No good time to buy a car?
September 4, 2018 7:40 AM   Subscribe

My eleven year old car is in the shop for the third time in as many months. I think I’ve reached the point with this car where ownership is going to become increasingly expensive and/or annoying, and so I’ve been thinking seriously about buying a new (or new to me) car. However, I’m having trouble deciding if now is the time to go for it.

My husband and I have good credit and enough money in liquid savings that we could put down a down payment without eating into emergency funds. However, we are both facing down the academic job market this fall, so after next summer neither of us have a guaranteed source of income.

In a normal universe, this would be the end of the discussion for me, because there is no way I would take on another monthly fixed cost with so much uncertainty in the near future. However, while doing new car research, I read in Consumer Reports and elsewhere that the various international trade disasters in the works (steel tariffs, NAFTA) are likely to increase car prices significantly.

Looking around online this morning, I saw 2018 Honda Civics in my area going for 22k and less and am feeling tempted, so I’ve come here for a reality check: it sounds foolhardy to saddle ourselves with a ~$250/mo car payment at the tail end of graduate school [with no road to gainful employment in sight]. At the same time, I feel like we’re going to be paying hundreds of dollars each month either way, in financing or in repairs, and the prices that I’m seeing now feel pretty reasonable to me, especially given that they may not stay that way for much longer. So: what would you do? How much warning do you think we’ll have before car prices start going up (if they ever do)? Is the tariff stuff a red herring? What do you think?
posted by mustard seeds to Work & Money (16 answers total) 3 users marked this as a favorite
What could you buy in terms of a reliable not-all-that-old used car for cash? That'd be my instinct -- go for the maximum reliability you could get without incurring a monthly car payment, given the uncertainty of your future income.
posted by LizardBreath at 7:48 AM on September 4, 2018 [6 favorites]

Get rid of the money pit, buy a better used car outright.
No one needs a brand new car.
posted by phunniemee at 7:49 AM on September 4, 2018 [5 favorites]

The tariff stuff is not a red herring at the macro level, but I don't think it's likely to change your personal decision to buy a new car while in grad school from a good one to a bad one.

Is there a reason why you're not considering a used car? Per KBB, you can get a 4 year old Civic for half the price of a new one.
posted by caek at 7:51 AM on September 4, 2018

The tariff stuff is a red herring, but I would still buy a new (or a used but only a few years old car from a dealership).

I spent a ton of money in grad school trying to repair my car before I bit the bullet and bought a car that was two years old. I wish I had done it to begin with--the reliability was worth it and as you said, I was spending more in repairs than I would have with a car payment.
posted by lucy.jakobs at 7:54 AM on September 4, 2018

It's easy to get discouraged about the future reliability of an older car when you have a cluster of repairs and extrapolate out. An honest mechanic can give you a best guess assessment of the condition of the car; if it's a model that's known for being fairly reliable, the engine, transmission and body are all sound it might still have a ton of service life in it. If it's rusty, the engine has a faint rod knock and the transmission fluid is black, maybe not. The average age of a car on the US roads is over 11 now, so there are a lot of people driving around cars much older than yours.
posted by Larry David Syndrome at 7:57 AM on September 4, 2018 [1 favorite]

The questioner said "new (or new to me)" which means they're considering used already.

And 11 years sounds old for somewhere with snow (and more importantly salt). There might be older cars on the road, but I doubt they're in the northeast. I wouldn't stress about the effect of NAFTA renegotiations on the price of cars, but sounds like it's time to replace the clunker.
posted by quaking fajita at 8:17 AM on September 4, 2018

I’ve been thinking seriously about buying a new (or new to me) car. However, I’m having trouble deciding if now is the time to go for it.

You have given us zero means with which to help you work out if it is the right time. We would need details on the repairs involved, the costs and any other issues with the car. Plus what car it actually is, and mileage etc. It's a pointless question without that information.

