When I was in real estate, every so often the parents would be helping their kids out with the house, but it usually ended badly… Parents get involved and now want to make the decisions… Want to remodel, whelp the parents don’t like your color choice so no go, etc.
Same could be with the car. It could be about control…
Hey David! Yep, I know what you mean! But in this situation I think it’s a 100% genuine act of love and generosity. My wife and I are extremely independent people (parents raised us to be!), so there’s no control or whatnot. Can’t imagine the stuff you saw in real estate over the years – wow!
I have actually received a car as a gift but under completely different circumstances. My ex-husband (husband at the time) and I were both working while he was attending college full-time. He was working at a retail job part-time. We had 2 cars, but then one of them died. Since my job was full-time and provided our insurance benefits, I drove the remaining car to work, while my husband got rides to work from friends at college (we lived on campus). This worked for a while but it was sometimes tough to find a ride and we couldn’t afford another car payment and also didn’t even have enough saved up to buy a decent older car. A friend of ours had a 1995 Honda Accord that his family no longer needed, so he literally gave it it us. This was in 2010 so it’s not like he was handing us a brand new car. But the car still ran and it helped us to be able to get by for the next 5 years or so. We even “paid it forward” and allowed my brother to drive it when his car died a few years ago (we had bought another car by this point).
Anyway, it would probably be hard to accept a brand new car, but maybe consider talking to her parents and saying that you’d rather wait until your car dies, then they can buy you a reliable used car. New cars de-value when you drive them off the lot, so it’s not really helping much for them to buy you a new car that you will have to pay a lot of insurance on. If they are dead set on getting you a car now, you can still let them know you’d prefer a car that is at least 2 or 3 years old.
Thanks for sharing and I love that you paid your gift forward. That’s truly a win/win. Getting something when you’re in need –> then giving something when you are in abundance. We could never drive a new car off a lot, no matter what it was. The 2-3 years old would be the plan if we agreed :) Cheers, Becky!
I honestly think you are overthinking this. TAKE THE VEHICLE!!! Especially if its an SUV!! I’m a born again Christian so this kinda stuff happens all the time in my circles…people giving away new cars/homes/expensive watches.
Don’t let your pride get in the way. Your in laws are not looking at you like you’re a charity. They are doing it out of honor and love.
I believe its a step of faith. I truly believe you guys are meant to be foster parents. Trust me…you are gonna wish you had that extra room once you start fostering!!!
Don’t worry about the added expenses. Do you not know how God/the Universe works? As you move in faith, you see increase! How do you know that once you take this vehicle, your income will not automatically go up?!?
Hey Angie! Expensive watches? haha!
I believe the universe has our best interests in mind no matter what we decide to do. Speaking of fostering, we’re mid-training right now, and even after hearing 1000 horror stories that will bring the average person to tears, surprisingly we haven’t been scared off yet! :)
I DID take the car gift. My 2012 Chevy Cruze had some unidentified issue (turned out later to be a relatively simple and cheap fix that the right mechanic could fix), my mom was relocating for the foreseeable future to Hawaii and wasn’t taking her 2014 Jeep Grand Cherokee with her. She asked if I wanted to trade. Gas will cost more (but even during pre 2020 my work commute is ~15 miles round trip and less if I take the bus into downtown Denver from a park n ride). Upgrade in features and space, which is great right now as we have a toddler. It did feel like a very unequal “trade,” but the Jeep would have sat in the driveway in Oregon for 80% of the year. I’d accept the gift :) it certainly crossed my mind that this exchange saved us from having to finance a down payment and additional car payment down the line.
Thanks for sharing Jess :) Agreed – if the Jeep was gonna sit there anyway… May as well help your situation a bit too. Hope you’re Mum is loving it in Hawaii! I’m jealous!
I get the hesitation but logistically I see the benefit of the bigger vehicle. I had a Prius when my son was born. It was hard getting the car seat in out of it but I made it work. Then I got rear-ended (baby not in car thank god) but the Prius was totaled. I got a Honda CRV to replace it and really enjoyed the extra room and it was so much easier to get the car seat in and out. Totally saved my back. I’m still driving the CRV which is now 11 years old and running great. It’s not a necessity but extra space is great when you have kids. We can throw bikes and other gear in the back no problem.
Is it a car they own already and that’s why it’s a Ford Explorer? Or are they just proposing to buy you that model? I’m asking because if there’s a choice in what kind of car they gift you maybe you could find a used hybrid crossover SUV?
If you have a good relationship with them and aren’t concerned there’d be any “strings attached” then I’d take the gift and pay it forward by gifting the Prius to someone else. Or like one reader pointed out buy it for a dollar in case of potential gift tax complications that I know nothing about.
Last thought – like you I have gifted an old car to someone else and it felt great. It made me very happy to be able to help out a younger family member.
Let us know what “your friend” decides!!
