How do I best make sense in buying a car?
August 24, 2011 11:30 AM Subscribe
My current vehicle is in it's death throes. This is my first time buying a car. How can I minimize my debt load and ensure I am making intelligent decisions throughout the purchase? I'm in America...
My current vehicle runs on borrowed time- leaky intake gaskets and water pumps are not a good sign for reliablity. KBB value of $2000 vs $1600 in repairs, not including a potential tranny rebuild. I thought about repairing just enough so that it would run and I could save up to pay for a newer vehicle in cash or have a bigger down payment 6 months down the road, but that repair money spent could be used towards a down payment on a reliable car NOW.
I am employed full-time and make <20k a year, just started going back to college part-time (semester is paid off), have no credit card debt nor outstanding loans, and hold a credit score of 713 according to Experian. However, I have very little savings for a down payment. Right now I'd probably only have enough for taxes, registration and insurance and $200 down.
Selling my HDTV, game system, and other miscellaneous items could net me another $1200-1700 cash. If I REALLY made sacrifices I could add another $500-800.
I will be going to the bank tomorrow to explore my options with car loans. I have a copy of "Don't Get Taken Every Time" on the way and currently reading through Personal Finance for Dummies trying to understand how car loans and finances work. I'm trying to use my network as a resource for vehicle options.
I've been looking at Mazda 3, Ford Focus and Fusion, and the Pontiac Vibe, if this helps.
Is my logic sound?
Where do I go from here?
Is my estimation that I can afford $6000 reasonable for a reliable 5-speed manual sedan or hatchback, or should I even be considering up to $8-10k?
My current vehicle runs on borrowed time- leaky intake gaskets and water pumps are not a good sign for reliablity. KBB value of $2000 vs $1600 in repairs, not including a potential tranny rebuild. I thought about repairing just enough so that it would run and I could save up to pay for a newer vehicle in cash or have a bigger down payment 6 months down the road, but that repair money spent could be used towards a down payment on a reliable car NOW.
I am employed full-time and make <20k a year, just started going back to college part-time (semester is paid off), have no credit card debt nor outstanding loans, and hold a credit score of 713 according to Experian. However, I have very little savings for a down payment. Right now I'd probably only have enough for taxes, registration and insurance and $200 down.
Selling my HDTV, game system, and other miscellaneous items could net me another $1200-1700 cash. If I REALLY made sacrifices I could add another $500-800.
I will be going to the bank tomorrow to explore my options with car loans. I have a copy of "Don't Get Taken Every Time" on the way and currently reading through Personal Finance for Dummies trying to understand how car loans and finances work. I'm trying to use my network as a resource for vehicle options.
I've been looking at Mazda 3, Ford Focus and Fusion, and the Pontiac Vibe, if this helps.
Is my logic sound?
Where do I go from here?
Is my estimation that I can afford $6000 reasonable for a reliable 5-speed manual sedan or hatchback, or should I even be considering up to $8-10k?
I would suggest you search for a used vehicle. You can still borrow money from the bank if you are purchasing a used vehicle. I don't think it is necessary to sell all of your things to do this!
Look at the used lot at a car dealership and see what you get for the amount of money you have in mind. Ask them how you can finance it with $200 or no money down. You don't have to buy a car to look and ask about financing.
I think that this sort of exploratory shopping will help you determine what you should look at purchasing, how you want to proceed with financing and if you really need to sell your other belongings.
posted by Yellow at 11:49 AM on August 24, 2011
Look at the used lot at a car dealership and see what you get for the amount of money you have in mind. Ask them how you can finance it with $200 or no money down. You don't have to buy a car to look and ask about financing.
I think that this sort of exploratory shopping will help you determine what you should look at purchasing, how you want to proceed with financing and if you really need to sell your other belongings.
posted by Yellow at 11:49 AM on August 24, 2011
I'd also look into Edmunds.com - they are an excellent online resource for purchasing a car.
posted by helmutdog at 11:52 AM on August 24, 2011
posted by helmutdog at 11:52 AM on August 24, 2011
For a used car in the $6k range, I strongly recommend a Honda Civic.
I had a '99 Civic that I bought in 2002 and drove for 7 years. Aside from normal maintenance, it was the most trouble free car anyone in my family has ever owned. And I put over 90K miles on it.
Things to ask for are the service records. Make sure all necessary maintenance has been done regularly.
posted by nickthetourist at 11:56 AM on August 24, 2011
I had a '99 Civic that I bought in 2002 and drove for 7 years. Aside from normal maintenance, it was the most trouble free car anyone in my family has ever owned. And I put over 90K miles on it.