There might be older cars on the road, but I doubt they're in the northeast.
Er. You clearly haven't been to the Northeast if you think this is an accurate representation of vehicle age. 11 years is just not that old if the car has been looked after.
posted by Brockles at 9:04 AM on September 4, 2018 [2 favorites]

I disagree with the previous poster stating that your question is pointless, and with the statement that 11 years old is not that old in the Northeast. I lived in the Boston area for over 20 years, and salt and snow aged all of my well-cared for cars well before the 11-year mark.

OP, I think you are overthinking the tariff issue. If you have a clunker that is eating up your monthly budget, tariffs won't matter to you but another $500 repair will.

Have you considered buying a rental car? I've had my Nissan Versa for 5 years with no problems. Zero. I bought it through Hertz for $11K and it was only a year old. Mileage was very low.

FWIW, I also think it's worth considering that although a car payment seems unreasonable, it's predictable... Unlike the uncertainty and stress of a car needing constant repairs.
posted by onecircleaday at 9:29 AM on September 4, 2018

I'm kinda with Brockles here. I live in the Northeast and drive a 15-year-old car that I expect to get at least another five years out of. It spent half its life down South, I take care of it, and I only really drive it on weekends. (I drive a company vehicle for work.) I also see my car out on the road quite often, so I'm not the only one!

We need to know what your car's mileage is and what the repairs were. My car had a cluster of expensive repairs around the ten-eleven year mark, but they were semi-expected and I probably won't have to do them again. Head gaskets, transmission seals, timing belts, and steering racks (those were my issues) are all good as new once they've been replaced, so now that I'm over that hump I should be good for a while. Maybe that's your car as well? There's a big difference between a car that is falling apart and one that's just had most of its long-interval maintenance work done.
posted by Anticipation Of A New Lover's Arrival, The at 9:30 AM on September 4, 2018

Ok, so maybe I need to clarify - there are two questions implied here:

1: Is now a bad time to buy a car.
This can be answered and people have addressed some of your concerns in that regard.

2: Have I reached the point in the life of my old car that it doesn't make sense to keep it.
This part of the question has zero information to make an assessment with. Just knowing a vehicle's age is less then no help in deciding if it will be more or less expensive to keep it for more than a couple of years - an 11 year old Hyundai is very different from an 11 year old Mercedes or BMW, for instance. Anyone saying 'yes get rid of the car' based on purely its age is not answering from any position of knowledge.

It is most often more cost effective (given the financial constraints in the future) to keep and maintain an older car than buy a newer one, but without knowing the history of the car or known issues it is not possible to make a recommendation, but perhaps the OP is already decided and is just concerned about the car buying market in general?
posted by Brockles at 9:54 AM on September 4, 2018

According to the Bureau of Transportation statistics, the average age of cars in the U.S. is 11.6 years. In Massachusetts , for example, it is 10.0 years. As Brockles said, an 11 year old car isn't particularly unusual, even in the Northeast.

What makes a difference is the condition and mileage of your car. Have it evaluated by a mechanic. Having three repairs in three months can be a random occurrence that says nothing about the reliability of the car. It's just shaken your confidence temporarily.

If you have uncertain income, taking on a mandatory monthly debt would be risky. For much less than the several thousand dollars of down payment and $250 per month in payments of a new car, you could keep an 11 year old car going a long time.

Forget the tariff thing. It's not going to change the cost of domestic cars by that much, and most of the "foreign" cars are actually assembled in the U.S. Wait until your employment situation stabilizes and then think about getting a newer car. Don't let political fearmongering rush you into a bad decision.
posted by JackFlash at 9:57 AM on September 4, 2018 [1 favorite]

I like to think of repairs in terms of car payment months. If a repair costs $1000 and I can go for 4 months without another repair, I figure it was worth it. Now, no more payments until the next repair! Woohoo!
With a new car the payments go on forever. Of course, if the repairs keep on coming, it may be time for a new car. It is mighty nice to have a few years with no worries about repairs.
Don't forget that insurance will be more expensive. Do you still have collision on that 11 year old car?
posted by H21 at 10:19 AM on September 4, 2018 [1 favorite]

I'd echo the advice to get a good used car if you want a new-to-you ride; there is virtually no economic reason to get a new car, unless it's a vehicle that's new to the market and nothing else will actually fill the need. New cars are an extravagance.

