Author Topic: Renting vs buying a cheap used car  (Read 2901 times)

nikhilm

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Renting vs buying a cheap used car
« on: March 15, 2013, 09:45:11 PM »
I could use some logical/mathematical advice about the effectiveness of buying a car.

My commuting and around the neighbourhood tasks like groceries are all done by bicycle and public transport. However I do enjoy hiking and other adventure sports and usually have to either carpool or rent a car. Effectively, my use of a car is about 5 times a month. It seems like something like Zipcar seems the best choice, but the catch is that the closest zipcar is 6 miles away, and the other car rentals have inconvenient timings (only 2 day rentals on weekends, closed on sundays and so on). This means that even if I rent a car I've to plan it around the train which runs only every hour. In addition I can't go out late or really early because the train stops running so there is no good way to get to/from the zipcar.

I can afford a used $7000-8000 hatchback, paid in cash. I'll drive maybe 6000 miles a year, so even a car with plenty of miles should last me for a few years. The only part that is trouble is that being under 25 and having a very new US driver's license (although I did drive before), my insurance costs will be to the tune of $140/month (per quote by state farm). So does it make sense for me to buy a car or should I stick to the pretty inconvenient but infrequent renting?

Thanks!

Reepekg

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Re: Renting vs buying a cheap used car
« Reply #1 on: March 15, 2013, 10:12:44 PM »
The mathematics of a cheap used car can be very favorable vs. renting, IF done correctly. Three years ago I moved from Europe back to the states and was renting a lot. I ended up just buying a $2400 '98 accord (which had a great engine but had clearly been in a low-speed accident with a big dent), using it off and on, and selling it 2 years later for $1800. It was particularly awesome because since it already had body damage, I could get the cheapest liability-only insurance available and not worry about anything happening to it. (I can't tell you how much fun it is to not let people cut you off because your car is nowhere near as valuable as theirs :) )

I have 2 recommendations. First, your price range is too high. You want to buy something very cheap for whatever reason (older model, etc.) but which runs really well. When you go to resell it, it will get approximately the same price as when you bought it since it the equation is still running engine + undesirable car = baseline value. If you buy something in the $7-8k range, you'll eat a few thousand in depreciation whenever you sell it. Second, get the bare minimum of insurance and self-insure with the idea that damage to your beater isn't worth fixing.

Or third, just bike over to the zipcar and throw the bike in the trunk! It's only 6 miles.
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Paul der Krake

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Re: Renting vs buying a cheap used car
« Reply #2 on: March 16, 2013, 06:27:06 AM »
On the insurance price: talk to an agent and see what they can do if you can prove you have prior driving experience. Their online forms are useless if you ever have a slightly odd situation. I was also quoted $150 a month by virtually every company when I first got a US license at roughly your agejust a few months back (moved here from overseas), but after some persuasion I was able to make it $30, for liability only though.
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CanuckExpat

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Re: Renting vs buying a cheap used car
« Reply #3 on: March 16, 2013, 06:50:32 PM »
In your situation, the fact that the Zipcar price already includes insurance and gas sounds like it might be nice. When you only use Zipcar how much do you spend in a month? I know Zipcar can be expensive for full day trips compared to renting, but six miles is also easily doable by bike :)

GoStumpy

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Re: Renting vs buying a cheap used car
« Reply #4 on: March 16, 2013, 07:25:43 PM »
I also think a cheaper car is the solution for you.... I drive ~$2500 cars almost exclusively, and they've all been reliable.  Bare minimum insurance is nice, too! 

I just picked up a 2005 Nissan Altima with 120k miles for $3100, so there ARE good cars out there for less than half of what you thought you'd have to spend :)
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nikhilm

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Re: Renting vs buying a cheap used car
« Reply #5 on: April 06, 2013, 10:20:51 AM »
So one thing I forgot to point out.

For weekend rentals I use enterprise which is just a mile away and also comes out cheaper for longer duration. They've really good weekend deals where the base car rental is $30 for all three days (still about $120 a weekend with young driver fees though :/)
Zipcar is expensive for anything over 4 hours, and usually I don't need the car for errands, I need it for weekend trips, so I don't use zipcar a lot.

I'll go and see what an agent says about insurance rates, and if non-owner's car insurance would be cheaper for me than paying Enterprise for SLI every time.

I'm in the Bay area and all the sub 3k cars here on craigslist seem to be really shitty. I want to be frugal but not drive a banged up car, or some model that looks really bad/old :) Cars I'd be willing to drive start from almost 5k. The cheap ones also tend to be sedans, whereas I'd prefer a hatchback.

nikhilm

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Re: Renting vs buying a cheap used car
« Reply #6 on: April 06, 2013, 10:22:32 AM »
Also I don't know anything about cars at all (other than driving them), since my family got one pretty late and most of my driving years I spent away at college so that I never had to do any maintenance on the family car. What would be good starting points to learn about basic car maintenance, and spotting obviously bad deals when looking for used cars?

chucklesmcgee

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Re: Renting vs buying a cheap used car
« Reply #7 on: April 06, 2013, 03:02:49 PM »
I'd suggest waiving collision coverage and any add-ons. I have a $1,000,000/$300,000 policy with USAA and pay around $45/month.

Mr Mark

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Re: Renting vs buying a cheap used car
« Reply #8 on: April 07, 2013, 02:15:53 PM »
We have a really old but totally rust free 1989 suburban diesel. 2k after fixing up. No-one pulls out in front.
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Reepekg

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Re: Renting vs buying a cheap used car
« Reply #9 on: April 08, 2013, 05:40:20 PM »
Also I don't know anything about cars at all (other than driving them), since my family got one pretty late and most of my driving years I spent away at college so that I never had to do any maintenance on the family car. What would be good starting points to learn about basic car maintenance, and spotting obviously bad deals when looking for used cars?

I can recommend http://www.amazon.com/Popular-Mechanics-Complete-Care-Manual/dp/1588167232 from Popular Mechanics.
It is written with the complete beginner in mind and will teach you day one things like changing your windshield wipers or tail lights, yet it also includes really advanced topics like fixing your cruise control, so you can grow into it. I particularly like that it tells you how complicated (easy, moderate, hard) things are ahead of time so you can judge how much time you have and if it might be worth taking it to a pro instead.

Other than that, find a friend who loves talking about cars to show you some things. I work with automotive engineers aka 'car guys' who won't shut up about that one time their timing belt did this and that and every step they took to fix it. I also considered taking an introduction to automotive technology class at the local community college, but didn't find the time.

If when buying a used car you avoid rust, white or thick black smoke, an engine that bangs or squeals, check engine lights, and brakes that don't make the car stop like you'd expect... then you're ahead of the game. Technically they say a reasonable seller will let you take a used car to a mechanic before buying, but I know the craigslist world isn't always like that.
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