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If only they made a Fitrester
August 10, 2010 6:12 PM   Subscribe

Looking for advice on a new-to-me car. Anyone with experience of late-model Subaru Foresters, Honda Fits, and the AWD vs. FWD question? I'll be in central NJ. Loooong-winded "more inside" with a summary.

As a birthday present, my dad has offered to help me buy a new car. I am lucky to have $20,000 cash to work with (which includes my contribution, his contribution, and the trade-in value of my current vehicle). Unfortunately, I seem to be stuck between two options. (Skip to the second-to-last paragraph if you want the condensed version.)

The Subaru Forester seems like a great vehicle. One of my friends has one and loves it. The size is great and the driving position seems reminiscent of my 2002 Toyota Tacoma, which I love. The only problem is that I'd have to buy used (2008 or 2009) in order to get something under $20k, and usually this excludes "certified pre-owned." As such, it is my understanding that the warranty would not carry over to me. (Please correct me if I'm wrong.) There is one available for under $20k that has heated seats, which is attractive. I am concerned about driving up there in winter, as I have only ever lived in Atlanta and then central Florida. As such, anything heated seems important, and I love the idea of all-wheel drive. AWD, though, means that fuel economy is sacrificed somewhat.

This brings me to my next choice. Everything I have read about the Honda Fit indicates that it is a nice little car. The fuel economy is, as expected, much better than the Forester. It's much more practical for everyday use. My girlfriend has a Nissan Pathfinder that I could use if I ever needed to do some hauling, but most of the time it would just be me moving myself around town, with only groceries and a backpack as the typical cargo. I could trick out a new one all to my liking and still keep it well under $20k. And of course, buying new would mean a warranty.

I guess my questions boil down to these:
- Is AWD worth the extra $400/year in gas the Forester would cost me over the Fit? In the winter with the Fit, would I wish I had AWD and better ground clearance?
- Could I expect my insurance to be significantly cheaper with an AWD SUV as opposed to a FWD hatchback? Consider that I am a 23-year-old white male, divorced, entering graduate school.
- Am I reasonable in feeling uncomfortable without a warranty? The Subaru Forester is considered a used "Good Bet" by Consumer Reports.

Thanks so much for your help. I appreciate advice on any aspect of this question, even just anecdotes about your experience with either vehicle. I've "Consumer Reports"-ed the crap out of these cars, and now I need some perspective from people in the know. Thanks again!
posted by dondiego87 to Shopping (26 answers total) 5 users marked this as a favorite
 
Just bought a Forester. Prior to that I had a Legacy and before that a string of FWD Hondas. I live someplace with real winter and real snow.

Is AWD worth the extra $400/year in gas the Forester would cost me over the Fit?

Absolutely.

In the winter with the Fit, would I wish I had AWD and better ground clearance?

Yes, if you go anywhere other than main roads. Especially if you are not used to being someplace with snow.

Could I expect my insurance to be significantly cheaper with an AWD SUV as opposed to a FWD hatchback?

Doubt it, no. At least not where I am. But it would be cheaper with a used car as opposed to a brand new car, I'd think, though call your insurance agent or do some online calculations to figure that out.

Am I reasonable in feeling uncomfortable without a warranty?

Certified pre-owned means they do a lot of checking and whatnot on the thing, and you'll still be covered for anything that's a recall. I have never had a car with a warranty so I'm not even sure what that would be like. I am liking the Forrester so far. I looked at the Fit and decided it wasn't going to be good enough on snow, though I heard people near here say it was surprisingly not bad on snow.
posted by jessamyn at 6:22 PM on August 10, 2010


I moved to central NJ (also for grad school) a few years ago after growing up just north of Atlanta and then living in Houston for four years, and I haven't felt the need for a car with AWD around here. Sure, I complain bitterly about how cold I am all the time, but it doesn't snow that often and they do a decent job of clearing off the snow. The car I drove for the first couple of years was a Nissan Sentra that didn't even have anti-lock brakes. I'm glad for the stability control that the Mazda3 I now drive has, but I don't feel like I'm missing out by not having AWD.

