Author Topic: Am I absolutely insane to buy a new car?  (Read 22053 times)

randymarsh

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Am I absolutely insane to buy a new car?
« on: December 04, 2012, 09:43:05 AM »
I can't believe I'm considering this, but how dumb would it be to buy a 2012 Honda Civic?

Background: I'm a junior in college, with 3 semesters left. I commuted to school freshman year in my 1996 Ford Explorer; spent around $200-$300 a month in gas. Studied abroad last fall and then decided I needed to be closer to my campus when I got back, so I moved to my own apartment. Used student loans to fund rent, bills, etc. 10 months later and I'm realizing what a dumb move I made. I'm planning to move back home and commute for the rest of school. I need a new car though. I'm at 220,000 miles and can't be missing class because my car needs yet another repair.

I started looking at used, but then my dad (who is not a new car person) suggests looking at new just to compare prices. So my (probably flawed) logic:

1. The price difference between new and used isn't that much. No matter what, I want less than 50,000 miles, preferably 40. This car is something I plan to drive until I can't anymore. $15,000 gets me a Civic with around 30,000 miles. A few thousand more and I'm in new territory.

2. Reliability is king. I'm at the point where I don't know if the Explorer is going to start the next time. I want a good 5 years of nothing but oil changes and tire rotations. I'm not a car guy and have no desire to be. I may change my own oil, but that's about it. I'll be driving at least 9,000 miles a year just on school. This car is going to get used.

3. Qualified for .9% financing vs. 3%-4% I'd pay on a used car.

4. My dad pays for my insurance. I may have to pay for the price difference (around $30 month) but he's pretty generous so that may not even happen.

5. Both my parents would prefer I have safety features like traction control and stability control, plus side airbags. A major part of my commute is on a dangerous section of the highway. People in the area routinely refer to it as a deathtrap, especially during the winter. Getting those features on previous model years requires going to higher trims, pushing the price even closer to new. I know how MMM feels about purchasing safety...but I'm not there yet.

6. December is the best time to buy any car, but new I think especially because dealers want to hit sales targets and reach bonus levels.

I realize that if I go new, I'm spending more than I absolutely have to. But I'm also getting more. Trouble free miles and full warranty coverage mainly. Those are worth something right?

Financial information:

Income: $500 net a month paycheck during the school year ($700 in summer), plus a couple thousand a year from my blog (pushing to increase this in 2013). Also been doing some side computer work for family friends. Safe to say I'll earn at least $10,000 in 2013. I can also tap student loans when I need to.
Retirement: Currently 10% of my gross pay is put into a 2050 Target Date Fund.
Savings: Destroyed since I moved out, but I'm trying to rectify that mistake.

Does new make any sense in my situation?

iamlindoro

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Re: Am I absolutely insane to buy a new car?
« Reply #1 on: December 04, 2012, 10:01:06 AM »
Short answer:  Yes.  You are insane.

Long Answer:  You are not even in the job market yet.  You are in debt, and you are considering financing a new vehicle.  Your worst offense was the following:

I can also tap student loans when I need to.

HOLY SHIT, NO YOU CAN NOT.  No. NO NO NO!  You do not need a car with stability trac, with side airbags, with electric butt warmers, and you most definitely don't need a new car.  You are considering putting yourself 30-35 full paychecks into debt, plus interest.  You do not earn near enough to justify a purchase like this, and even if you were making a lot, it would still be a foolish choice. 

Go read the MMM article on getting a vehicle.  The fixation on mileage is an awful idea.  Get on CraigsList, set a top price of $8,000, and DO NOT imit yourself only to the civic.  You are basically painting yourself into a corner with requirements that are not necessary.  You need to go from a unreliable beater to a reliable beater, not from an unreliable beater to a new car.

PAY CASH.

DoubleDown

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Re: Am I absolutely insane to buy a new car?
« Reply #2 on: December 04, 2012, 10:10:53 AM »
And please tell me again why you need to move so you can drive 9,000 miles a year (just to school) on a self-described "death trap, particularly in winter" highway?

Why would the alternative of sharing an apartment with roommates or renting a room in a house cost more than all the money you'd spend on the car, insurance, gas, maintenance, etc.?

I don't know where you live, but I'd be surprised if you couldn't find housing within walking distance of your campus for something like $400-500/month or less. Utilities shared with three other roommates, as an example, should cost very little.

Seems to me you'd be better off sharing a place, being close enough to school to walk or bike, and not taking your life in your hands every day on that "death trap." And the previous poster already noted that YOU CANNOT AFFORD A CAR. Frankly, I don't think you can afford even a used car, let alone a new one.

I went through college never owning a car. I walked everywhere and went with my roommate in his car when I needed to get groceries. It was great, I highly recommend it.

grantmeaname

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Re: Am I absolutely insane to buy a new car?
« Reply #3 on: December 04, 2012, 10:19:26 AM »
You need to spend more than twice your annual income on a car because you don't want to be inconvenienced by unreliability?

