Help me pick a used car, econ majors!

February 18, 2008 5:18 PM

How do you determine the sweet spot between price and age/reliability when looking at used cars?

I'm about to buy my first car on my own; the car I learned on and drove for five years belongs to my parents, and it's time to give it back. All I'm sure of at this point is that I want something small (I really like the Fit and the Yaris, but I've always heard it never makes good economic sense to buy new) and fuel efficient, probably foreign. My budget is potentially as much as $15K with about half of that available as cash for a down payment. Price and reliability are my only big concerns; I don't care much about names and looks if it gets me around and never fails. I think cars are pretty silly but necessary in my case, so I don't want to spend any more than I have to. Now I don't know how to narrow down my search any more, because that means I would have to be more specific about my budget and models and the kind of mileage I'm willing to accept. Is there a point that's definitely "too used" when looking at used cars, where reliability issues make the cost to drive similar to a more expensive, less used car over time? Basically, I know I want the lowest cost per month of ownership over the life of the car, so is there some rule of thumb that says a used car that costs about $X will give me that? What bar should I set for mileage? Nothing over 40K? 100K? You can assume that whatever I buy I will drive until it's totaled or develops annoying mechanical issues; I won't be trading up any time before 5 years, hopefully more like 10. Is there any scenario in which it would make sense to go for one of the cheap new hatchbacks instead of something used?

Help, I'll drown in all the options if I don't intelligently set some parameters! I'm in California if it matters. Specific model recommendations are appreciated, but I figured framing the question in terms of find a used car "sweet spot" is more useful.

posted by slow graffiti to shopping (22 answers total)

Let me try to be the first to post Edmund's excellent True Cost to Own calculator: http://www.edmunds.com/apps/cto/CTOintroController
posted by schrodycat at 5:22 PM on February 18, 2008 [3 favorites]

The lifetime of most cars in my experience is 100k miles. So I dont buy anything near that because Im just going to do a lot of repairs as the car reaches junkyard status. Ive had better luck buying a cheaper/less sexy car with less miles. A car with 50 or 60k miles that isnt beaten up and checked by a mechanic is quite a money saver.
posted by damn dirty ape at 5:32 PM on February 18, 2008

In terms of simple cash expenditure, a very very used car that you can buy outright is almost always cheapest; even when a car is in poor shape, it's unlikely that the repair bills would be as much as a car payment every month. Think about your personal tolerance for unreliability. What happens if the thing breaks down? Also, how many miles a year are you likely to put on it? How faithful are you about doing routine maintenance?

It's been awhile since I both lived in California and owned a car at the same time, but I remember the emissions laws as being particularly strict. I'd definitely avoid any car where the emissions controls were at all questionable.
posted by jon1270 at 5:39 PM on February 18, 2008

I don't know if you have a mathematical bent, but you might be interested to know that the market for used cars was analyzed by economist George Akerlog in the 1970's. I know I was amused when I first stumbled on his work to discover that there is a good reason why used car quality is problematic. See http://en.wikipedia.org/wiki/The_Market_for_Lemons.

Personally my family has bought many Hondas, both new and used, but do not let me sway you. Check with friends and family whom you trust *and* who have similar life styles and share your outlook on what's important in a car. Also YMMV.
posted by forthright at 5:47 PM on February 18, 2008

I've always heard it never makes good economic sense to buy new

If you think you are the type of person who will own a car as long as it is serving you well, up to or beyond 100,000 miles, buying new is fine. I've only ever sold one car with less than 100k on it, and it was one I bought used with about 60k on it that was a classic case of "buying someone else's problems". A new car will cost you a little more up front, but all unexpected repairs will be covered by warranty as long as you do the proper maintenance (oil changes and the like).

Also, buying a new car may sound like it's more expensive than buyng used, but one or two unexpected repairs on a used car can wipe out the up-front savings. When you buy a new car with a full warranty, it's like buying a used car with "repair insurance" that no one else has had an opportunity to mess with.

This Car and Driver article compares cars in the $15,000 range. It's a little dated, but still has good information.

