Help me buy a car the right way, this time.
April 12, 2014 10:37 AM   Subscribe

I just moved to Charlottesville, Va from California. Bought a car here quickly after getting here through Carmax which I am realizing now is way too nice, my car payments are too much ($247/month) and I worry too much about when parking, driving etc. (a 2010 Toyota Prius, 6 year loan that I owe 15k on).

I moved here for a job that requires that I commute an hour each way so I need something relatively reliable, but it is likely that when my two year position term is up I will move somewhere where I won't need a car. I have good to great credit and hope to keep it that way.

So my questions: what kind of car (meaning: year, model, mileage) should I get based on the above criteria? Should I suck it up and keep the car I have now? Can I apply for a loan with my credit union while holding a loan on my current car before I trade it in? Will getting different car with new financing seriously mess up my credit? Should I go with a dealer or private party? Major car buying n00b here, thanks in advance for your feedback!
posted by ethel to Shopping (11 answers total) 1 user marked this as a favorite
Use and the blue book value to get an idea of the value of the car you have now. You might also look up listings for cars similar to yours (i.e. 2010 Toyota Prius) on Craigslist in your general area. You'll get closer to this price if you sell it yourself, but, with a loan, that's a bit more of a complicated transaction than if you owned the car outright.

You'll never get that price if you trade-in, because you are essentially the wholesaler selling to a retailer. But it's simpler to work with a dealer and do this in one transaction.

You might also use Edmunds and Kelley Blue Book to get an idea of fair prices for cars you might want to buy instead. It might turn out not to make much sense financially, if you want to buy something close in price to what you'd sell for.

(I can't speak to other questions, but I hope this helps.)
posted by bluedaisy at 10:58 AM on April 12, 2014

First step is to figure out how much you CAN afford. Write out all your monthly expenses, include a little extra for saving or emergencies. Subtract that from what you make per month, and determine what you can afford to spend on a car payment per month.

Plug that into some online calculators, which will tell you how much that translates to on a 3-year loan; 4-year loan; 5-year loan, etc.

I strongly recommend that you avoid a 6-year loan on a used car. You'll be underwater on that loan for most of it's life (owing more than the car is worth), especially if you didn't put any money down.

I can't tell you whether you need to get a new car, because I don't know what you can afford. If you really can't make the $247 on the payments, then yes you should probably get out. But how much can you get for the Prius if you sell it?

Maybe you're better off finding a slightly older / cheaper Corolla or Civic for the gas mileage?
posted by hydra77 at 10:59 AM on April 12, 2014

Um. It's a 4 year old car. The longer you wait, the less it will be a 'nice car' and the less you will worry about it. If you change cars just because of the (really, very minor) criteria you have laid out here, then you'll just lose more money on the swap. It sounds like you are about a year into the loan and you haven't gone broke yet so you still have at least a year of 'needing reliable transport for an hour commute'.

It costs you money to change cars. You always lose money changing cars, probably more than the difference in cost between your car payment now and whatever amount you think you want to pay in the future.

it is likely that when my two year position term is up I will move somewhere where I won't need a car.

But not definite? Then why not wait until this time, establish if that is truly what is going to happen and just sell the car at that point (after you use it to move). That way you only sell the car once, rather than sell it for something cheaper (and lose money) and then sell that one (and potentially lose money), also you avoid the drama getting out of two loans.

You need a reliable car for at least the next year - stick with what you have. Be smarter next time when buying a car that you have properly thought out your maximum realistic monthly payment. There is no way out of this now (unless you truly can't afford the monthly payments, which sounds unlikely being as you've had the car a year) without throwing money away, so stay where you are, I say.
posted by Brockles at 11:00 AM on April 12, 2014 [10 favorites]

btw- don't underestimate what you're saving on gas if you're commuting an hour every day. around here, that's at least 100 miles a day. a 'good' cheap car will get 30ish mpg. your prius is getting 40 mpg or more on the highway... so at 500 miles a week, you're currently dropping about 12 gallons of gas a week ($42-ish) instead of 17 gallons ($60-ish). push that out to two years and you're looking at a savings of almost $2000 in gas with your current car.
posted by noloveforned at 11:06 AM on April 12, 2014 [2 favorites]

Response by poster: Sorry I was unclear about the monthly payments: purchased in January of this year, CAN afford the payments, just would like to be able to save more than I am now and not have the terrible feeling all the time that my car will get scratched.

I carpool, so only drive one to two times per week.

I put 2k down on the car when I bought it.