Cheers Amelia and I’ll def let you know what happens :)
As for the extra room, I can definitely see how it helps with kids. People drive minivans and SUVs for a reason – they are AWESOME for kids. Actually, now that i think about it, we should just skip straight to a mini-van. Prolly headed that direction anyway, haha! If we agreed, it would be a new (used) purchase, and we’d have say for sure in the model :)
Cheers and have a great week!
I think it is risky. If they wanted to give your wife some of the inheritance early when it is more useful then I get that, in fact I’ve done that with our kids and probably will again. But to select a car you don’t really need is very odd behavior. I’d worry it might be “since you won’t take care of our daughter the way she deserves then we’ll do it ourselves.” It’s presumptuous and interfering if that’s what is behind it. If it was a car they were about to trade in and they merely offered it to you or to sell it to you at a bargain price, that would be totally different. It could be they are just kind and generous and don’t see the problems this could cause. I’d talk it over with your wife and if she agrees, then she should tell them thanks, but please no. Your marriage is priceless. The car will be a rusting heap of metal in thirty years, your marriage will be for life if you guard it well.
Thanks Steve. I think when my wife and I were first dating, this could have been the thought. But, we’ve been together for 11 years, married for almost 6, and I’d be very surprised if I hadn’t shown that I’m 100% capable of taking care of my wife. I know what you’re saying though, everyone’s view of a ‘good life’ is different.
Glad you’re passing down wealth across multiple years, slowly to your kids. I agree with this strategy, and how you handled it yourself :)
If your gut is telling you that the giver’s intent is pure then it seems like an acceptable gift. I accepted a new $20K car a few years ago from a family member who could well afford it and it was a good decision. I think a person’s first gut instinct on things is usually correct. The worst decisions I made in the past were when I talked myself into it despite a negative initial intuition!
Thanks Elizabeth! I also love the gut feeling and listening to first instincts. If I’m being honest, I think we’ll say no thanks, even though I’m confident it’s offered with pure intent.
So, I think it really depends. I would be reluctant to accept a new car as a gift, but I had no problem accepting a used (10 year old) Honda Accord.
I was able to sell my Civic for $ 6,000, and have a bigger car for my bigger family. Now, that used Honda Accord is 18 years old and going strong. I needed a car, and it is nice to have one that is paid off, and relatively good (Hondas last long).
If someone came along and told me they would give me a new car now I would probably accept it. It really helps not having a car payment! Just my 2 cents.
Timing is everything. :) You want a Prius? haha kidding.
While I would appreciate it, I’m not sure if I would accept a car as a gift. I mean, there comes a point where it becomes too much. I would never accept a pet as a gift, either. I can barely take care of myself.
But it would be interesting to know what the choice would be after everything was said and done. Other people might feel differently than I do.
Cheers David. I’ll definitely let everyone know what happens. We might not accept a car, but we’d accept a pet probably! And this sounds weird… but we’d also accept a kid!
I may accept the gift, however I know only one person that would gift me such an item and there would be a price too high to pay. For me the person I know would always remind me what they did over and over, anytime we had a disagreement and then would put me in a pickle with other relatives, if you don’t have this worry/concern and they are not going to hold this over your head or expect something as pricey in return, I would accept graciously. I would have advise you to check with State Farm for rates, http://www.cr.org for reviews/repairs on the 2018 Ford Explorer, I would keep the Prius, Toyota’s have a longer lifespan than Fords normally. Why out of the blue a vehicle, did either of you say I wish we had a bigger vehicle? I would ask them if it would put them out “financially” to gift such an expensive item, or would they consider another investment? I would have too many Why’s ? Do they see that you are both doing so well, this is how they want to say good job? You don’t have to drive the Explorer as much, so that would cut down on fuel, State Farm offers savings for not driving much, which I believe Geico does too, but not in a way where they track it. You should ask Geico about other possible discounts you could get, maybe having a 500 collision deductible could lower the rates too. The 2010 should just have liability on it anyway right?
I hope you can figure this out.
Hey Christina! Cheers on the quotes and rates advice – I was just doing rough prices, but will check out State Farm anyway because switching insurance regularly can give wicked discounts! I guess as time unfolds i’ll be able to know more and answer more. Thanks for sharing about your situation and talking about the position of the giver. Like you, I would never accept a gift if it put someone out financially. Other people’s financial wellbeing is important to me, I could never be a drain on others!
So much of my answer depends on type of car. My 2001 Civic is leaking oil, check engine light just came on Saturday (possibly due to the oil leak), and has over 200K miles. If someone offered me a newer Civic I’d probably take it, though I’d want to offer them at least some money for it.