Around here, I see plenty of Subarus, but even more Fits and Mazda3s and Civics and such.
posted by capsizing at 6:35 PM on August 10, 2010


What a perfect question! I drive a 2009 Honda Fit and my husband drives a 2005 suburu forester. I absolutely LOVE my Fit and wouldn't trade it for the world, but if there is snow on the ground we are always taking out the suburu instead. It is a champ on dry or rainy roads, but the little wheels and low clearance is bad for snow. That said, the cargo space inside the Fit is surprising. All the seats flip into eighty million positions and I've never felt short of space or had to load something in the suburu cause it wouldn't fit in the Fit. It certainly holds it's own. It is an amazing, snappy little car.

It depends how much you will be needing to drive on really snowy or icey back roads. The Fit does fine on well plowed city roads, but if snowy winter travel is a priority for you, the Subaru is well worth the cost for safety.
posted by ninjakins at 7:09 PM on August 10, 2010


If you live anywhere where it snows, like NJ, you should get the Subaru. The AWD is simply astounding the first time you take it out in the snow.
posted by sanka at 7:21 PM on August 10, 2010


First a little info about me. I sold new cars for a living for several years, have an uncle that owns a car dealership and a father that has been used car sales manager for so long he might have gotten his start selling horses.

Individual models aside, I would highly recommend buying used over new. Modern cars are very reliable. When I was in the car business an often stated maxim was that the least reliably car made today is more reliable than the most reliable car made ten years ago. The balance of the manufacturer's warranty will transfer to you. For most car companies the only exception is the ultra long 10-year/100,000 mile warranty (which reverts to a 5-yr/60k in most cases). With certified pre-owned vehicles, some manner of extra warranty is often applied and your sales person should be able to give you the details.

In terms of AWD vs FWD. I've lived in the twin cities metro area of Minnesota for my entire life. We have some hard-core winter weather and are pretty hard core about driving in it. That said, we're also pretty hard core about getting the snow cleared from the streets. I've driven several AWD vehicles in the snow (including some Subaru's) and the AWD is great and great fun but I've never felt its lack in the FWD vehicles I've owned except for a few of the snowiest days. The car I drive now (a 2005 Nissan ALtima 3.5SE that I LOVE, is pretty low slung and FWD and it handles the winter weather just fine). It will really come down to how much snow you get in your area and the areas you'll be driving and how good the snow removal is in those areas as well as how easy it is for you to just stay home (or as we in Minnesota call them, mamby pamby little girls :p ).

If you've never driven in winter weather on a regular basis I would recommend taking your car out, no matter which car you end up buying, and drive around an empty parking lot after the first big snow. Drive it around, do some donuts, yank on the emergency brake in the middle of a turn. If you can bring a friend to pull the e-brake for you in the middle of turns, even better. Its a good way to get familiar with how differently your vehicle handles in the snow and get a feel for snowing driving in general and is great fun besides. My dad did this with me when I was first learning to drive and it helped a ton.

The best way to determine the insurance route is make some calls and maybe find a broker who works with a few insurance companies to do some checking for you. My experience going through a broker has been that I pay less than doing it direct and spend a TON less time shopping, she even called me to let me know that I could save some money switching companies when I had my last renewal but your results may vary. At the very least, you can work up some online quotes to compare the vehicles to each other.

In the winter, the heated seats seem like the greatest feature added to vehicles since the wheel but they can also be added after-market. Your dealer likely has a contact with a company that can do it. I had several installed on vehicles that I sold and the customers loved them. In some cases it costs less do it after market than the feature costs from the factory and works better.

After that, it is down to personal taste and how you like the way each vehicle feels. If you can you should see if you can borrow your friend's Forrester and drive a route that you drive/will be driving every day. Then do the same with the Fit if the dealer will let you. If you're very clear that driving this route and the price are the only things that are keeping you from buying the car, they will probable let you. Know as "the puppy-dog close" I often employed this tactic letting customers take the car home overnight to show their wife/husband/see if it fits in their garage/drive to work/etc. Bring a new puppy home and, whether your wife wants one or not, you now own a puppy right? Same idea here but you'll be armed with fore knowledge of the tactic so it will only work if it is really the right car for you.

