Author Topic: I need car buying advice  (Read 5891 times)

atap

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I need car buying advice
« on: January 12, 2015, 03:57:56 PM »
Hi Team,

I did something really dumb a year and a half ago -- I financed a new car. Even at the time, in my heart, I knew it wasn't a great choice. I was trying to be more of an adult I guess.

As it stands I owe about 12000. Payment is a little under 300 a month. Ouch!

The car is worth 12000 - 14000 depending on if I sell it private party (not the easiest because of the loan) or to someone like carmax.

All told this is going to be about a $10000 mistake. 5000 down, plus a year and a half of loan payments plus increased insurance.

Anyway, my real question is about used cars. I have to drive to work right now because of the distance and poor biking infrastructure, so I need a daily driver. 25 miles all told every day. I also need a station wagon to get my upright bass to weekend gigs.
I can pony up about 5000 for a used car. Any suggestions on what to look for? I'm in Austin, TX.

Or should I buckle down and pay it off as fast as I can? I have 10000 in student loans on top of all this.

I know I'm in a bad spot. I can't quite figure out where to go.
Thanks for your help and advice!

ysette9

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Re: I need car buying advice
« Reply #1 on: January 12, 2015, 04:06:06 PM »
What kind of savings do you have? What about your income? How fast can you pay off this car and your student loans? If you can pay them both off in a short amount of time and you plan on keeping this car for a long time, it might be worth it to just keep it.

Otherwise, bite the bullet and sell it private party and get something cheaper. There are plenty of options. I don't know the exact dimensions of a bass (my instruments are quite a bit smaller!) but some small wagons off the top of my head are: Toyota Matrix, some Subarus, VW Jetta wagon, some of the Scions. Heck, I even see some 1990s BWM 3-series wagons out there in good condition. Occasionally there is a Honda Accord wagon, but those seem to be pretty rare.

This_Is_My_Username

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Re: I need car buying advice
« Reply #2 on: January 12, 2015, 04:07:12 PM »
You definitely need to sell the car and buy a cheaper one.  You are smart enough to solve the issue of the car loan while concurrently selling the car.

I'm not sure what types of cars are available in your country, but the main things to look for are (1) reliability, and (2) fuel efficiency. 

atap

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Re: I need car buying advice
« Reply #3 on: January 12, 2015, 04:50:53 PM »
Savings are about 4000 right now. I have an automatic pension contribution every month, so that will serve me well later down the line. Income is about 28000 after taxes and retirement. Rent and utilities are 650 a month. Student loan payment 120. If I pay off the car and the loans it will take me about 2 years, maybe 2 and a half. The car is a Hyundai, so it has a ten year warranty if I keep it. The mileage is great -- over 30 mpg city. There are a few Subaru on Craigslist but they all have 120k+ miles and get worse mileage.

Thanks for the input

neo von retorch

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Re: I need car buying advice
« Reply #4 on: January 13, 2015, 09:14:22 AM »
What area do you live in? I'd list the car now to start the ball rolling, and talk to your bank about the paperwork you need to sell the car. They will likely issue a form which you take along to the sale which ensures that as the money is transferred from buyer to seller, the bank gets the amount owed to them. Since you do not have the title and the bank does, the form is needed for the notary to complete the sale for  you.

Then depending on the area you're in, we can help you find car options that should work. What are the dimensions of the bass? I'm thinking, for example, of the Honda Fit which has fold down rear seats and the front seat can get out of the way pretty well. I once loaded up a Fit with all the wood and materials from an Ikea king-sized bed, including the rolled up memory foam mattress. With some diligence, you could likely find a 2007-2008 with 60-80k on it for $7-8k. May still need a small loan but rates are great so it's probably forgiveable. If you get $14k private party and you owe $12k, you'll have just about all the money on hand. The gas mileage on a Fit is ~32-34 overall. Better than the AWD Subarus (up until the past year or so when they made some nice advancements.) The Fit is just one example - there are others that were available before 2007 so could be found for a little less cash.

Forcus

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Re: I need car buying advice
« Reply #5 on: January 13, 2015, 11:33:43 AM »
How about a Mazda 3 hatchback? I've seen them coming up for $5-7k, under 100k miles.

Jack

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Re: I need car buying advice
« Reply #6 on: January 13, 2015, 11:55:22 AM »
The good news is that your Hyundai wagon (Elantra GT I assume...?) is already the right car. The bad news is that it's too new. Go look for an older one, figure out how long you'd be planning to keep it (vs. how long you'd be planning to keep your current one), figure out the cost per mile on both and get whichever turns out cheaper.

