Author Topic: Family strongly against cash car idea  (Read 4098 times)

FlyJ

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Family strongly against cash car idea
« on: May 22, 2017, 12:23:56 PM »
My car recently stalled on the highway and wouldn't restart. I'm still waiting to find out what happened, but if the repairs are expensive, I'm considering buying a ~$6,000 car with ~100k miles. Along the lines of the MMM "mileage inventory" thinking, it might be cheaper per mile to get a different car at this point. My current vehicle is a 2005 Honda Accord with some major cosmetic damage and 185k miles. I drive a 340 mile round trip three to four times per month for work and was thinking of getting something a little more reliable for the trip (and less rusted/smashed). 

I've communicated with my dad and brother lately about the possibility of getting a cash car, and both seem to be strongly against the idea (both also have a lot more money than me). Phrases like "will cost you more in the long run", "more reliable", "never know how it's been maintained", "high maintenance cost", are often spoken when we talk about it, which has caused me to second-guess myself quite a bit.

It seems that many people here have been successful with cash cars from private sellers, but is there more to it that I'm missing? Is there some type of internet bias here where only the success stories are posting, and I'm actually taking a huge risk?

There seems to be some perfectly acceptable Civics, Corollas, etc. in my area. $7,000 is my cash max and I really don't want to finance a vehicle.


« Last Edit: May 22, 2017, 12:25:36 PM by FlyJ »

Louisville

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Re: Family strongly against cash car idea
« Reply #1 on: May 22, 2017, 01:07:49 PM »
Best bet is always a 2 - 5 year old Honda, Toyota or the like with around 40k miles. It's the sweet spot for balancing reliability and cost/mile. That's always been how I buy and it has served me well.
Even if you can't afford to go that high, $7k can still get a quite solid car.
With only a few, rare exceptions, new cars and car payments are for chumps. A lot of old timers eschew used cars because back in their day cars only lasted 80K miles before needing a bunch of expensive repairs. When I was a kid in the 70's, everyone's car was in the damn shop all the time. It just isn't like that anymore.

Re: Family strongly against cash car idea
« Reply #2 on: May 22, 2017, 01:12:10 PM »
I've had decent luck with used cars. It's cliche but find one with a single owner, and that single owner should be an old man.

FLBiker

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Re: Family strongly against cash car idea
« Reply #3 on: May 22, 2017, 01:13:41 PM »
We just replaced our car (1999 Ford Explorer sport) w/ a $6000 car -- 2010 Hyundai Accent.  I'm very happy with it so far.

Last time around, we bought a 3 year old Corolla, and I personally feel like it wasn't worth the Toyota premium.  This time, we were looking at Ford Focuses or Hyundai's.  Not that I wouldn't get a Toyota for the right price, but I wouldn't pay extra for one.  Our 2009 Corolla hasn't been trouble free.  It hasn't been terrible by any stretch, but (at least on this particular car) the reliability seemed pretty average.  I've heard from some folks that, now that Toyota's are made in the US, the difference in reliability isn't as great.  I'm not a car expert, though.

FlyJ

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Re: Family strongly against cash car idea
« Reply #4 on: May 22, 2017, 01:18:05 PM »
Best bet is always a 2 - 5 year old Honda, Toyota or the like with around 40k miles. It's the sweet spot for balancing reliability and cost/mile. That's always been how I buy and it has served me well.
Even if you can't afford to go that high, $7k can still get a quite solid car.
With only a few, rare exceptions, new cars and car payments are for chumps. A lot of old timers eschew used cars because back in their day cars only lasted 80K miles before needing a bunch of expensive repairs. When I was a kid in the 70's, everyone's car was in the damn shop all the time. It just isn't like that anymore.

My second option would probably be something along those lines. A bit more expensive but reliable and still more affordable than new.