Things to ask for are the service records. Make sure all necessary maintenance has been done regularly.
posted by nickthetourist at 11:56 AM on August 24, 2011
How many miles a year are you driving? Switch to a motorcycle or scooter? Share a car with a friend?
Is there any chance you can do some work on the car yourself? Fixing a simple car is not rocket science and if you choose wisely you can find one with a huge online community to act as support.
Problem is any used car is going to be a bit of a crap shoot, and if you stretch too far you won't have any breathing room if it winds up needing repairs. Stay the hell away from used car dealerships and financing if it's at all possible. Craigslist and enlisting a slightly car-savvy friend is a better way to get a deal.
IMO, Mazdas, Fords and Hyundais are probably the best bet at the bottom of the market. They depreciate WAY faster than Hondoyotaburus and aren't that far off in terms of reliability. I'd be looking to spend much less than $6K at your income level and doing everything possible to pay cash. A used police car (or any crown vic) is available at any price. Reliable, safe, huge, OK fuel economy and dirt cheap. Last generation escorts are OK, too, if you can stomach driving one. A Focus is usually good, too. Or a Ford Ranger.
FWIW, the most headache free car I've had is my Miata. Dead simple, tough as nails, available all day for under $4K, tons of used parts available, decent mileage. Not the most practical thing, but the fun factor makes up for it and it's adequate 99% of the time I'm not hauling my kids around.
posted by pjaust at 12:07 PM on August 24, 2011
Is there any chance you can do some work on the car yourself? Fixing a simple car is not rocket science and if you choose wisely you can find one with a huge online community to act as support.
Problem is any used car is going to be a bit of a crap shoot, and if you stretch too far you won't have any breathing room if it winds up needing repairs. Stay the hell away from used car dealerships and financing if it's at all possible. Craigslist and enlisting a slightly car-savvy friend is a better way to get a deal.
IMO, Mazdas, Fords and Hyundais are probably the best bet at the bottom of the market. They depreciate WAY faster than Hondoyotaburus and aren't that far off in terms of reliability. I'd be looking to spend much less than $6K at your income level and doing everything possible to pay cash. A used police car (or any crown vic) is available at any price. Reliable, safe, huge, OK fuel economy and dirt cheap. Last generation escorts are OK, too, if you can stomach driving one. A Focus is usually good, too. Or a Ford Ranger.
FWIW, the most headache free car I've had is my Miata. Dead simple, tough as nails, available all day for under $4K, tons of used parts available, decent mileage. Not the most practical thing, but the fun factor makes up for it and it's adequate 99% of the time I'm not hauling my kids around.
posted by pjaust at 12:07 PM on August 24, 2011
Best answer: "... Is my estimation that I can afford $6000 reasonable for a reliable 5-speed manual sedan or hatchback, or should I even be considering up to $8-10k?"
posted by Giggilituffin to travel & transportation
Lower levels of new car sales are driving up used car prices. Banks generally will not finance used cars more than 6 or at most 7 years old, and the older the car, the shorter the finance term they'll offer, generally (so you might only get 24 to 36 month financing options, resulting in a pretty high monthly payment, which you don't have in your budget now). Also, a lower percentage of new cars are sold with manual transmissions each new model year, and the desirability of manual transmission vehicles will substantially limit your resale options and value, when it is time to trade or sell.
Counterbalancing these trends for your situation, a lot of dealerships were forced to close by the U.S. auto consolidations of 2009, forcing thousands of mechanics into independent shops, or to open their own repair businesses. If you shop around carefully, you can find reliable repair mechanics for most vehicles, who can do good repair work for less than you might think, and many are looking for long term customers, with older vehicles that will need ongoing maintenance and repairs. Couple that with intelligent parts purchasing from online auto parts stores offering discounts, free shipping, and no tax on Internet sales, and you might find that getting your current car repaired for several more years service, while you save money for its eventual replacement, might be your best financial route.