I've also been a huge fan of edmunds.com for car buying research.

I'll keep an eye on this thread if you have follow up questions or think of other questions to ask or you can feel free to message me.
posted by VTX at 7:22 PM on August 10, 2010 [1 favorite]


Have you considered a Subaru Impreza or Legacy Wagon instead?

The Impreza at least would give you better economy that the Forrester (albeit not as good as the Fit) while maintaining (some of) the practicality. The Legacy likewise, with more practicality and slightly lesser fuel economy. Compromise cars, somewhere between the small and frugal Fit and the the larger SUV.

Personally I drive an AWD Mazdaspeed6 and I wouldn't trade it for the world. Actually, that's not entirely true - I would trade it for a Subaru Legacy GT Wagon as it'd be more practical and almost as fun, but they don't make those any more. During the snowstorms that hit Maryland this winter, I found my AWD useless - because the snow was so bad I didn't take the car out in it at all. That said, I have found the car to be incredibly "sure-footed" in heavy rain and I personally think the fuel penalty is worth it.

With regards to your Warranty question - the warranty is on the car, not the driver. If you buy a car that's still within warranty, you're covered. It may not be "certified" (which, as Jessamyn points out means extra checks) but you should be covered. Unless warranties work differently in the US than my understanding (in which case I've been driving my Mazda for a couple of years under the mistaken impression I was covered).
posted by Nice Guy Mike at 7:24 PM on August 10, 2010


Speaking as someone who just bought a Fit and didn't even consider a Forester... If you need AWD to go, you probably shouldn't be driving around. AWD doesn't help at all with the dangerous part of snow, which is stopping.

That said, I've been driving a FWD vehicle (protege) for years in places with real snow, and the only trouble I ever had was going downhill in the rain.
posted by contrarian at 7:41 PM on August 10, 2010


@*multiple*: That's a good point about the difference between cleared and non-cleared roads. I was in Central Jersey during SNOWPOCALYPSE 2010!!1!1! so I think I've got a decent idea of the worst condition the roads in my town will be in. They seem to be very good about clearing it off, but I did see at least one minivan get stuck in a parking spot.

@VTX: Great suggestions. I was definitely planning on spending a few hours in a parking lot like that; good to know that other people might understand what I was doing ;-).

@Nice Guy Mike: I had actually considered an Impreza, and wanted to include that in my question but eliminated it to save space. The Impreza would only save me about $9/month over the Forester, as opposed to the Fit's $33/month savings. I figure that I'd pay $9/month for the extra size of the Forester if I were to go Subaru.

For what it's worth, I would get the Fit with traction control (Vehicle Stability Assist, I think they call it).

Considering the mixed messages I'm getting for AWD vs. FWD, what do you folks think about me maybe waiting until the snowy season, and then shopping around? It might be advantageous for me to test-drive each under snowy conditions. Would a dealer even consider letting me do that?

Thanks all for the continued input!
posted by dondiego87 at 8:25 PM on August 10, 2010


All wheel drive is good and all, but a good set of snow tires on a fit will get you further in the same weather than all season tires will on a subaru. as an above poster mentioned, all wheel drive doesn't help with the stopping bit.

If you're considering used foresters, they underwent a major revision in the 2009 model year. (they became larger and more SUV-like) 2004-2008 are for the most part the same but came in several trim levels. rock solid cars, and you should be able to pick up an 07-08 for under 15k with low miles.

Depending on my commute, i would seriously consider the fit. the mileage is going to be far better.
posted by freq at 8:36 PM on August 10, 2010


I had a Subaru Liberty for many years. I would buy another one. You get a lot for your money, are well made and tough.
posted by the noob at 8:38 PM on August 10, 2010


We have a Fit right now, and I love it. I have driven it in a bit of snow, and it was fine--but I don't have to regularly commute in snow in it.