But I would also echo the advice to take a hard, unemotional look at your current car. I think people tell themselves "it'll cost me as much in repairs" as a way of justifying getting a new car, when it is very rarely true. (Which is not to say getting a new car might not be a bad idea, for fuel economy or safety or reliability or other practical reasons.) $250/mo in car repairs is a lot of repairs. Even the worst clunkers I've driven around haven't gotten close to that.

It's pretty common to have a car go into the shop and suddenly generate a fairly big repair bill, either out of deferred maintenance or just discovering previously-latent issues. But it's usually not a regular thing. In my experience you get a few hundred bucks here and there (on top of expected PM, like tires, brakes, oil, etc.—these should be counted separately since you'd have them on a new or untroublesome used car too) until eventually something really bad happens and the car is effectively dead, because it's decisively not worth the repair cost. Blown head gasket, thrown conn rod, excessive oil burning, serious transmission problem... that's the sort of thing that can mean the end of the road.

But every month you're not making a car payment or paying an equivalent amount in repairs is money in your pocket, so I'd stretch the old car out as long as it goes, especially if you just invested money in it via repairs and the resale value is marginal.
posted by Kadin2048 at 1:43 PM on September 4, 2018

Also I'd echo the responses not to think too hard about the trade/tariff thing. The car companies build cars to pricepoints, not the other way around. If the price of steel goes up, they'll use more aluminum or plastic. (If the price of aluminum goes up, they'll use more steel. If the price of plastic goes up, they'll use more aluminum. Or whatever.) They can move their sourcing around to avoid tariffs on imports. They have a lot of levers to pull, including just taking a hit to their own bottom line, in order to keep prices in line with consumer expectations. They know there's only so much money that people are going to pay for a car of a particular type/configuration.

My guess is that you'll see some of the incentive programs (0% financing, big cash allowances, crazy buyback-and-upgrade schemes) go away before the sticker prices change significantly. The prices and expectations, particularly around round numbers like $10k, $15k, $25k, are pretty "sticky" and it's not like the car companies aren't always trying to get people to normalize spending more.

What happened during the last recession, when people stopped buying as many new cars, the used car market suddenly tightened and the prices on good used cars (especially small, reliable import cars) went up a bit. It's those morons fine folks buying a new car every 3-5 years who basically subsidize the rest of us when we buy a preowned or used car. If they decide not to buy a new set of wheels, that's one less used car on the market. But that happens every time the economy takes a downturn. Your guess is as good as mine where we're headed.
posted by Kadin2048 at 1:53 PM on September 4, 2018

How much do you drive? That will affect your insurance rates.
How much do you have for a down payment? That will affect your monthly cost.
Can you find a low-interest loan? Mine was ~2.25% and over the six years of the loan I paid way less than $1000 in interest.
While you have income can you pay an additional $25-$50/month? When I did that consistently I was able to skip monthly payments later on.

Car loans are the cheapest loans to get if you have good credit which you do.

When I bought my first ever new car I was delighted by how new it was and that it had all the current bells and whistles. If you test drive a new car and you enjoy the newness then you can add a benefit into the happiness/security/comfortable category. Not every improvement has to be financial.
posted by bendy at 8:21 PM on September 5, 2018

I'm not sure the tariff thing is going to impact car prices as much as news outlets are predicting, at least not in the short term. In solar, foreign panel manufacturers (i.e. all panel manufacturers, nobody makes panels in the US) got hit with a fairly hefty tariff last winter. In response, they just slashed their profit margins and kept prices the same—because they knew that if they didn't, they'd sell fewer panels and a domestic industry would rise up to compete with them. Auto manufacturers will probably work hard to keep prices similar to what they are now.
posted by Anticipation Of A New Lover's Arrival, The at 12:40 PM on September 7, 2018

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