Thanks so much for comments so far.
posted by ethel at 11:09 AM on April 12, 2014

You should keep the Prius you bought unless you can manage to sell it for very close to what you paid. I am currently selling mine from 2005, and the value has held wonderfully, which is why I recommend you keep yours, especially if you expect to sell it in a couple of years. In addition to that, it's known for being a reliable car. Better to be worried about scratches than about a junker that might break down on you.
posted by smalls at 11:22 AM on April 12, 2014 [1 favorite]

You will lose money on the exchange. It's a 4 year old Toyota, it not that "nice" of a car. It will get scratched. It will get a dent. That is just part of owning a car. Think about why owning an uglier and already scratched car would make you happier? And are you willing to LOSE money to get that?
posted by saradarlin at 11:23 AM on April 12, 2014

Best answer: CAN afford the payments, just would like to be able to save more than I am now and not have the terrible feeling all the time that my car will get scratched.

Honestly, if you keep the car the idea of it getting scratched will fade. Besides, it's REALLY not that much of an issue for resale value of the car as minor scratches can be polished out. It's something you kind of need to get over - an older car will still bother you unless it is so old that it is already scratched, in which case the money you'd lose on fuel economy and maintenance costs will be equivalent or more than the cost of tidying up scratches on your current car when you sell it.

Anything extra you can save by swapping for a slightly less valuable car would be negated by the amount you'd lose changing cars. Having a newer, more reliable and fuel efficient car will save you more money in the long run, it just won't be as obvious to you in your monthly budget. I think you're over-thinking this and the worry over scratching is all a mental block you need to fix. Once you have removed that, it's a perfectly good car for your use case.

Stick with what you have. It's a good fit for you, you just need to trust in that.
posted by Brockles at 11:26 AM on April 12, 2014 [5 favorites]

ethel, if you wind up deciding to buy a new car, I recommend strongly that you go to Edgecomb's, on Avon Extended. They only sell used cars, with 75% Volvos, but there's no haggling (the price is the price, period), their employees don't receive a commission, and they're awfully nice. My first car (1994 Volvo) was from them, in 2003, and I just replaced it last year (2008 Prius), which I also bought from them. My family has bought all of their cars from Edgecomb's since 1992. They're a real step up from every other dealership in town. (They also do great repair work, although there are several fine repair shops in town.)

If it was me, I'd go sit down with Edgecomb's, recite your Ask MeFi question, and see what their advice is. I get that asking a car dealership if you should buy a car from them sounds insane, but it can't hurt. You're welcome to tell them that Waldo sent you, if that makes you feel less like you might be taken advantage of. :)
posted by waldo at 1:09 PM on April 12, 2014 [2 favorites]

Just a thought on the relative value of your car (I can't speak to whether it's worth hassle of reselling it and getting something older/cheaper):

I recently inherited a well-maintained 2007 Prius, and as far as durability is concerned, it might as well be new. Drives great, and the trim is all in place and sturdy (even though it spent the first six years of its life traveling washboard gravel roads). Nary a squeak or a rattle. If not for its very high mileage, its resale would be somewhere in the range of $8 -- 9k. That strikes me as being a pretty respectable retention of value, for a seven year old car.

I only drive it every couple of days, so I end up putting gas in it approximately every 1.5 months. (I wish I could be more accurate, but it's literally so rare that I have trouble tracking it.) That works out to a maximum (normal) fuel expenditure of something like $0.56 per day, I think. Obviously, this gets pushed upwards by the occasional longer trip, but even so, my fuzzy, napkin-math puts that at < $300 in gas, per year. It seems like your weekly mileage is greater, so your expense will be higher than mine, but you can see how much less it will probably be than if you're doing the same commute in an older, non-hybrid car.

I don't think you should think about keeping the car as a situation where you have to "suck it up," but rather as a situation where you got a fair deal on a potentially very reliable, very efficient vehicle. It's hard to really see into the future (e.g. will you absolutely end up moving somewhere where a car is undesirable?), and you may end up being glad you held on to it.
posted by credible hulk at 2:24 PM on April 12, 2014 [1 favorite]

You're already past the big depreciation hit in value, so you won't lose that much money on your car if you take care if it and don't drive too much. If you carpool, your carpool partners probably won't appreciate an ultra-beater.

If you're determined to switch cars, save around $5k cash and wait until someone trustworthy is selling a well-kept older economy car with good maintenance records private party. That's pretty much the cheapest way to buy a car reliable enough for an hour-long commute. Then sell your car private party: this may be difficult to do if you're underwater, unfortunately. With regards to the loan questions, just call your credit union.

Are there unmentioned considerations keeping you commuting an hour in Charlottesville? Real estate is much cheaper than CA, so you ought to move to bike commuting distance to work if you really want to save on car payments.
posted by akgerber at 8:20 AM on April 13, 2014

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