Eric

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Re: I need car buying advice
« Reply #7 on: January 13, 2015, 12:18:07 PM »
How about a Mazda 3 hatchback? I've seen them coming up for $5-7k, under 100k miles.

For real?  Buy one for me and I'll fly out and drive it back to the West Coast.  I'm almost serious.  Those go for twice that much out here.

neo von retorch

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Re: I need car buying advice
« Reply #8 on: January 13, 2015, 01:06:47 PM »
I live near Philly, PA and for the most part $7k is right around the 100k mark on a Mazda 3, but there are some good examples out there:

Quote
2005 Mazda Mazda3 s $6,495 63,361 mi. Silver hatchback

Sadly this one is an automatic :'(

LadyStache

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Re: I need car buying advice
« Reply #9 on: January 13, 2015, 02:24:32 PM »
I would keep the car with the plan to keep it for a very long time. It's not like you went out and bought a luxury car. You got something you thought would be reliable, with good gas mileage, that suits your needs (able to transport your instrument).

atap

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Re: I need car buying advice
« Reply #10 on: January 13, 2015, 04:04:19 PM »
I am wavering now, but I appreciate all the advice. It is an Elantra GT, and one reason I bought new is that they didn't make them until 2013. The warranty is the other reason. 10 yr, 100k. It is a manual transmission, so I get points for that, right? My plan from the get-go was to drive this thing for at least 15 years. Basically until it falls apart.

Quick and dirty numbers, assuming 200k miles per car
12000/185000 = 6.5 cents/mile

Honda fit on Craigslist
6500/104000 = 6.3 cents/mile

I figure gas mileage is about the same, so I left that out. The only difference would be the insurance premium and the warranty. I'm not sure if I'm putting to much emphasis on that, but I like having it. Anything else I need to factor in? At this point I'm leaning towards throwing everything I have at the loan and paying it down as fast as possible.

Also, if anyone knows anyone near Austin, TX there is a Honda fit on Craigslist now. (I don't know if I am allowed to link)
08 Honda Fit Sport - $6500 (South austin)  has 96k miles!

Spec7re

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Re: I need car buying advice
« Reply #11 on: January 13, 2015, 05:19:44 PM »
That fit is damn tempting.  I just sold my Jeep and I'm motorcycle only right now.  Trying to decide if I want to buy a duplex or a car first.

atap

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Re: I need car buying advice
« Reply #12 on: January 13, 2015, 05:33:07 PM »
Tell me if this is crazy?!

I've have an offer from capital one right now to write a check on my credit card at 0% interest for one year. The catch is there is a 2% fee. If I write myself a 9000 check I can pay off the car right now. The 2% fee is 180, but I will be able to drop my insurance to a high deductible plan and save 30-35 a month, so I get that back. The loan is at 2.15%, so a small savings there too.

Then! I can focus on my student loans, and then the car. When 12 months is up, I will transfer the balance to a new card. Not the best on my credit score, but I'm not going to need credit for a while.

Am I missing something?

AlanStache

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Re: I need car buying advice
« Reply #13 on: January 13, 2015, 05:53:16 PM »
What would the rate be if you could not transfer the balance in one year?  How bad is the worst case here?

"Quick and dirty numbers, assuming 200k miles per car
12000/185000 = 6.5 cents/mile"
Does that 12k include interest until it is paid off?

The 4k is your emergency fund now?

atap

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Re: I need car buying advice
« Reply #14 on: January 13, 2015, 06:19:46 PM »
Worst case is pretty bad. 20.9%.  However, I am confident I can get a balance transfer based on the slough of offers I get in the mail. My emergency fund is 6k -- I would leave 2-3k in the bank. No worries of job loss as I am civil service (knock on wood).

The cost per mile didn't include interest. Duh on my part. Comes out to 7 cents per mile with interest, assuming I don't pay it off early.

AlanStache

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Re: I need car buying advice
« Reply #15 on: January 13, 2015, 06:32:32 PM »
What rate is the student debt at?  and that is 10k? 

Is there a reason to keep that much emergency fund when you have a car and student debt?