You've already eaten most of the depreciation on your current vehicle, and that's a major cost you never get back on any trade up to a newer vehicle. If you have repairs made on your current car, keep records, and keep up with maintenance, you'd be hard pressed to come out better on a new car, I think, and you might even re-coup some of the cost of your repairs if you sell the car in good running condition in a couple of years. I've done this myself with a 2001 Chevy S10 truck in the last year; working with a laid-off ex-dealership mechanic with 18 years experience on GM products, for a total outlay of $2738 (including labor), I replaced the tires, the clutch (including engine rear oil seal, clutch master cylinder, and fluid change for the transmission), the brakes (new master cylinder, calipers, discs [including wheel bearings], rear cylinders, drums, rubber brake lines and hardware), the radiator, water pump, hoses, coolant, radiator pressure cap and thermostat, plus a new battery, an alternator, new serpentine belt, new spark plug wires, plugs and fuel filter, as well as air filter and premium shock absorbers, all around. For another $168, I replaced the windshield and wipers, because the old one was pitted. The truck has 98,000 miles (well below average mileage for its model year), gets 27 -32 mpg, has no cosmetic problems, a towing hitch that is pretty handy, and is likely to be good, troublefree transportation, for the next 5 years. Over that term of use, that's a monthly repair cost of $46.76, which beats any car payment I'd ever get, for a used vehicle in this good a shape. Moreover, I know exactly the mechanical condition of this vehicle, what has and hasn't been replaced, and I have a good relationship with a mechanic who is proud of his work, and has used me for a couple of referrals, which I've been happy to provide.
If you don't mind driving an older vehicle, repairs can really make economic sense. And you may also benefit from lower insurance costs, lower registration and lower tag taxes, too, for several hundred dollars a year in additional savings.
posted by paulsc at 1:46 PM on August 24, 2011 [1 favorite]
posted by Giggilituffin to travel & transportation
Lower levels of new car sales are driving up used car prices. Banks generally will not finance used cars more than 6 or at most 7 years old, and the older the car, the shorter the finance term they'll offer, generally (so you might only get 24 to 36 month financing options, resulting in a pretty high monthly payment, which you don't have in your budget now). Also, a lower percentage of new cars are sold with manual transmissions each new model year, and the desirability of manual transmission vehicles will substantially limit your resale options and value, when it is time to trade or sell.
Counterbalancing these trends for your situation, a lot of dealerships were forced to close by the U.S. auto consolidations of 2009, forcing thousands of mechanics into independent shops, or to open their own repair businesses. If you shop around carefully, you can find reliable repair mechanics for most vehicles, who can do good repair work for less than you might think, and many are looking for long term customers, with older vehicles that will need ongoing maintenance and repairs. Couple that with intelligent parts purchasing from online auto parts stores offering discounts, free shipping, and no tax on Internet sales, and you might find that getting your current car repaired for several more years service, while you save money for its eventual replacement, might be your best financial route.
You've already eaten most of the depreciation on your current vehicle, and that's a major cost you never get back on any trade up to a newer vehicle. If you have repairs made on your current car, keep records, and keep up with maintenance, you'd be hard pressed to come out better on a new car, I think, and you might even re-coup some of the cost of your repairs if you sell the car in good running condition in a couple of years. I've done this myself with a 2001 Chevy S10 truck in the last year; working with a laid-off ex-dealership mechanic with 18 years experience on GM products, for a total outlay of $2738 (including labor), I replaced the tires, the clutch (including engine rear oil seal, clutch master cylinder, and fluid change for the transmission), the brakes (new master cylinder, calipers, discs [including wheel bearings], rear cylinders, drums, rubber brake lines and hardware), the radiator, water pump, hoses, coolant, radiator pressure cap and thermostat, plus a new battery, an alternator, new serpentine belt, new spark plug wires, plugs and fuel filter, as well as air filter and premium shock absorbers, all around. For another $168, I replaced the windshield and wipers, because the old one was pitted. The truck has 98,000 miles (well below average mileage for its model year), gets 27 -32 mpg, has no cosmetic problems, a towing hitch that is pretty handy, and is likely to be good, troublefree transportation, for the next 5 years. Over that term of use, that's a monthly repair cost of $46.76, which beats any car payment I'd ever get, for a used vehicle in this good a shape. Moreover, I know exactly the mechanical condition of this vehicle, what has and hasn't been replaced, and I have a good relationship with a mechanic who is proud of his work, and has used me for a couple of referrals, which I've been happy to provide.
If you don't mind driving an older vehicle, repairs can really make economic sense. And you may also benefit from lower insurance costs, lower registration and lower tag taxes, too, for several hundred dollars a year in additional savings.
posted by paulsc at 1:46 PM on August 24, 2011 [1 favorite]
Get your existing car fixed and keep it.
Let's say you end up with $2500 in repairs. That amounts to, what, maybe 8 or 9 car payments? Less than a year's worth anyway. Every month you keep it after that is money in your pocket.