I used to own a Subaru Legacy wagon. First, why are you looking at the Forester instead of the Legacy wagon or Outback wagon (the Outback is the Legacy with some silly extra trim)? Is it because you want more of an SUV? The Forester is pretty much the same. I suspect that in NJ, you won't need extra clearance--that's an issue if you'll be driving off of main roads and onto dirt, and even then you might not need it.

Anyway, yeah, the Subaru was great for snowy conditions, but when I had it, I lived in a rural area with lots of dirt roads and frequent snow. It would have been overkill for most other places, I think, where the roads are going to get cleared pretty quickly. I never loved my Subaru, not like I loved and love my Honda.

I would think that for in-town NJ, you might want the AWD a couple of days a year. And is that really worth the reduced fuel efficiency?

Finally, I'll also add that the Car Talk guys say to buy used, not new, because you lose a lot of value of the car the minute you drive off the lot.
posted by bluedaisy at 8:44 PM on August 10, 2010


In the winter with the Fit, would I wish I had AWD and better ground clearance?

I own a 2010 Honda Fit and live in MN. I love the car but it's true, it's not great in the snow. If you check the forums at fitfreak, you'll see that alot of people own dedicated snow tires for winter, which I can totally understand after one winter with this car.

That said, I grew up in NJ and winters there are nothing like winters in MN. I mean, yea, it snows a few times a year there, but it melts relatively fast, so you don't get snowpack on the roads for months at a time. The occasional ice storm would be a problem even with AWD, especially if you might become overconfident with it.

Like bluedaisy says, the Fit is a great in-town car and fun to drive, but if I had to commute a long distance every day I would have a different car. I don't find it comfortable for long distances (too bumpy, the seats aren't cushy enough, etc). Another option you might consider is the Toyota Matrix. It's a bit bigger than the fit but it still has the hatchback vibe, it's cushier, and has some amenities that the Fit doesn't offer.
posted by cabingirl at 9:31 PM on August 10, 2010


I spent my whole life in the warm environs of California and Texas up until this past year. I experienced my first "real" winter here in snowy/icy Illinois with a FWD Accord (here is a previous question of mine about electronic stability control and winter driving conditions). Despite others' advice, I didn't practice driving in snow when it first came, I just took it slow and steady when conditions were less-than-optimal. I didn't have any problems, mainly because they were very good about keeping roads and lots clear. I agree with others that you probably don't really need AWD if you are going to be sticking to well-plowed, paved areas. The trade-off in gas mileage might not be worth getting an AWD, depending on how many days/months of truly snowy conditions you will have vs. non-snowy conditions. Keep in mind that "non-snowy" means non-winter as well as "it's winter but everything's paved/salted".
posted by puritycontrol at 9:43 PM on August 10, 2010


Are you sure about your price guesses? I just checked a 2010 Forester X (the base model) with an automatic transmission (since that's what most people buy) on Edmunds, and they come up with a "tmv" price of about $21000 (and my experience has been that with some shopping, one can usually beat the Edmunds price). Is that close enough to your price cap to justify a small loan, if you really want to buy new? And if you looked at Imprezas, you could buy one for well under your price cap, new.

That said, in NJ you don't need AWD. It's nice, but not mandatory at all. They plow and salt the roads, and there aren't many days that it snows enough to shut things down.
posted by Forktine at 9:49 PM on August 10, 2010


VTX is mostly right about buying used but in one case I would demur and that is the case of turbocharged cars. If you are looking at something like a Legacy GT or WRX you'd have to be very careful to ensure by-the-book maintenance and if any go-fast or attention-grabbing modifications were visible, pass on the car.

I have two Legacy AWD wagons. My partner and I are addicted to AWD - we get a lot of rain but little snow, and live on a dirt road which gets slithery when it rains. AWD on a steep sloppy hill is wonderful.

My friend had a 2002 Forester which was a light and happy car, then she bought a 2010 Forester which feels like a bus. Try to get 2008 or previous models unless you like that huge cavern behind you feeling.
posted by jet_silver at 10:06 PM on August 10, 2010


- Is AWD worth the extra $400/year in gas the Forester would cost me over the Fit? In the winter with the Fit, would I wish I had AWD and better ground clearance?