RWD

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Re: Family strongly against cash car idea
« Reply #5 on: May 22, 2017, 01:26:21 PM »
I'll just address these objections you listed:
Quote
1) "will cost you more in the long run"
2) "more reliable"
3) "never know how it's been maintained"
4) "high maintenance cost"

1) Only if you buy something really unreliable and/or expensive to maintain. For example, MINI Coopers or Maseratis. Basic used Japanese sedans will almost never cost more than buying new in the long run.
2) Maybe, maybe not. With a new vehicle it hasn't been around long enough to know if there are any particular problems with that year/model. With a used vehicle you can search the internet for known issues so you know which cars to avoid and what specific things to look out for.
3) A third-party pre-purchase inspection will tell you a lot about what condition a vehicle is in and should always be performed. In addition, you could look for owners that include the service history paperwork with the sale. In theory you should also do a pre-purchase inspection before buying a new vehicle too, as sometimes they are damaged during transport and the dealers can still sell them as "new".
4) Only with high maintenance vehicles. And eventually a new vehicle will be out of warranty and have the same maintenance costs. See again my responses for 1) and 2).

I've purchased five used vehicles (two sight-unseen) and they have all been way cheaper than the depreciation on a new car. I did run into some reliability issues with my 15+ year old (1987) Toyota with 200k miles, but nothing too serious or expensive.

FlyJ

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Re: Family strongly against cash car idea
« Reply #6 on: May 22, 2017, 01:34:10 PM »
I'll just address these objections you listed:
Quote
1) "will cost you more in the long run"
2) "more reliable"
3) "never know how it's been maintained"
4) "high maintenance cost"

1) Only if you buy something really unreliable and/or expensive to maintain. For example, MINI Coopers or Maseratis. Basic used Japanese sedans will almost never cost more than buying new in the long run.
2) Maybe, maybe not. With a new vehicle it hasn't been around long enough to know if there are any particular problems with that year/model. With a used vehicle you can search the internet for known issues so you know which cars to avoid and what specific things to look out for.
3) A third-party pre-purchase inspection will tell you a lot about what condition a vehicle is in and should always be performed. In addition, you could look for owners that include the service history paperwork with the sale. In theory you should also do a pre-purchase inspection before buying a new vehicle too, as sometimes they are damaged during transport and the dealers can still sell them as "new".
4) Only with high maintenance vehicles. And eventually a new vehicle will be out of warranty and have the same maintenance costs. See again my responses for 1) and 2).

I've purchased five used vehicles (two sight-unseen) and they have all been way cheaper than the depreciation on a new car. I did run into some reliability issues with my 15+ year old (1987) Toyota with 200k miles, but nothing too serious or expensive.

Yeah, the objections seem somewhat stereotypical. I agree with your assessment. My dad literally just a called me to talk about it. The reaction is very irrational.
« Last Edit: May 22, 2017, 01:36:20 PM by FlyJ »

Smokystache

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Re: Family strongly against cash car idea
« Reply #7 on: May 22, 2017, 01:49:17 PM »
I like using Edmunds.com "True Cost to Own" to look at depreciation when I'm tempted to buy a new car. Edmunds (as just once imperfect source of information) says that you can buy a 2017 basic Honda Civic sedan for about $19k (plus taxes, etc.) and over the first 3 years it will lose about $6700 in depreciation. That's  over $2200/year or $185/month just in depreciation (not to mention the car payment). (And that's a very reasonable new car - don't get me started on SUVs).

I try to imagine how painful it would be to leave for work in the morning on the first day of the month and leave 2- $100 bills on the top of the car ... and on the way to work they just blow away. Every month for the first 3 years I owned the car. That makes depreciation on a new car more "real" to me. It's just money blowing away in the wind.

Now I know this isn't a perfect example that takes into account all the variables, but most people really underestimate how much money they lose in depreciation on their vehicles.

ysette9

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Re: Family strongly against cash car idea
« Reply #8 on: May 22, 2017, 01:54:48 PM »
I think this is a case where you need to thank your family members for their opinion, stop talking about your car buying thoughts, and manage your own affairs like an adult. I appreciate that family opinions hold weight and we want to share important decisions in life, but you have solid reasons for buying a decent used car and plenty of reasons to not buy a new car, so leave it at that.

