Going from a no car household to a two car household. What's the most cost-efficient way?

May 20, 2011 8:04 AM

Going from a no car household to a two car household. What's the most cost-efficient way?

We're a childless couple who are moving from the big city to the suburbs, for reasons outside of our control. We currently don't own a car and never did, so the whole thing is a bit foreign to us. It turns out we will probably need not one, but two cars.

First, I will probably be facing a 35-mile (each way) commute to work. Second, even though my wife telecommutes, the region we will be moving to is a little isolated and public transport is non-existent , so I don't want her to be stranded without a car all day.

For car number one, my idea is to lease the smallest, cheapest, most fuel efficient car I can find and use that to commute to work everyday. What I'm thinking is that this car will be travelling 17 to 20,000 miles a year, and if I can find a lease that gives me a good price under these conditions, I'm better off than, you know, owning a car that drives 17 to 20,000 miles a year.

For car number two, I'd also like to buy a bigger, more comfortable car to keep in the house and that we can use to travel around on weekends and would have some cargo space to fit groceries, household stuff, bikes, ski equipment, etc. This car would probably sit around a lot during the week. I probably can't afford a new truck/suv/minivan/large station wagon, so I would buy it used, and I'd like to find a good car I would then own for the long haul.

Does the rationale make sense? Should I look at other options, combinations? I don't specially like cars, so I don't care about anything other than the basic requirements, which are - car number one should be really fuel efficient so I won't go broke in a long, quasi-daily commute and car number two won't be used a lot, but it's an important back up car, and I'd like it to have a lot of space for when it does get used.

Any tips from anyone more car-savvy than I am (which is pretty much everybody) are much appreciated.

posted by gertzedek to travel & transportation (21 answers total)

For car #1 you want a used Toyota Camry. You can find them everywhere, get good mileage, 6-7 years old will run you in the range or $6500-7500 and they'll easily take 250,000+ miles on them with regular maintence. It's the most basic combination of cost/efficiency. A lease on a brand new one is probably going to run $300 a month or more, just guessing, which is way more than a $7500 dollar loan payment in the $180/month range.

For car #2, same idea, what about a used Subaru outback? 4WD, plenty of space, ok mileage, perfect for weekend errands. I found this one in 30 seconds of searching, $8600. You could just about get both for less than the cost of one 2011 model.

If you feel like you have to have everyday reliability from the primary commuter, maybe lease that one and buy #2 used. But even if one has to hit the shop (we are talking about older cars here, repair costs are inevitable), you should be able to make do with the other one for a day or three.
posted by T.D. Strange at 8:19 AM on May 20, 2011 [1 favorite]

You need to make sure the yearly mileage allowance a lease is 20,000 miles a year. I haven't leased in a bout 8 years, but IIRC I had to pay extra every month for a higher mileage lease.

Also, look into used Jetta TDI Wagons.

For your big weekender and I'm not kidding here: Look for an excellent condition 2004-2005 Ford Excursion Limited with the V8 Diesel. It will outlast your grandchildren. You can chip it and get 18-20 miles to the gallon.
posted by roboton666 at 8:21 AM on May 20, 2011

I'm no expert but I wouldn't lease. You can spend about as much and own the car at the end. Leasing is for people who want a new car every three years or are indecisive. In general, it's almost always a bad move for the lessee.
posted by kat518 at 8:21 AM on May 20, 2011

I think leasing is generally a bad idea. You pay a relatively large amount of money and end up with nothing after the lease expires, plus I believe leases generally include annual mileage restrictions lower than what you intend to drive.

I would consider buying a nearly new Honda fit or Ford focus or something as your daily driver and then a well-used Japanese or Korean crossover or small SUV for the weekend and emergencies. Unfortunately the small, used, fuel-efficient car market seems to be kind of nuts right now so getting the daily driver might be tough.