The single most (and possibly only) intelligent thing I did in my twenties was to never have a car payment.
posted by dzot at 1:52 PM on August 24, 2011
Let's say you end up with $2500 in repairs. That amounts to, what, maybe 8 or 9 car payments? Less than a year's worth anyway. Every month you keep it after that is money in your pocket.
The single most (and possibly only) intelligent thing I did in my twenties was to never have a car payment.
posted by dzot at 1:52 PM on August 24, 2011
Response by poster: The current car in question is a 2001 Chevrolet Lumina with the 3.1 v6 and 205k. I average 22k miles a year. This is the second time the intake gaskets need to be replaced since I've had it in 2005. I do consider it reliable, but already put $800 into it last year.
There is no way I could live with a Miata on a daily basis, as much as I wish I could.
posted by Giggilituffin at 4:22 PM on August 24, 2011
There is no way I could live with a Miata on a daily basis, as much as I wish I could.
posted by Giggilituffin at 4:22 PM on August 24, 2011
Get a Hayne's Manual for the car and learn how to do the intake manifold gasket replacement yourself. It's not that difficult.
posted by torquemaniac at 5:31 PM on August 24, 2011
posted by torquemaniac at 5:31 PM on August 24, 2011
That 3.1L Generation III 60 degree V6 GM engine had intake gasket issues that are the subject of on-going class action lawsuits. In the meantime, GM has service bulletins out that recognize the problem, and recommend a new type of gasket, and new intake manifold bolts with pre-applied locking compound. But GM is not extending warranty coverage on the issue past normal drive train warranty, so I understand your skepticism about continuing to try to drive this vehicle. And there are millions of these engines out there, so the general wisdom is that the General is going to fight the class action lawsuits as long and hard as possible, and that any recovery to class members will be minimal.
I also agree with torquemaniac that it is not a particularly difficult repair, but if you're not mechanically inclined or equipped, it's not so simple either. Moreover, if a leak has occurred that allowed coolant into the intake valve passages, you could have oil contamination and long term internal engine damage.
posted by paulsc at 6:27 PM on August 24, 2011
I also agree with torquemaniac that it is not a particularly difficult repair, but if you're not mechanically inclined or equipped, it's not so simple either. Moreover, if a leak has occurred that allowed coolant into the intake valve passages, you could have oil contamination and long term internal engine damage.
posted by paulsc at 6:27 PM on August 24, 2011
If you do decide to try to fix your car, this Lisle push rod removal tool can help you remove the pushrods without doing a lot of other tear down that is normally required to remove the rockers and then the pushrods. If your mechanic doesn't have one, it's $18, and turns a 6+ hour job into a 3 hour one. Or, an $800 repair bill into a $350-400 one (not counting additional cooling system work or parts, like a water pump, pump gasket, radiator hoses, radiator pressure cap and maybe a radiator, if yours is a 10 year old aluminum one, with DexCool as the antifreeze).
posted by paulsc at 7:29 PM on August 24, 2011
posted by paulsc at 7:29 PM on August 24, 2011
I've owned three cars, all used. I would still be driving the first one if a bus had not bashed the front end off it, and I would still be driving the second one if young master flabdablet hadn't rolled it.
The $6000 you're contemplating spending on a replacement car would buy many, many years' worth of repairs to your old one. That's the metric by which you should be judging repair costs, it seems to me; I can't see the logic behind comparing repair and potential resale costs.
posted by flabdablet at 8:17 PM on August 24, 2011
The $6000 you're contemplating spending on a replacement car would buy many, many years' worth of repairs to your old one. That's the metric by which you should be judging repair costs, it seems to me; I can't see the logic behind comparing repair and potential resale costs.
posted by flabdablet at 8:17 PM on August 24, 2011
Response by poster: Thank you all for your input. I was able to get a second opinion of the repairs needed and taken care of at a fraction of the cost through an independent shop close by.
(saving for a used Miata as a second car, though)
posted by Giggilituffin at 11:28 PM on August 28, 2011
(saving for a used Miata as a second car, though)
posted by Giggilituffin at 11:28 PM on August 28, 2011
This thread is closed to new comments.
You may already know this, but try running some searches on Cars.com and seeing if vehicles you like within a reasonable distance of your home & meeting your specs fall in your price range. I was in the market for an automatic, and this seemed to raise the price a fair amount - so at least anecdotally speaking, wanting a manual transmission should probably save you a bit of money!
I'm afraid I can't help with the loans/financing piece of this.
Good luck!
posted by brackish.line at 11:41 AM on August 24, 2011