FlyJ

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Re: Family strongly against cash car idea
« Reply #9 on: May 22, 2017, 02:05:14 PM »
I think this is a case where you need to thank your family members for their opinion, stop talking about your car buying thoughts, and manage your own affairs like an adult. I appreciate that family opinions hold weight and we want to share important decisions in life, but you have solid reasons for buying a decent used car and plenty of reasons to not buy a new car, so leave it at that.

Very true. I think the big decisions are often shared in my family, so everyone feels they have a say. The financial particulars of this decision aren't very evident if one isn't the type of person who reads MMM, so the idea of seeking family advice is probably moot. I did share a MMM article with my brother about car buying. Maybe it'll turn him on to the idea.


Flynlow

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Re: Family strongly against cash car idea
« Reply #10 on: May 22, 2017, 02:20:57 PM »
Is there a chance that your father and/or brother handle maintenance on the car for you?  If they're the ones who have to work on it, i could see steering you away from 100k mile cars.  Particularly since there are good 100k mile used cars, and really bad 100k mile cars, and not everyone can tell the difference.

I was recently quoted <$12k out the door for a brand new 2016 ford fiesta hatchback.  Thats a pretty smoking deal for 4 years warranty coverage and expected 200k mile future life.  If it were me, i would consider that vs. a used 100k mile car for $6-7k that you suggested.

beltim

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Re: Family strongly against cash car idea
« Reply #11 on: May 22, 2017, 02:39:38 PM »
To some degree, car markets are still local (somewhat less so as eBay and shipping cars becomes more popular, but still).  Every time I looked at the market for new versus used Camrys and Corollas, the two best deals were:
1) Cheap, old as dirt models
2) Brand new

In the markets I looked at, the depreciation was pretty much linear for the first 100k miles or so, and all else being equal, a new car is more reliable and requires less repairs than one with 100k miles (insurance was a small difference if paying in cash).

However, this was not the case in all markets, and it wasn't the case for all models.  I think anyone who says, "XXX is always the beat deal" is just limited in experience.  Without knowing the model that you're looking at, it's hard to say if $6k a 100k mile vehicle is better or worse than new, or something in the 40k range, or whatever.

Laura33

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Re: Family strongly against cash car idea
« Reply #12 on: May 22, 2017, 02:48:20 PM »
Q:  Are you female?  If so:

Dads worry -- it's their job.  :-)  And brothers pick it up from dads.  Your dad's job is to worry about you being stranded alone somewhere at night and murdered while waiting for a tow truck.  He would rather you blow all your money than risk that worst-case outcome -- he would probably buy you a tank if he could, with actual functional firearms.

And (whether you are male or female) your job is to weight the actual likelihood of that worst-case outcome against the real costs of the spanky new car to your budget and long-term plans, and to decide accordingly.

Of course, if he gives you more grief about it, you could always ask when you can expect the check in the mail to cover it.  :-)  Otherwise, I am guessing you can get a fairly recent model Hyundai Accent or Ford Focus for your budget, and it will do just fine for several years.

FlyJ

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Re: Family strongly against cash car idea
« Reply #13 on: May 22, 2017, 04:10:05 PM »
Q:  Are you female?  If so:

Dads worry -- it's their job.  :-)  And brothers pick it up from dads.  Your dad's job is to worry about you being stranded alone somewhere at night and murdered while waiting for a tow truck.  He would rather you blow all your money than risk that worst-case outcome -- he would probably buy you a tank if he could, with actual functional firearms.

And (whether you are male or female) your job is to weight the actual likelihood of that worst-case outcome against the real costs of the spanky new car to your budget and long-term plans, and to decide accordingly.