Keep in mind that there wouldn't be a market for any car that couldn't handle typical driving conditions, even in the winter. AWD and higher ground clearance would no doubt make everyday driving in snowy weather slightly easier, but the days on which you'd be able to make it to your destination in a Forester but not in a Fit will be very, very few.

- Am I reasonable in feeling uncomfortable without a warranty?

As noted above you've got this wrong. The original factory warranty, assuming the car is within mileage and age limits, carries over.

These cars are different enough that I think it's more a matter of personal preference than being able to say one is definitively better than the other.

Regardless of which you choose, seriously consider buying used and learning to negotiate. When you buy a new car, it looses thousands of dollars in value the moment you drive it off the lot, even if you've shopped carefully. The same can happen with used cars if you're not careful, but the sticker prices on used cars have a lot of wiggle room built in whereas new car prices often don't. It's much more feasible to negotiate a great deal on a used car than on a new one.
posted by jon1270 at 4:57 AM on August 11, 2010


A practical criterion: If you are a surgeon, ER nurse, or for whatever reason absolutely have to get to work on the few days a year (or per decade) during a blizzard, then AWD will certainly be beneficial. If you can work at home, skip work, or show up a few hours late, then FWD will do just fine.

We have a fwd saab and AWD small SUV. 95% of the time here in New England, the Saab gets us there without a problem. Yes, when there is snow on the road, the Saab floats around a bit whereas the AWD plows through like a tractor. But, as others have said, your ability to stop is no better in the AWD. As a point of comparison, the Saab is probably a little better than the FIT in snow, since it weighs more, but not a lot better.

The Saab does fine using all season tires (not snows). The trick is to replace the tires when there is still plenty of tread left, maybe 2/3 the way through the technical lifespan.

A final thought: if you live where there are lots of potholes, then the Forreser has advantages - not as susceptible to front end and tire damage.
posted by Kevin S at 5:30 AM on August 11, 2010


If you are really worried about winter driving safety buy four snow tires for the car you end up purchasing. All Wheel / Four Wheel drive only gets you stuck further away from help - the real safety upgrade is to improve stopping distance / control.
posted by csmason at 6:10 AM on August 11, 2010


looses loses

dangit.
posted by jon1270 at 6:10 AM on August 11, 2010


I've lived in New England all my life, including Down East Maine. I've had front wheel and all wheel drive vehicles. Honestly, I think 4WD gives people a false sense of security so they can drive like idiots in poor conditions. Even now, front wheek drive gets me where I need to go (including long trips into snowy Maine) in all but the truly nastiest weather. You should try to stay home then anyway unless you're a doctor, EMT, etc.
Good tires, and the traction control are good options.
For the record, a Honda CRV is a good mix- ours had 4 WD when needed and front wheel drive the rest of the time.
Also, I'm cheap and front wheel drive usually gets better gas mileage.
posted by pentagoet at 6:36 AM on August 11, 2010


Also, make sure there is a dealer/repair facility for whatever vehicle you get... nobody wants to drive an hour to get the car fixed.
posted by pentagoet at 6:38 AM on August 11, 2010


I live in NY where it snows pretty much the same as NJ and I don't worry about it because they sand, salt and plow the roads where I live. I drive a Mini Cooper, which is much smaller than the Fit that you're considering and my girlfriend has, and we have no problem driving around 300 square feet of carpet tiles and groceries at the same time or bringing home a few hundred dollars worth of ikea. We also took my Mini Cooper through the unplowed roads of the Planting Fields the last time they canceled work due to snow.

I don't see why you need an all wheel drive car with huge ground clearance unless you live out in the wildress and will be driving on unpaved, unplowed roads a whole lot. Which doesn't sound like Jersey to me, but I don't go there a whole lot, it could be more wildness than I thought.
posted by Brian Puccio at 6:50 AM on August 11, 2010


AWD doesn't help at all with the dangerous part of snow, which is stopping.