I really have no interest in driving an SUV, however. The few times I have it felt way too big. My husband and I don’t have any kids or dogs (yet) so I don’t need the extra space. My husband drives a Ram so we have the space there for hauling stuff. I just need something small, efficient, maneuverable, and reliable for my 300 miles of commuting each week. If someone offered me an SUV, even one that was much newer, I’d probably pass. I would feel bad taking a gift car and turning around and selling it to get what I wanted.
Great notes, Megan! I agree that the type of car helps decide. Prius –> Prius upgrade would be fun!
Now, what do you mean about no dogs (yet)!??!? I expect puppy photos in my inbox as soon as this happens!
I want a dog, trying to convince my husband, and the cats will be even harder to win over, haha.
Once it happens I’ll happily email you puppy photos!
I’m torn and it sounds to me like it’s a “give my inheritance away while I’m still alive” type situation but I question why a car, why not cash instead that I could save until I *needed* a car? Some of us probably also wish we were in your shoes … for my folks, it was here, let me by you dinner. ;) Now, my dad is gone and my sister and I both help her out when/where needed but again, nothing as a large as a car.
My second question would be why an explorer vs another/better hybrid? I just pulled a “best hybrid car” list and a Prius is #11 on the list; Hyundai Sonata Hybrid is #1. Personally, I love my Hyundai – I drive a 2006 with 320k miles on it and still get 30 mpg; lower insurance; lower taxes.
Hey Karen. We’re chatting more about the car details and I think another hybrid is more likely. The explorer came up because they’re just an awesome well rounded car. But for our circumstances, a hybrid is more desirable. You’re at 320k miles in the Hyundai? – holy moly that’s amazing!
I have a thought that is totally unrelated to the financial side of it. It would depend on what type of relationship the parents had with the husband and wife. If it would be something hanging over their heads to get their way later about things, that would be something to think about too.
Absolutely that’s something to consider. And in some ways, even more important than the finance side of things. Thankfully, the parents/kids have a great relationship and carry no ongoing weird feelings like that type of stuff. :)
Awesome! That makes it at least somewhat easier.
I’m not exactly in your situation, I live on the edge of suburbia/rural area. No public transportation and I commute depending on location 30 mins to an hour daily. So a reliable car is necessary for kids, hauling mulch, hauling dogs and other kids and furniture and Christmas presents and, and, and so a vehicle larger than a Prius would be important. If you are going to add kids to the mix you will NEVER regret a 4 door car. I had help with the downpayment on my first house back in the 80’s when interest rates where 23% and the prices of houses were -for the time sky high ( not kidding). It was the only way we could afford a house and it was a starter house- nothing fancy. The one that helped was a relative and they could afford the gift. You could also help to offset the costs of the new vehicle by selling the old vehicle. If you want to donate, consider a women’s shelter. We can always refuse gifts, but we can’t always say I want this instead of that. It takes a big person to accept a generous gift. A question I haven’t seen asked is how hurt/offended would the gift giver be if the gift is refused. I would personally be crushed, but that’s me. Good luck with your decision.
Thanks for the input and perspective, Shay. I can see how having a larger car not only helps, but is really necessary for some families. We’ve been getting by just fine with the Prius so far (actually, I can fit my 10ft longboard in the Prius for surfing, they are bigger than they look!) but things will change quickly if/when the kiddos come in the mix. Thanks for confirming this!
As for hurt feelings, etc… While there might be a short term let down, I think we have a solid relationship and would move on pretty quickly. :)
My boyfriend and I were in a similar type situation but with a house/condo rather than a car. We were living together in my condo and while it was tight we were comfortable and liked our small mortgage. My boyfriend’s parents, thinking our place was much too small, generously offered a significant amount of money to put towards a new bigger place. We ended up taking the money and got the bigger place after years of looking and disagreements. It never really sat right for either of us. I was uncomfortable with what seemed like judgement about the way we were living. Also, I know my boyfriend felt a lot of pressure for us to find something that his parents would approve. I have no doubt that their hearts were in the right place when they offered us the money but both my boyfriend and I agree that we wish we had not taken the money.
Wow thanks for sharing. Goes to show that even the best of intentions can morph into feelings later that aren’t pleasant. Sorry you had to go through that, but I hope it made the relationship stronger in the end and you came away with a learning opportunity!
Definitely! Good luck!
I understand the hesitancy, but as you say there are many options! Gift it on, accept it and rent it out through P2P sites…Taking a rain check sounds like a good compromise for the situation.
Go with your gut! You will know the right decision when you just know. :) I don’t have a car accepting/denying comment, just read in the comments that you are in the process of maybe fostering and I want to say that that is truly wonderful. The world needs more people like you. High five from Connecticut, and now after reading for ages I have commented exactly twice. :) Take care, thanks for a great blog!!!
Hi Hilary! I’m a big fan of trusting the gut! Thank you for stopping by and commenting :)
Virtual high five back!
Should I accept a 2018 suv from a friend for free? Sometimes we fight as friends. thank you. walter d.