Also keep in mind that owning that 2nd car, especially when you're not using it a lot, is a bunch of money. You might look into van pools or carpooling if you can handle a little less commuting flexibility.
posted by ghharr at 8:22 AM on May 20, 2011

I suppose that depends on exactly how you define small and fuel efficient.

Consider how much time your commute will take each way and what weather you'll be driving in most of the year. Because the smallest most fuel efficient cars are not necessarily designed to do a lot of mileage. And a small car designed for city short distance driving gets old really quickly if you spend a long time in it, driving in conditions where a heavier vehicle would feel nicer on the road a lot of the time.

I'd also challenge the wisdom of spending a lot of money on "space" in a vehicle if you only use the "space" once a year or so. You can fit your groceries and a couple of overnight bags into the smallest of cars. In fact I managed to fit ski equipment into an ancient Fiat Panda back when I first learned to drive. On those rare occasions when you do need space you could always borrow or hire a suitable vehicle.
posted by koahiatamadl at 8:23 AM on May 20, 2011

FWIW here's an article by Suze Orman on cars. She advocates buying something about two years old that's been well taken care of. There's also a helpful link to a calculator on Edmunds.com.
posted by kat518 at 8:27 AM on May 20, 2011

I think your general car-choice logic makes sense, although you might be surprised at how much size you don't need in your "big" car. Unless you've routinely got construction projects or something that require you to haul a lot of stuff (in which case, look for a truck), a mid-sized wagon would probably suffice for the big car.

I'd look at buying lightly used rather than leasing new.
posted by adamrice at 8:28 AM on May 20, 2011

35 miles each way to work is 17.5k miles a year, leases only really make sense if you drive 12k/yr or less. Rather than buying a gigantic car for your weekend trips I'd get a reasonable sized car and add a roof rack with a storage box. That way you've always got the option to leave the roof box at home and get better gas mileage on road trips. A subaru impreza will be plenty big enough for the adventures of a childless couple and they're pretty much indestructible.
posted by foodgeek at 8:30 AM on May 20, 2011

At that kind of mileage, leasing a car probably isn't the way to go. Leases are better when you need to have something, but don't need to make particularly heavy use of it. Most advertised vehicle leases are for 12,000 miles a year, and the extra 5000-8000 miles is probably going to cost you something like $500-800 extra per year, i.e. $40-65 extra a month. I'm currently leasing a vehicle, and though it was still the right choice for me at the time,* the fact that I apparently drive about 20,000 miles a year (who knew?) is going to wind up costing me about $1500 at the end of my lease unless I buy the thing out.

I'd recommend sinking ten or so grand into a Honda Civic, as they average about 30 mpg (which is almost as good as you can get without buying a hybrid or a coupe) and are very reasonably priced. You can probably get one with less than 100,000 miles on it in that range, and that should do you for at least five years without too much maintenance.

For the second car, sure, something a little bigger. I'll go ahead and recommend the Subaru Forester. Like Hondas, Subarus run just about forever, and though they're a little pricier than Hondas, they do seem to fit the bill. A 2005 with about 80,000 miles runs for about $14,000-15,000.

Really, if you were going to lease a car, this would be the one you'd want to lease, as it doesn't sound like you'll be driving it all that much. In that case you're looking at new vehicles, but can expect to spend about $200 or so a month for three or so years. Leasing can be a good way to use vehicles (previously) but you really need to crunch your numbers.

On preview, I see that T.D. Strange and I seem to be of the same mindset. I'd point out that the Civic does tend to get a little better mileage than the Camry, but it is also slightly cheaper. Both are work-horse, bare-bones Japanese sedans with incredible performance history, so you'll do fine with either.