Hyundai-Blue: When I bought a new car 2 and a half years ago, I bought a Hyundai. Hyundai is no longer the worst car EVAR; they are much more reliable than in the past and right up there with the top dogs in that respect. The nice thing about Hyundai (and their sister brand, Kia) is that they have a full, bumper-to-bumper 5 year/60,000 mile warranty.
posted by Doohickie at 5:50 PM on February 18, 2008

For me, the sweet spot has always been around $3000. Look for something small and Japanese with 50,000 miles or less on it.
posted by flabdablet at 5:53 PM on February 18, 2008 [1 favorite]

FWIW, I currently own a 1991 Daihatsu Mira that I bought for $3500 with 81,000 km on it. It's currently got a whisker under 200,000 km, still achieves 5 litres / 100km fuel economy if I limit my speed to 80km/h, and doesn't use much oil. I plan to run it until it falls apart which, being Japanese, it won't do for at least another five years.

Don't buy an American car. They're designed to start falling to bits a month after their warranties expire.

Little Korean cars are very, very nearly as good as little Japanese cars now.
posted by flabdablet at 5:59 PM on February 18, 2008

Do not spend 15k on a car, it's just a waste of money. Unless you are buying something relatively new or specialist (which I would avoid)

flabdablet is right. But I'd spend up to 6k on a used car, and it would have to be pretty darn good.

Most Japanese makes are worthwhile, Toyota/Subaru of the early-mid nineties being a good choice- All are OK hard to go wrong with a well maintained Japanese car.

Buying a car for 15k is madness, though not as mad as buying a new car.
posted by mattoxic at 6:05 PM on February 18, 2008

I buy simple Japanese cars or trucks at around 80k, and expect them to reliably last to 200k, as long as a mechanic has looked them over and deemed them not to have been abused.
posted by M.C. Lo-Carb! at 6:07 PM on February 18, 2008

The lifetime of most cars in my experience is 100k miles.

My experience is that modern Japanese cars (and, I read, the better of the US cars) have a useful life more on the lines of 150-200k miles, sometimes much more, assuming that you are a fairly gentle driver and do all the needed routine maintenance. I sold a Honda some months back with well over 100k miles, still on the original clutch, and having had nothing other than routine scheduled maintenance plus routine wear items (like brakes and tires) -- that car made sense to have bought new, and at over 100k miles was worth almost two-thirds of what it had cost new -- I would never pay that much for a high-mileage car, but people are paying those prices; my neighbor's Ford, which is on it's third transmission in less than 80k miles, not so much sense to buy new, used, or otherwise -- I wouldn't take that car if it was free, because it costs so much to keep on the road.

As to buying new/used, it's partly an issue of how long you intend to own the vehicle (because from a cost point of view, it is the cost/year and cost/mile that matter; a $15k car driven for 10 years may be cheaper than a series of $4k cars that last between one and three years each, depending on the repair bills accumulated in each case), how much you value having the latest passive and active safety features, and how willing you are to be inconvenienced by a broken-down car on occasion. Some cars (like the Honda I sold) seem to be keeping their value at such a high rate that buying new can make more sense -- I would far rather pay $15k for a new Fit than $11k for a Civic with tons of miles. Other cars (often US-made, but also luxury cars of all makes) drop in value so precipitously that only someone with no concern for money would buy them new.

The Edmunds TCO values are worth comparing, especially their rates of expected depreciation; also talk to your insurance agent because similar-seeming cars may cost quite different amounts to insure.
posted by Forktine at 6:35 PM on February 18, 2008 [1 favorite]

The lifetime of most cars in my experience is 100k miles.

My first Nissan Maxima went to 315,000 miles before we sold it for $1000. Was still running perfectly.
Our second Maxima currently has 265,000 miles on it.
I'm just sayin'...
posted by Thorzdad at 6:43 PM on February 18, 2008 [2 favorites]

The guys over at Car Talk claim that the most economical way to own a car is to buy something 3-5 years old and drive it for 7-10 years. They're assuming you're taking out a three year loan to pay for the car, so if you don't need to do that it may be a better buy to get a newer car and drive it longer.
posted by backseatpilot at 7:22 PM on February 18, 2008 [2 favorites]

Some time back I read a white paper on the web which claimed that for fleet managers, the magic window for value/reliability was from 60,000 to 120,000 miles. But looking again now, I can't find it, and can't remember on what basis that claim was made. Intuitively that claim makes sense, but it probably really varies by make and model of car so much that as a rule of thumb it would be of limited use.
posted by Forktine at 7:28 PM on February 18, 2008

The lifetime of most cars in my experience is 100k miles.

Every car I've owned has lived well beyond this. 86 Olds Cutlass - just shy of 300k. 85 Nissan Sentra - about 220k. 97 Geo Prizm - 180k (and I probably could squeeze more life out of that one). In each case I'm talkign about the mileage achieved before either the inevitable prohibitive repair or the niggling swarm of little repairs and quirks makes it a PITA to drive.