Of course, if he gives you more grief about it, you could always ask when you can expect the check in the mail to cover it.  :-)  Otherwise, I am guessing you can get a fairly recent model Hyundai Accent or Ford Focus for your budget, and it will do just fine for several years.

Not female, but my dad is still quite the worrier. Considering our ages, it won't be long before the our roles are reversed.

aceyou

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Re: Family strongly against cash car idea
« Reply #14 on: May 22, 2017, 06:59:21 PM »
I've posted on this many times in different threads over the last year, but I really think a 5k used Prius is just about the absolute sweet spot for minimizing total cost of ownership and providing a nice reliable ride.  My specs:

2007 prius
depreciation per year: ~$500 (but goes down each year a bit)
insurance: $360/year
maintenance/registration: ~ $500/year (actually it's been less)
gas: ~ 300/year tops

Total cost of ownership: $1600-$1700

And it looks very nice and is incredibly reliable. 

surfhb

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Re: Family strongly against cash car idea
« Reply #15 on: May 23, 2017, 09:21:27 AM »
The taxes and drive off fees for a new Honda Civic is more than it would cost to put a brand new motor in my truck!   

Not to mention the monthly payments and depreciation


Do the math, brother.


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teamzissou00

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Re: Family strongly against cash car idea
« Reply #16 on: May 23, 2017, 09:37:38 AM »
How easy and what is the cost to replace battery issues on a prius?

FlyJ

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Re: Family strongly against cash car idea
« Reply #17 on: May 23, 2017, 09:41:04 AM »
I've posted on this many times in different threads over the last year, but I really think a 5k used Prius is just about the absolute sweet spot for minimizing total cost of ownership and providing a nice reliable ride.  My specs:

2007 prius
depreciation per year: ~$500 (but goes down each year a bit)
insurance: $360/year
maintenance/registration: ~ $500/year (actually it's been less)
gas: ~ 300/year tops

Total cost of ownership: $1600-$1700

And it looks very nice and is incredibly reliable.

Yeah. Prius is top of my list.

ketchup

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Re: Family strongly against cash car idea
« Reply #18 on: May 23, 2017, 10:01:51 AM »
I've posted on this many times in different threads over the last year, but I really think a 5k used Prius is just about the absolute sweet spot for minimizing total cost of ownership and providing a nice reliable ride.  My specs:

2007 prius
depreciation per year: ~$500 (but goes down each year a bit)
insurance: $360/year
maintenance/registration: ~ $500/year (actually it's been less)
gas: ~ 300/year tops

Total cost of ownership: $1600-$1700

And it looks very nice and is incredibly reliable.

Yeah. Prius is top of my list.
I'd agree with the sentiment, but I've found Priuses at least in my area to be overpriced for the mileage.  Lots of 2007-2008 models with 250-275k miles for the same price as a 2010 Hyundai with 80-100k, which I would say is pretty close to best bang-for-buck among new-ish cars right now.  Hyundai cars have gotten way better than their 90s reputation (if not quite matching Toyota/Honda), but their depreciation is still very steep so 5-8 year old models are dirt cheap.  My boss got a 2010 Accent with 60k miles last year for $5k.

Mgmny

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Re: Family strongly against cash car idea
« Reply #19 on: May 23, 2017, 11:42:56 AM »
Not sure where you live, but in MN they base license registration taxes/fees on the year of the vehicle and MSRP. For this reason alone (and insurance), i would try to buy the oldest, least expensive "reliable" car possible. For example, a 2018 $30k automobile would pay $400 a year in registration fees (and probably very high insurance) whereas a 2007 car with an MSRP of $99k only pays $35 year.

That's a $370 a year difference just in registration fees!

FlyJ

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Re: Family strongly against cash car idea
« Reply #20 on: May 23, 2017, 01:52:12 PM »
Turns out my particular Accord has a non-interference engine (3.0L V6), so the engine wasn't damaged when the timing belt broke. She'll live to drive again. $1100 for timing belt, water pump and cover will hopefully get me another 15 to 20k miles.



ysette9

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Re: Family strongly against cash car idea
« Reply #21 on: May 23, 2017, 03:48:28 PM »
Yay!

