$5k ... buy a used car or use as a downpayment on a new car? (1 Viewer)

[Frederick]

My wife and I have been going back and forth about buying a car. We've managed to get by without one, but I'm beginning to see the benefits of having one around. So in a month or two we should have about $5k put aside (assuming something doesn't come up to eat away at it), and I was wondering if I should go ahead and find a good used car for that amount or use it as a down payment on a new one. My father-in-law says that we should go ahead and buy a used car, since this will be our first car and we're trying to save up to buy a house, he feels as though we really don't need a car note right now. But I'm a lil' concerned about the whole "inheriting someone else's problem" bit. Advice?


Freddy C.

 

[Brian Perry]

I would say your best bang for the buck would be buying a certified pre-owned Lexus. You'd basically be getting a new-car warranty. And a $20-25k used Lexus would be far superior to a new $20-25k domestic car, IMHO.

 

[David-S]

If you're getting by without one currently, and living in the city (i'll assume) I would just get a cheap car, to make grocery and whatnot runs easier... why buy an expensive car if you'll never use it...

Just get it checked by a good mechanic beforehand (ask around, since i get you don't have one now)...


There's a lot of reasons to sell a car, not necessarily just problems... I don't think you should have a problem... then just take that $200 and sock it away...

my 2¢

 

[Bryan X]

If you've gone this long without a car, you probably aren't needing one for heavy usage.

You can find decent used vehicles in the 12k - 18k range that are probably still under manufaturer's warranty. Look for something that is 2 years or less old and 25,000 miles or less. That should give you enough time to see if problems pop up, while the vehicle is still under warranty.

We historically have bought new, but recently bought a 2 year old Chrysler Concord with 25,000 miles as a second car for about 14k. The time we had until the warranty passed gave us time to flush out any problems. Fortunately nothing came up.

Assuming your low usage, I'd forget the 20k - 25k Lexus or anything else higher than 18k or so. Why spend 20k - 25k on something you aren't going to use often?

Just remember, vehicles depreciate heavily in the first two years compared to the rest of their useful life. So don't buy new if you are expecting to get rid of the vehicle in a couple years or so.

Also, if you buy a 2 year old or so car from a dealer BE SURE to find out if the car came off a lease or used to be a rental car. Don't ever buy a used car that the dealer got from a rental company. Those cars get more abuse in 18 months than the average car gets in 5 years.

 

[JohnRice]

I would use the 5K as a large down payment on a good used car. Unfortunately, 5K is still low for a good used car, but I see no reason to spend 25K either. A good opportunity these days is to find a lease return car. They are almost always very well cared for because the person who leased it doesn't want to pay penalties. Just be sure you don't actually get a former rental car. Many salesmen will claim rental cars were privately leased. There is a big difference. A nice solid but inexpensive car like a Chevy Cavalier can be a real deal and often around 10K. Since you probably won't drive it much, it could easily last you 15 years and the taxes and insurance will be low.

 

[Denward]

Have you considered just renting a car when you need one?

 

[Ryan Wright]

Or you can just buy a cheap used car for $5k and learn to maintain it yourself. You'll save a bundle of money. If you have to make $300 payments on a car, you are really going to regret it when you go to buy your house. That's $50k less house in today's market.

 

[Prentice Cotham]

You could buy a decent Honda Civic or Toyota Corolla for $5K. Those make great everyday or runaround cars and are typically low maintenance.

 

[Kyle Richardson]

I agree with Prentance. You can get a smaller, basic, used car like the Civic or Corolla for $5k for the little amount you will be using it. Why pay for a $20K car when you wouldnt use it that much? Put the extra money towards the house!

 

[DaveF]

Following what Ryan said, what are your priorities? Would you rather have car debt or house debt? Money spent on a car is money not available for your house.

I'm in a similar position right now. I've got a 10 year old car and I'm shopping for my first house. I estimate that I need about $20k cash for the down payment and closing costs on a $150k house in my area. So the car stays and I save for the house. After I buy my house I can start saving towards a car down-payment.

But if you decide you need or want a car, you can do very well for under $10,000, as I just learned from my roommate. He bought a 3 year old Chevy Prism -- identical to a Toyota Corolla -- with 30k miles for $9500.

If you really don't need a car, it seems prudent to save for your house. If do need a car, then purchase frugally so you won't be set back too far in saving for your house.

 

[Matthew Todd]

I also agree with Prentice and Kyle. When my wife and I were looking for a first car (this was 1999) we bought a 1996 Toyota Corolla for $8000. It has been good to us. I would have regretted paying a lot more for a car now that we are building a house. I'd rather put the money in the house than a car.

Matt

 

[Frederick]

Thanx for the advice, guys. And yes, I do live in the city. We usually take public transportation everywhere, and our friends come and get us when we go out. But our son's 9, and he wants to do things like little league and basketball, and the places and times that they have these events are inconvenient. And working on other peoples time is beginning to become a hassle. Like when we're ready to leave a party, we have to wait for our ride to be ready to leave as well. Generally we use Peapod to grocery shop, and if we only need to get little things, there's a store right up the street from us. We live in a rather convenient spot, but next year we'll be moving somewhere cheaper to help save $$.