*The fact that I leased a Prius and have saved about $1100 in gas helps quite a bit.
posted by valkyryn at 8:30 AM on May 20, 2011 [1 favorite]

Leasing is for suckers.
posted by grouse at 8:33 AM on May 20, 2011 [1 favorite]

Car # 2 doesn't need to be very big. You don't need a van or truck to go skiing, camping, haul bikes, etc. A 2nd Toyota Camry/Honda Civic would do fine. I have a Toyota RAV4 because I used to take teenage boys skiing/boarding, and it's now bigger than I need. I haven't yet found the great deal on its replacement, which will be smaller. I used to have a Nissan Sentra, and put a canoe on top, or hauled a small boat with ease.

When I have had a chance to buy a used car with nicer options, like the Camry I had a while back, it made a difference in driving enjoyment, for not a lot of money. I miss my sunroof.
posted by theora55 at 8:37 AM on May 20, 2011 [1 favorite]

Apologies if this gets long!

First: depending on where you work, do you have access to a van pool or similar? My town has all of the state agencies as well as a huge university, so many people commute from up to an hour away. I don't think you have to be a state employee, either.

Your idea sounds pretty similar to what my former in-laws did. My FIL was trained as an accountant (though he works for the gas company -- seriously, he IS Hank Hill), and he's ridiculously thrifty for pretty much everything. Even though he's a bigger guy and looked silly in a teeny car, he always got whatever car fit his exacting specifications. For the '70s and '80s, that was a VW Super Beetle; I think it then went to a Ford Escort and then a Hyundai Elantra. He bought fairly new if not brand new, though knowing him I'd imagine he'd buy at least a one-year-old car just to avoid the depreciation. They also had a big Chevy pickup with a club cab, suitable for hauling an RV.

Currently, one of our apartment manager guys commutes in from about 20 miles away in a Smart Car. I still wouldn't recommend something quite so small in a place with icy winters, especially if you're driving on interstates, but it seems to have worked very well for him over the last several years.

I would still recommend buying the BEST tiny car you can. First, the construction and quality will range quite a bit, and if you have a long commute safety will definitely be important. No "rollerskates." Second, if you're spending an hour-plus in the car every day, you don't want to dread it just because you can never find the right stereo adapter. Make your car comfortable and useful for your commute.

I agree with everyone else on an older Honda (or Toyota). Hondas run forever and are built solidly, and the insurance will be pretty low. My 2000 Accord is inching up on 200k, but because it was used as a commuting car (like you're considering) it still runs beautifully and feels great inside. A Civic hatchback, if you can find one, might be just the ticket. The weight of Hondas, even the smaller ones, helps them stay stable in the winters, too. (For reference, when the gas prices were super crazy in the height of the economic meltdown a few years ago, old Geo Metros were the hot car for fuel efficiency. Ick.)

As for the larger vehicle, Subaru Foresters are indeed great, but they may be hard to come by (because they're great). Stay in the Japanese area, but avoid Nissans; they're designed terribly and have no room in the back seat.

While I've been carless by choice in the past, we're currently pondering what we would need to go back down to one car from two, since up until this point my partner has worked irregular hours in what passes for the boonies -- kind of similar to what you have right now. It's a tough equation to manage, but I think you're asking the right questions.
posted by Madamina at 8:40 AM on May 20, 2011

Leasing isn't a good option for you, as detailed above. In the automotive world, a lease is a way to slightly reduce your monthly payment versus buying, and can be beneficial if you know you will be able to abide by the terms of the lease. But getting a lease that allows for 20k miles a year probably is going to cost as much as a loan.

For the "family car", consider a Honda CRV. Cavernous space for something as small as it is, and supposed to be good on the gas too.

Another option would be to run the numbers, and get the cheap/standard 15k lease, and then use the second car to absorb any extra miles you will need to use. Drive the second car one day a week, or one week a month.

The OTHER option would be to lease the secondary car with the cheap lease, and buy the first one. Get something like a Honda Fit for the daily commuter, and use it until it falls apart. Meanwhile, via leasing, you can be a little freer to choose the "family car" because you know that in three years you will be able to turn it back in and try again if it isn't the perfect thing for you.
posted by gjc at 8:47 AM on May 20, 2011

When To Lease vs. When to Buy (although operating on the premise of buying a new car rather than used.)
posted by wuzandfuzz at 8:49 AM on May 20, 2011

A 2004 Civic with under 100k on the clock will last you until you get bored. Unless you leadfoot it, you'll only spend a gallon of gas each way if it's highway miles.