SwordGuy

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Re: Family strongly against cash car idea
« Reply #22 on: May 23, 2017, 05:40:47 PM »
Good news on the repair cost.

While the discussion is still fresh in your mind, take every single argument against buying a low to medium mileage used car and compare it against the standards mentioned in this article:

http://www.mrmoneymustache.com/2012/12/26/cure-yourself-of-tiny-details-exaggeration-syndrome/


And remember, no matter how new that car is when you buy it, you'll be driving a used car after the first year.  Keep that in mind.

FlyJ

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Re: Family strongly against cash car idea
« Reply #23 on: May 23, 2017, 08:23:56 PM »
Good news on the repair cost.

While the discussion is still fresh in your mind, take every single argument against buying a low to medium mileage used car and compare it against the standards mentioned in this article:

http://www.mrmoneymustache.com/2012/12/26/cure-yourself-of-tiny-details-exaggeration-syndrome/


And remember, no matter how new that car is when you buy it, you'll be driving a used car after the first year.  Keep that in mind.

Thanks for that. I haven't visited the blog a whole lot lately, and need to remember how great a motivator it is.
« Last Edit: May 23, 2017, 08:38:21 PM by FlyJ »

threefive

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Re: Family strongly against cash car idea
« Reply #24 on: May 23, 2017, 08:32:55 PM »
I guess I'll be the one person to suggest that the new car isn't always a completely dumb move.

First, I have absolutely terrible luck/experience/whatever with picking used vehicles. Several used cars have ended up costing me more over the holding period than the new cars I have bought. There are people that will tell you to pick so and so and look out for such and such, and I've read all of that and I've still bought lemons. I can even do my own repairs fairly well. I just keep getting crappy used cars. I say this to set the context of my decisions. I'm probably statistically more likely to come out monetarily ahead buying used, but not really by that much compared to the stress I've endured with crappy cars over my life. Others have had good luck or are more skilled.

We have only one car. I live in a town with ZERO public transportation options, no sidewalks, and death-wish cycling roads. I still bike to work, hence the 1 car. That one car has been new twice in a row now, and I'll probably never go back to used. It's always a small ~$16-18k new car. The dealer literally pays me to finance. 0.9% rate over 5 years = a $1000 incentive. The loan cost about $400-500 total over the term. I'd pay cash otherwise. 5 year full warranty. I now have a well known, fixed cost over those 5 years. Repairs are handled by the dealer on the manufacture's dime. End of 5 years, sell and repeat. At this price point, the depreciation hit is relatively small, the repairs are non-existent, and I have zero concern that the car will work when I walk out to the driveway. I never have to worry about what a previous owner did or didn't do. I don't even have to spend much time worrying about "finding a deal," since the price variation for a new compact car is tiny, with dealers all within $500 of each other. It also makes my wife more happy. Not that she cares about fancy new cars. We're getting base model compacts. She just never worries about the thing, and I spend maybe one month every 5 years even thinking about cars.

All of that said, I have a high salary, otherwise live frugally, and we have a decent size stash with zero non-mortgage debt (well, except for that car loan). I'm probably paying a luxury tax on that piece of mind and freedom from thinking car thoughts. I'm happy to pay it and I can afford it.

nouveauRiche

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Re: Family strongly against cash car idea
« Reply #25 on: May 23, 2017, 08:53:38 PM »
When we took our new-to-us Prius to our mechanic for the first time (for an oil change and to have him check it over), he said "If all cars were Priuses, I would retire."  (i.e.  Nothing goes wrong with them)

Edited to add:  Glad you were able to fix your Accord.  That seems like the best option.  I expect you'll get more than 20k more miles out of it...
« Last Edit: May 24, 2017, 11:25:04 AM by nouveauRiche »