Correct, but the Forester has bigger wheels and comes with better tires, which counts for quite a bit when stopping. I seem to remember from my research last year that a lot of people were unsatisfied with the stock tires on the Fit.

I drive an AWD Audi, and although I've never noticed the difference in dry/wet weather, the difference in snow is incredible compared to my old Volvo (which was, by all accounts, a pretty good FWD snow car). Obviously, you shouldn't rely too much on the AWD for traction, but it does help tremendously.*

Everybody I know with a Fit loves it, and Subaru owners tend to be extremely loyal (and also love their cars). I don't think there's a *wrong* answer to this question, as you've got two solid choices.

*Avoid the temptation to buy a used Audi made before 2004 like I did. Fun to drive, but unreliable as hell. Also, the ground clearance on older A4s is pretty awful.
posted by schmod at 10:51 AM on August 11, 2010


Oh, hey, turns out I can't spell wilderness, twice wrong in one post!
posted by Brian Puccio at 12:31 PM on August 11, 2010


Thanks everyone, again, for all your replies! I think I'm going to go with the Fit. The consensus seems to be that the roads around me will be well-cleared and thus totally within the Fit's capabilities. And as pointed out, only those with really critical jobs (not a grad student like myself) really REALLY need to get around in severe winter weather. The Fit Sport with Navigation comes with electronic stability control (Vehicle Stability Assist, as Honda calls it), which I think should help out in icy handling situations, so I will be getting that. I will look into getting some good snow tires, but I'd have to figure out where I could store them during the rest of the year.

To all who have suggested buying used -- very good advice under normal purchasing conditions, and it's much appreciated. I have suggested that to my dad a few times, though, and he is almost insistent on getting me a new one. Since the amount he pays is the only variable amount due to the payment structure we've worked out, it's really up to him! (I pay X, my trade-in is Y, and he pays $20,000 - [X + Y].) This also applies to those who think that stability control is unnecessary (thanks @puritycontrol for the link!) -- he thinks it's worth it, so I'll get it!

Thanks to all who gave suggestions on cheaper Foresters and other Subaru models. I just don't think AWD is going to be necessary for me, but if I did those options would have been extremely helpful.

Thanks again!
posted by dondiego87 at 7:14 PM on August 11, 2010


@dondiego87

First, if you end up getting dedicated snow tires (and hopefully and set of cheap wheels to leave them mounted on) you'll want to do some research in how to properly store them. Tires will wear out after about five years whether you drive on them or not and some people end up driving on unsafe tires even though plenty of tread is left for this reason. This has been covered in "Car and Driver" magazine several times over the years and a search of their website will likely produce the information you're after if a simply google search does not.

Now, as a former new car sales person, I can give you lots of tips since you're set on buying new. Basically it goes like this, the dealer has an invoice for what they must pay for the car, which they don't actually do until after they've sold it. Car markets are different around the country and for different cars but, generally, making an offer $100 above this invoice price will be accepted unless the car is in really high demand. The invoice price is readily available online at edmunds.com, kbb.com, and several others. If I were in your shoes, I would visit a reputable local dealer and find the car you want. Make note of the exact sticker price and exactly what options are on it as well as any factory rebates or other incentives. I don't see anything right now but these things can vary by region. Now you can build that exact car on kbb.com and see the invoice price. Often times, the dealer will simply show you the invoice. It doesn't look very official (they usually get printed out of a dot matrix printer in dealer's office) but they don't fake them since the information is so readily available. I would certainly build a couple of cars on kbb.com and bring this information with you but be aware that sometimes the factory doesn't actually build specific combinations of option packages and some items that seem like one off options (floor mats are one example though it looks like the Fit only has trim levels and no options to speak of) come equipped on every car (pseudo standard equipment, if you will).