Yes, you're insane. That's a colossally dumb move. You shouldn't be looking at a car with less than 100k miles on it, and you probably shouldn't be looking at a car at all.

gecko10x

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Re: Am I absolutely insane to buy a new car?
« Reply #4 on: December 04, 2012, 10:41:18 AM »
I've been known to make terrible financial choices regarding cars, and I agree with the above posters 100%.

You have no money for a car (I'm assuming, since you're talking about financing). So that's how much you can afford: $0.
Simple math: gas (say $150) + car payment ($9k @ 4% for 3yrs = $265) + insurance + maintenance > $500/mo for housing within walking (or biking) distance. (Plus you'd have the car costs for 12 months/yr vs only 9 months for the house)

Also, limit your student loans. I didn't do this and regret it. I think it'll put you too far behind financially. The majority of people cannot afford debt straight out of college.
« Last Edit: December 04, 2012, 10:43:26 AM by gecko10x »

Russ

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Re: Am I absolutely insane to buy a new car?
« Reply #5 on: December 04, 2012, 10:46:06 AM »
Sell (or park, if you really want to keep it) your car, move to campus, and do it right this time. If you're reasonably responsible and don't blow money like so many other kids with oversized loans, you'll easily break even.

That 9000 mile commute is costing you $5000/year, according to the IRS. If your school is anything like my school, that's enough to buy rent and utilities for a WHOLE YEAR. Not just fall and spring semester, but ALL 12 FUCKING MONTHS! Plus you get to live with your awesome friends instead of being stuck at home with your parents. What a deal!

Now I'm not usually for asking people for money, but if you can talk your dad into giving you what used to be the insurance money, there's your food for the month. Now you're living on campus, saving an hour drive every day, hanging with your friends, not dealing with your shitty car, and living a generally better life, all for zero extra dollars.

If you really need to go somewhere, walk, ride a bike, take a bus, or borrow a car. If your parents complain about you not driving home to see them, tell them to visit you. Cook them dinner and show them how grown up you are.

$15,000+ (HOLY SHIT that's a lot of money) in debt is not what you need
« Last Edit: December 04, 2012, 02:30:59 PM by Russ »

randymarsh

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Re: Am I absolutely insane to buy a new car?
« Reply #6 on: December 04, 2012, 11:08:14 AM »
I've only a read a few responses and I have to run for class, but I did want to add:

I have to have a car. I did the walking/public transportation thing in Italy and loved it, but this is non-negotiable no matter where I live right now. My hometown is rural and my campus is 30 minutes away in a suburban area. My job is currently on campus, but I'm looking for something higher paying and that means driving at least 15-20 minutes to the city nearby.

I currently pay:

Rent: $623
Electricity:$40
Natural gas: $30
Gas: $100
Groceries/Household stuff: $250
Other: $100

I would be paying (new car assumption):

Car payment: $300
Gas: $130 in a 33 MPG car
Other: $100

Even if I could find roommates in the middle of the year in the next 30 days, any car payment at all plus my share of rent/utilities and groceries will cost more than living at home.

I should also clarify I have around $2,000 in checking/savings but how much of it is really "mine" is up for debate I use my student loan refund to pay for a majority of my current way too high living expenses.

grantmeaname

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Re: Am I absolutely insane to buy a new car?
« Reply #7 on: December 04, 2012, 11:13:40 AM »
I have to have a car. I did the walking/public transportation thing in Italy and loved it, but this is non-negotiable no matter where I live right now. My hometown is rural and my campus is 30 minutes away in a suburban area. My job is currently on campus, but I'm looking for something higher paying and that means driving at least 15-20 minutes to the city nearby.
What about a motorcycle? A bicycle? An electric bicycle? Public transportation? A moped?

I promise, you could live without a car. Other people manage it.

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Even if I could find roommates in the middle of the year in the next 30 days
You can.

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any car payment at all plus my share of rent/utilities and groceries will cost more than living at home.

Right. As we keep saying, the car payment is the part that's an issue.

Quote
I should also clarify I have around $2,000 in checking/savings but how much of it is really "mine" is up for debate I use my student loan refund to pay for a majority of my current way too high living expenses.
You borrow money to spend more than you earn on your living expenses and you think that a car loan on a new car is even a possible part of a solution to your issues?

No. It is not.

iamlindoro

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Re: Am I absolutely insane to buy a new car?
« Reply #8 on: December 04, 2012, 11:19:20 AM »
Even if I could find roommates in the middle of the year in the next 30 days, any car payment at all plus my share of rent/utilities and groceries will cost more than living at home.

Why?  You're already paying for each of these now, and not a modest amount for a rural area, either.  Go on Craigslist.  Roomies are needed all the time, and since those people are often in a bind they'll be willing to cut you a nice deal.

I should also clarify I have around $2,000 in checking/savings but how much of it is really "mine" is up for debate I use my student loan refund to pay for a majority of my current way too high living expenses.

This is the exact reason you shouldn't purchase a car, let alone a new car.