It's possible I've been lucky, but my experience suggests cars at 100k may still have a significant useful life.
posted by weston at 8:36 PM on February 18, 2008

Toyotas or Hondas <>
Or you could do what I did for my most recent used purchase, a used police car with 100k miles on it for < $3k. But if you go this route, be prepared to do a lot of maintenance, ideally on your own, because despite the heavy duty construction and components, used police cars are a: american, with poorer engineering and build quality, and b: often pool vehicles that are worked like rented mules.
posted by zippy at 8:38 PM on February 18, 2008

The lifetime of most cars in my experience is 100k miles.

Again: What kind of cars are you driving? I guess they aren't Japanese. My last Subaru had well over 225k, and was still going strong when I sold it for $1000. Similar experience with the Toyota pickup and Honda Accord I had previously. Sweet spot for me is between $3-5k.
posted by sophist at 9:34 PM on February 18, 2008

My personal experience:
1990 Ranger, 300,000 miles, NEW $9000, sold for $2500. Current, 2001 Ranger, bought used $21,000(it had been in a flood, no damage, could not be sold as new) 227,000 miles, NO major problems, still going strong, burns NO oil, 22 MPG.

DO: maintain well, it pays of. I changed everyting on the front that rotates this year (alternator, water pump, idlers, power steering pump-$700). It's on synthetic oil through out, still on original exhaust and HEADLIGHTS.

I do drive 99% highway miles (150 miles round trip, 5 days a week). AGAIN, maintain!
posted by raildr at 10:02 PM on February 18, 2008

a little rule of thumb worth considering: Fast, cheap, reliable. Pick two.
posted by trinarian at 10:34 PM on February 18, 2008 [1 favorite]

I got an '01 Corolla in 2003 that had 46K miles on it for around $11K. It works great, and any small issues (e.g. waterpump replacement) were covered by the warranty -- 3 years for everything, and 7 years for the engine & transmission. Be wary of the dealers you buy them from. If you are near El Monte, try the Longo dealership. I've also heard Car Max is generally good, but you don't get the dealer warranties.

By the way, $11K is a bit steep, but then they're incredibly low-maintenance and reliable cars.

a little rule of thumb worth considering: Fast, cheap, reliable. Pick two.

Yeah, good advice here.
posted by spiderskull at 11:15 PM on February 18, 2008

For $15K you're looking at a program car, 2 year old rental cars with some mileage but consistant maintenance. Either that or a new Hyundai/Nissan/etc. Your choice. Hyundai's also come with a free 5 year roadside service plan. Do take into consideration your usage, lots of miles back and forth or lots of little trips.

One thing about older used cars is theft. It hasn't been mentioned but all those early 90's Toyotas are still the most popular to steal because you can open them with an ice pick.
posted by ptm at 12:56 AM on February 19, 2008

Hondas retain their value pretty well and are one of the most reliable cars out there. My '96 Accord was at 210k miles on very basic maintenance until some dick in an Explorer pulled out in front of me. If you're considering a Hyundai, you may want to buy new-ish, since their warranty is a big part of their value. The Toyota Corolla is also solid and if you can find a Chevy Prism it's the same car, but slightly cheaper because of the American car stigma.

If you do decide to buy new or finance at all, I wouldn't bother to make a down payment. Interest rates are low right now, so you should be able to get an attractive rate. Stick the money you would've paid into something paying a reasonable interest rate.
posted by electroboy at 7:09 AM on February 19, 2008

Consider buying one directly from a rental place. The conventional wisdom is becoming wrong on that- the cars in their fleets are much nicer these days, and they are maintained impeccably (compared to the average used car). You'll have to figure out exactly how to do it, but it's possible. They will keep the good ones to sell themselves, and dump the trash onto the auction circuit. Those are the ones you'll find on a used car lot with a shiny coat of wax on it with a grinning salesman.

Carmax- the cars there are going to be, on average, of a better quality than the independent used car lot. But they are expensive.

Certainly 2-3 years old is the sweet spot of price:reliability:features. But you run the risk of not knowing what you're getting.

If you truly don't care, look for the cheapest car with the highest reliability ratings. A long warranty is nice, but Hyundai uses it to counteract their reputation for poor quality. I have no idea what their reliability is like now.
posted by gjc at 8:00 AM on February 19, 2008