When making your offer I would also suggest that any survey from Honda that shows up after you buy the car, will be returned with perfect scores. If memory serves with Honda specifically, there is a question that asks if you discussed the survey with the dealer and it is VERY important that you check "No". The scores on these surveys can have some huge financial impact on the dealer, the new car manager, and the sales person. Assuring them that you will give them perfect scores makes them much more likely to accept your offer. I also would not be shy about sending signals and telling them outright that you want to buy the car. Many people feel the need to be coy about their willingness to buy a car but this is a mistake. This is like telling the sales person, "I'm not really serious about buying a car, you can't really sell me one and you're wasting your time." What the sales person whats to hear is, "The only thing preventing me from buying this car is the price." As I think I've shown you, getting together on the price of a new car is pretty simple. Oh, one more thing, make sure that you keep the price of the car and the value of your trade in separate. In the classic scenario, the sales person will say something like, "So, if we can make the numbers work for you, are willing to take this car home today" When you say yes they'll write up the deal and bring it to the manager. They'll drive your trade-in and then the sales person will come back out with the initial offer. It will some tiny discount off of the sticker price and some low-ball offer on your trade. The sales person will likely try to get you to focus on the difference between the two since this is the money that you have to come up with out of your pocket. Make sure to keep the price of the new car and the value of your trade separate. It isn't an issue with most dealers here in Minnesota but I've never bought a car in New Jersey. Also keep in mind that the dealer will be using a different database to determine the value of your car than Kelly Blue book (usually a database maintained by a national auto auction that shows them what that they car would likely cost and what similar cars have sold for recently at auction) and will have some minor expenses involved in getting your car ready for sale.

Once they've made this initial offer it is time for you to make a counter offer. This offer should be the invoice + $100 - whatever you think your trade-in is really worth along with the survey spiel. If they ask for a check, give it to them. They can't cash it if they don't sell you a car and it sends a clear signal that you will buy the car if the price is right. You might get another counter offer, you might not but stick to your guns.

I had exactly one customer make me a realistic counter offer of $300 over invoice (he told me what the invoice on that car was) and a reasonable value on his trade that made both him and the used car manager happy. He even said, "I think my car is worth X but I know you guys have some expense to clean up, inspect, and advertise the car to get is sold. So I'll take X - $500. My manager and I were so stunned that we took the offer right away before we woke up from this shared dream. Most people have such crazy ideas about how to buy a car and are so afraid of getting screwed that they make things way more complicated than they need to be and expect some outlandish discounts and, frankly, they are often d**ks about it.

I also see that Honda is offering 0.9% financing. Depending on your father's finances it might make sense for you to finance the purchase. You could even take you and your dad's cash contributions and purchase something like a CD (bankrate.com shows rates as high as 3.0% in NJ for a 5-yr CD), some Bonds, or some other investment vehicle that would give you access to the funds should you feel the need to pay off the loan if the payment becomes an issue (for which there is no penalty) and would earn a higher rate of interest than you'd pay on the loan. If nothing else, inflation alone means that the payments you make on the loan will be less valuable than the funds they loaned you to purchase the car.

Put another way, if you financed $19,000 today, at 0.9% for 60 months, the payments would be $324 and you'll have paid a total of $19,440 for the car at the end of five years. In five years, something that costs $19,000 today will cost $22,628 at the historical average rate of inflation of 3.5% (which, given the actions of the Fed over the few years will likely be MUCH higher over the next decade). You've basically given you future self a $3,000 or more discount on the car you buy today and that assumes that you don't earn any interest on the funds in the mean time.

Depending on your credit history, you may need your dad to co-sign the loan (assuming he qualifies aka, has a good credit rating) which would mean that he also has to be on the title with you. This is almost never a problem unless you relationship with your dad is such that you think he would use this to screw you over somehow in the future. I don't get the sense that this would happen, I'm just laying all the info out there for you.

That said, if I were in your shoes, I would absolutely finance the purchase and stick the money in the bank or, more likely, some other relatively stable investment instead. If you need to, you can open a joint account to make the payments out of the make everyone feel comfortable, go for it. Hopefully, you'd simply make the payments (and you can certainly put more money down to lower the payment) without much hassle and have the entire wad of cash waiting for you when the loan is paid off.

That should be plenty for you to chew on for now. Feel free to post here with more questions or send me a message. Let us know what happens!
posted by VTX at 7:10 AM on August 12, 2010 [2 favorites]


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