Can you work out the total cost in dollars 15 years out for the three cases?  1) continue doing what you are doing, 2) CL car, 3) pay off current car with CC (assume transfer works out).  With that warranty maybe some lower longer term maintenance assumptions will  make the numbers more interesting. 

atap

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Re: I need car buying advice
« Reply #16 on: January 13, 2015, 08:08:24 PM »
I haven't had that much emergency fund until about a month ago. I made a bunch of extra money over the holidays, got some money for Christmas and my gf paid me back money she owed me. So, I'm trying to figure out where to put it to help the most. The student loans are at 4.75%

I'm not really sure how to estimate maintenance costs. I saw 100 a month, but that seems high, especially when taken over 15 years (18000). Obviously I wouldn't be spending that much on a CL car. I'd just replace it. Any pointers on that part?

Thanks again!

JLee

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Re: I need car buying advice
« Reply #17 on: January 13, 2015, 08:20:45 PM »
Tell me if this is crazy?!

I've have an offer from capital one right now to write a check on my credit card at 0% interest for one year. The catch is there is a 2% fee. If I write myself a 9000 check I can pay off the car right now. The 2% fee is 180, but I will be able to drop my insurance to a high deductible plan and save 30-35 a month, so I get that back. The loan is at 2.15%, so a small savings there too.

Then! I can focus on my student loans, and then the car. When 12 months is up, I will transfer the balance to a new card. Not the best on my credit score, but I'm not going to need credit for a while.

Am I missing something?
I wouldn't do that - if you did manage to wreck your car without full coverage (or it was stolen, etc) you'd be looking for a replacement while still owing the balance on the card. I would pay it off in full before dropping coverage.

RWD

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Re: I need car buying advice
« Reply #18 on: January 13, 2015, 09:22:39 PM »
At 2.15% interest I'd just keep the car and make minimum payments. It's efficient enough and cheap enough that upkeep, fuel, and depreciation aren't bad enough to justify switching cars. The worst part of the depreciation is already done, selling it now won't recoup that. Keep it for at least the ten year warranty period and you'll have a hard time finding a much cheaper car.

takeahike

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Re: I need car buying advice
« Reply #19 on: January 14, 2015, 08:21:59 AM »
My used car has cost me about $100/mo since purchasing it.  I purchased it with 100k miles on it.. and it's a car known for expensive parts. All in all the $100/mo in cost over 10 years for a good used car is probably accurate... this includes tires (+winter tires) regular maint. + purchase price +wear & tear parts.

I bought a new car in 96 and kept that thing for 16 years. It also had the 10yr/100,000 warranty at the time and that's why i bought it. I don't regret it. The car was reliable and never left me anywhere. (i just wish I still had it, because now my daughter could be driving it.)

I've done it both ways. Had the new car and kept it forever, and the used car and kept it forever.   I sold the '96 car for some stupid reason for $300 because it finally started having electrical problems.

OH, factor in your property tax expense on the new car vs. used car in your numbers.. and the cost of insurance on new vs. used. I pay about $400/yr on my used car, and our newer car is $1200/yr. (You'll still want to have full coverage on your new car for awhile. Freaky stuff happens.)

Also, put your money towards student loans. If you put that money towards your car, there is no guarantee that in case of an accident/total that you'll get all of your money back. Often the insurance will pay off the remaining balance owed, and not what you have into it.. and sometimes you'll even owe money depending on the type of insurance you have. I know this from recent experience. I purchased a newer 2 yr old car a couple of years ago, full coverage. The car was flooded in a freaky storm while sitting in a parking lot. Totaled.. and the insurance covered what I owed luckily! But I lost my downpayment, and any payments that I had put into it. Put your pay-off money towards something that can't be totaled, stolen or broken.
« Last Edit: January 14, 2015, 08:32:00 AM by takeahike »

Forcus

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Re: I need car buying advice
« Reply #20 on: January 14, 2015, 10:27:50 AM »
How about a Mazda 3 hatchback? I've seen them coming up for $5-7k, under 100k miles.

For real?  Buy one for me and I'll fly out and drive it back to the West Coast.  I'm almost serious.  Those go for twice that much out here.

For real! In fact there were two individual ones, one for $5,200 and one for around $6,000 for sale here in the last month. The one for $5,200 was super clean, no rust except a little on the lower door seams on the inside of the doors. It did need front wheel bearings and the tires had plenty of tread but seemed noisy. I am still kicking myself for not grabbing it. It was sold within two weeks and the one for $6k sold within a week. The one thing though is rust can be an issue with cars here which you might not have there, depending on your location. Specific to Mazda 3's they very often get rust through on the rear quarters, the bumper chafes the paint where it is bolted right behind the wheelwell. Of somewhat less important but still hyper annoying is the rear subframes rust pretty bad on these and other cars that share the same chassis (S40 and Focus). They are replaceable but basically the bolts and bushings seize and deteriorate so much that if you want to replace bushings or get an alignment, often the bolts have to be cut.