As for the wife's car, yeah, Outback or something more outdoorsy. Used. As noted above, leasing is for suckers.
posted by notsnot at 9:09 AM on May 20, 2011

Right now, used cars in good shape that get decent or good mileage are not really a bargain. A variety of factors have driven up the cost of desirable used cars and if you take mileage and wear and tear in account most are not really a good deal.

A major factor in this is the supply disruption of new cars and the demand for cars in Japan due to the Earthquake.

So, since you are not a car guy, my recommendation is to buy a nicely equipped korean car that is one step up from their cheapest model, or at least the highest trim level in the cheapest model. You want to get stay off the bottom model due to quality and build concerns. usually the cheapest models have cut some corners that do not lead to problem fee mileage later in life. This will make a great commuter car, they have really good warranties and are a very good value for the money. Specefically i would take a lot at a KIA soul or forte. They are not great cars but they are competent, reasonably well made and readily available for a decent price.

For the second, backup car I would get something that has a decent hauling capacity. Four door pickups are suprisingly good vehicles and really useful. If you buy some furniture you don't have to get it delivered or rent a truck or whatever. Ford made an explorer sport track that gets 20+ mpg and my coworker loves. Honda ridgelines are also in this class. Both are available used. Just don't go crazy and get some huge 1 ton king cab thing and you will be fine. Good luck.
posted by bartonlong at 9:23 AM on May 20, 2011

Tangential but: When you go to insure these cars, be sure to ask about multi-car discounts. A lot of companies have them, not everyone volunteers that information.
posted by Ys at 9:46 AM on May 20, 2011

For your second car I'd buy an old car that has fully depreciated. You have a reliable car to get you to and from work so no sense paying for the reliability in your second car.

If you have only once every six months haul a dinette set hauling needs you would be much better off with a small car with a trailer hitch and a utility trailer than a pickup. Mileage would be better the 99/100 you aren't hauling something, loading a trailer is easier, and you can haul more (volume wise) with a utility trailer than with those half assed boxes that come on small four door pickups (eg: the sport trac only has a 36" box, I've got more space behind second row seats of my shorty Caravan).
posted by Mitheral at 9:47 AM on May 20, 2011

Actually, Madamina, the Smart Car performs excellently in the snow/ice. Most of the weight is over the drive wheels.

Additionally, the Smart Car is much roomier inside than most Japanese cars — I actually have plenty of headroom at 6'2" whereas in a Prius I'm hunched over.

There have not been any major changes to the engineering of the Smart since the 2008 model, so you should be able to find an affordable one bought for novelty which has now worn off. However, for a commute that long, I would recommend tracking down the Passion model with leather seats, and if you are somewhat handy, install the Area 451 cruise control module.
posted by mmdei at 10:33 AM on May 20, 2011

Read this.

That is all.
posted by jon1270 at 10:37 AM on May 20, 2011

Okay, maybe that's not quite all. The book I linked to is about negotiating the purchase of a car. The reason it's important to do a good job of this is that most used cars sold by dealers are hugely marked up. If you pay the asking price, you are likely to lose a couple thousand dollars or more the moment you sign the purchase agreement. A well-negotiated purchase price can save you more money than years worth of good gas mileage.

The gist of the idea is this: selling cars for maximum profit is a shell game. They ask you what you want your monthly payment to be so that they can compensate for the inflated price by setting you up with a loan that takes longer to pay off. Or the ask you what you want to spend, then meet your price but give you a worse car than you could've had if you'd been more careful. If you're not prepared for the games the dealer will play, you will lose.
posted by jon1270 at 10:51 AM on May 20, 2011