The smaller car may be a problem. I'm 6'4", 265 lbs. I don't think I can fit in a Civic . Also, my wife wants to start breeding again in a few months, as if our lives aren't complicated enough.

Another thing about looking at used cars: how used? How many miles is too many miles? And should I go to a dealer or look for a lil' old lady in the `burbs that only goes to the shopping center and the train station?


Freddy C.

 

[Bryan X]

Another thing about looking at used cars: how used? How many miles is too many miles?

About two years old is good with 25,000 or less miles. Vehicles heavily depreciate in the first two years so you can get a decent price at that point. Also, with being less than 3 years and under 30,000 miles you generally will have some factory warranty left, which is nice.

If you buy from a dealer be sure that the car is not one they got from a rental company. Stay away from those like the plague. You usually can find quite a few decent vehicles coming off a 2 year lease.

 

[Fred Seger]

Don't let little cars fool you. Sometimes they have more room than "mid sized cars". I 6'4" 250 and I fit in my friends Honda CRX just fine.

I would buy used and probably would spend over the $5000 you have saved up already.

 

[Robert McDonald]

I think you should look at a used car and save the $$ for a house. I bet you could get a good used Honda or Toyota to meet your needs. Get the April Auto issue of Consumer Reports; they'll list used cars to avoid and give you recommended cars in your price range. Also go to Edmunds as they have a used car section.

 

[Denward]

Having 2 kids with a Civic or Corolla sounds like a bad idea. Bending over to load a kid into a car seat in one of those is not good, especially for the vertically endowed.

My previous idea about renting a car as needed doesn't really work with kids around. I assumed you were childless since you were carless.

How about a used small SUV (e.g. CR-V, RAV4, etc.)? Check out cars.com or autotrader.com. That will give you a good idea about what's available in your area.

 

[Joe Szott]

Buyinga new car is absolutely no guard against getting a lemon, I know people who have bought almost every brand of vehicle and had a real junker (not the model of car, just their particular one.) Notable exceptions would be BMW, Saab, other high end (foreign) manufactors.

I say get a decent used car and be sure to check out the VIN # on carfax before you buy it. It's a real good way to tell if it has had problems or not n the past. If I had to pick a few car makers that typically hold up very well in the used market, I would suggest a basic BMW or Toyota.

 

[DaveGTP]

It is admittedly proven that the best car value is a 2-yr old car, as it loses the most depreciation in the first couple of years. Realistically, though, with how much you are driving (from what it sounds like, unlike me), I wouldn't think that there is any reason you should have a car payment. At the most take your 5k as your limit. A lemon is a lemon regardless of miles. My '94 Beretta had 169,000 miles on it. I love my '00 Grand Prix GTP, but I do miss the miniscule car payment on a car that worked perfectly. A new car is vanity, not economy.

In the long run, a cheap car, even with a few repairs, is a lot cheaper than a new or newer-used car. My opinion would be to go spend 3k or so of that cash on a used older car. With the little amount of driving you are doing, it doesn't seem like you need a lot of car. I bought my 2000 Grand Prix GTP because I like cars a lot and I drive a lot (about 15-25k a year, depending on how many credits I am taking). I like cars fast and with toys (Heads up display, leather, power stuff, supercharger). I didn't spend 15k on a car to be economical. I did it because I wanted it.

My fiancee bought a '94 Saturn for $1800 to replace her smashed up delSol, THAT is economical. Is she going to spend fourteen THOUSAND dollars in the next 4 years on repairs (the approx. price difference between my car and hers)? Not possible. A car purchase of over, say, $5k is your choice, not thrifty. It's like buying expensive premium speakers over cheaper ones. Depends on what is important to you. It sounds like the house is more important to you. If that's true, concentrate on that, don't take out a loan.

And by all means, buy from a private party if possible. Dealers are in it for the profit. You can get a better deal from a private party with some careful hunting

 

[Cam S]

I think your best bet would be to a get a used Toyota or Honda, 4 door. Those things NEVER break (well atleast my 96 civic sure doesn't), and if they DO break, it will be cheap to fix.

 

[MikePeroni]

I was in the same boat 3 years ago. I ended up buying a 96 Contour V6 with 70,000 miles on it for 5000.00. Great decision. In three years Ive had 1 repair for a water pump for 300.00. Changed my own brake pads and run Mobil 1 oil every 6000 miles. The car has 115,000 on it now and gets me to work and back every day and thats all I want. We lease an Explorer for the wife and kiddies and for family trips and stuff.
The old school of thought is that cars are only good for 100,000 miles. Not true. Any car built from the 90s up should go at least 150,000 if not more with maintenence. Also to prohibit rust, I got this tip from my old hod-rod father in law. Once a year on a nice dry day, buy a can of fogging oil with the spray tip thing included at Murrays for a couple bucks. Open the hood, doors ,trunk ect.. and insert the spray tip into all the little drain holes you can find and give them all a good shot of oil. Do the fenders, everything. This coats the metal on the inside(where rust starts)and Im telling you it works like a charm...no rust on my cars at all. Anyway, put your extra dough towards your house, youll be glad you did.