I will say in reference to the above that I hadn't seen a lot of them in similar condition or price locally so it might have just been a rarity. Again making me kick my own a$$ for not buying that one for $5,200.

This was posted the other day, but it's not a hatch. http://peoria.craigslist.org/cto/4828868256.html

I've also noticed that there were (as of the last time I looked, maybe 6 months ago) many left over old style Mazda 3's new on dealer lots and they were blowing them out for Nissan Versa prices. I think that also depressed the prices on used ones a bit as well.

Forcus

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Re: I need car buying advice
« Reply #21 on: January 14, 2015, 11:04:02 AM »
Well here is my thought.

Completely divorce / compartmentalize the sunk costs. They are gone, forget about it.

So what you are looking at now is a 1-2 year old manual transmission sport wagon with low miles, a long warranty, low cost of operation, and good MPG for $12k that you know has been well maintained and driven nicely. That's not bad.

I personally would not trade that for an unknown quantity car for 7-8k with 100k miles. I've bought cars similar to that with clean Carfaxes and found out later they had damage. Or had been detailed very well but with smoke and other odors that came out later, etc.

The Fit you found isn't a bad car BUT it is a different car. I believe they get about the same MPG as your GT but I believe the Fit is also quite a bit smaller. Not that that's bad, but for my own situation I wouldn't trade down unless there was a compelling reason (major cost savings, easier parking in a big city, etc.).

Since you have no current way to eliminate the commute, and the savings on downgrading to the higher mileage car is moderate at best, I'd stick with it. Again, that is just my thought. If you do not work on your own cars that further bolsters my position as you'll need to allocate 2-3x in estimated parts costs to cover labor for repairs on a used vehicle.

Now on to your balance transfer question, I wouldn't do it. I'd throw ALL the money I could possibly spare at the student loan unless it is a very low rate and your money could best be used elsewhere. That's not to say that balance transfers are bad but I'm assuming your student loan is much higher than your car loan.

One other thing to think about, 12-14k might be hard to get for your car. Manual transmission wagons are used car lot lepers. I recently passed on a 2014 Fiesta, loaded, with 18k miles and a manual transmission for $11.5k (still thinking on that one). They were practically begging me to take it. I see you only getting offered maybe $10k by Carmax but that's just my thought.

Jack

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Re: I need car buying advice
« Reply #22 on: January 14, 2015, 12:11:12 PM »
Completely divorce / compartmentalize the sunk costs. They are gone, forget about it.

So what you are looking at now is a 1-2 year old manual transmission sport wagon with low miles, a long warranty, low cost of operation, and good MPG for $12k that you know has been well maintained and driven nicely. That's not bad.

I personally would not trade that for an unknown quantity car for 7-8k with 100k miles.

...

One other thing to think about, 12-14k might be hard to get for your car. Manual transmission wagons are used car lot lepers. I recently passed on a 2014 Fiesta, loaded, with 18k miles and a manual transmission for $11.5k (still thinking on that one). They were practically begging me to take it. I see you only getting offered maybe $10k by Carmax but that's just my thought.

+1

atap

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Re: I need car buying advice
« Reply #23 on: January 14, 2015, 12:40:05 PM »
Forcus,

Thanks a ton. That was the logic i was having a hard time pinning down. I got attached to the idea of ditching the car as a symbol of my newly developing financial badassity. I will hang on to it. On to the next items: switch to Cricket, cancel cable in 2 months when the contract is up, move closer to work, fix up my bike. I'm going to throw all my extra money at the student loans. 10k at 4.75%. Im giving myself one year max to pay them off.
Thanks again to everyone who weighed in.

D Bopp

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Re: I need car buying advice
« Reply #24 on: February 03, 2015, 09:06:50 PM »
Atap, it's funny. I too, currently have about 12K left on my 2013 Hyundai (Sonata though), have 6K in Student loans, and am also a bass player.  My wife is currently driving the Sonata (w my 2 young kids). It has tons of air bags and I feel safer with her driving the kids around in it.   My daily commuter is a 2005 Honda Element w 178K miles on it. It's great for hauling my gear to gigs.

I don't really have any advice for you, but wanted to mention I am kind of in the same boat as you. Bought the Hyundai before I decided to get my finances in order. But I think the best thing to do is to just pay off the new car and drive it forever. My current plan is to give the car to my daughter when she is old enough to drive (13 years from now). But who knows, maybe I'll still be using it!