To clarify, you should be living small right now so that you can start at less of a disadvantage when you get out of school.  I understand there are a lot of pressures around you as most college students are completely foolish about their money and have lots of toys, but you absolutely must resist the urge.  You're considering putting yourself $20K further into debt before you've even gotten started.  Depending on your field, your cost of living, and your lifestyle, this decision may delay your financial security/independence by *years*.
« Last Edit: December 04, 2012, 11:22:46 AM by iamlindoro »

Jamesqf

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Re: Am I absolutely insane to buy a new car?
« Reply #9 on: December 04, 2012, 11:23:22 AM »
An early '90s (or even '80s) Civic or similar will be far more reliable than your Explorer ever was.  If you must have a car, buy one like that, and plan on spending no more than $2-3K on it.  If you're really concerned about reliability, buy two so you'll have one as a spare - that'll still put you more than $10K ahead of the buy new plan.

ShavenLlama

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Re: Am I absolutely insane to buy a new car?
« Reply #10 on: December 04, 2012, 11:27:57 AM »
I have to have a car. I did the walking/public transportation thing in Italy and loved it, but this is non-negotiable no matter where I live right now. My hometown is rural and my campus is 30 minutes away in a suburban area. My job is currently on campus, but I'm looking for something higher paying and that means driving at least 15-20 minutes to the city nearby.


When I was in college, I had a job several miles away from campus. Looking back, I was really only working so I could afford to drive to work!

Enjoy your time in school by hanging out with friends on and near campus. I wish I had done that more.

Working for a living sucks balls, friend! And you'll have plenty of time for that when you graduate.

Russ

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Re: Am I absolutely insane to buy a new car?
« Reply #11 on: December 04, 2012, 11:38:00 AM »
a car. I did the walking/public transportation thing in Italy and loved it, but this is non-negotiable no matter where I live right now. My hometown is rural and my campus is 30 minutes away in a suburban area. My job is currently on campus, but I'm looking for something higher paying and that means driving at least 15-20 minutes to the city nearby.

This still doesn't explain to me why you "need" a car. If you move to campus, you won't have to drive home, and you don't have a job in the city yet so you really don't have to drive there either. If you do find a job in the city, a 15-20 minute drive is probably 10-15 miles between campus and hopeful-future-work, which is totally bikeable for anyone your age without some sort of disablity. Even better, if you move 5 miles further off-campus toward the city, that's a 5-mile ride to campus and a 5-10 mile ride to the city. Totally doable.

gecko10x

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Re: Am I absolutely insane to buy a new car?
« Reply #12 on: December 04, 2012, 11:40:57 AM »
To clarify, you should be living small right now so that you can start at less of a disadvantage when you get out of school.  I understand there are a lot of pressures around you as most college students are completely foolish about their money and have lots of toys, but you absolutely must resist the urge.  You're considering putting yourself $20K further into debt before you've even gotten started.  Depending on your field, your cost of living, and your lifestyle, this decision may delay your financial security/independence by *years*.

This ++

If I had gotten this kind of advice/face-punch back then, I'd be years ahead of where I am now.

eyePod

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Re: Am I absolutely insane to buy a new car?
« Reply #13 on: December 04, 2012, 11:42:55 AM »
An early '90s (or even '80s) Civic or similar will be far more reliable than your Explorer ever was.  If you must have a car, buy one like that, and plan on spending no more than $2-3K on it.  If you're really concerned about reliability, buy two so you'll have one as a spare - that'll still put you more than $10K ahead of the buy new plan.

I agree with you.  Old camry's or corolla's are also really good choices.  get an 87 corolla hatchback.  That thing drives around on almost no gas!  You are trying to rationalize what you need with what you want.  I get the safety issues with motorcycles/mopeds.  I had an uncle killed by a drunk driver and promised my parents that I'd never drive one.  There are other options that don't involve you going into debt.   Can you commute with anyone else?

mlipps

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Re: Am I absolutely insane to buy a new car?
« Reply #14 on: December 04, 2012, 12:10:45 PM »
Stop being an idiot. You don't need a new car, you want one. The answer is no, and no amount of excuses is going to change the simple fact that you can't afford it.

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Re: Am I absolutely insane to buy a new car?
« Reply #15 on: December 04, 2012, 01:39:47 PM »
I'm a professional engineer and have been out of post-secondary for almost a decade. When I graduated I did the same rationalization that you're doing and bought a new vehicle, financed, no cash down. I figured "hey, I'm a newly minted cash making machine, why not treat myself?" Today I'm rocking a '97 Camry with 300,000 km on the odometer and in retrospect I wish I had either avoided the purchase or bought a used vehicle. If you must buy then look for a used camry/corrola/civic for $5k and you'll be miles ahead financially.

bogart

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Re: Am I absolutely insane to buy a new car?
« Reply #16 on: December 04, 2012, 04:07:29 PM »
I recently posted in the "looking at cars with 100K" thread about why that poster might want to consider buying new or at least carefully evaluate how much is likely to be saved buying used.

You?  Should buy an ancient used car or none at all.  Move back onto campus (or within walking distance of same; rather than looking for roommates, find a place that needs one) and procure a decent bicycle or a scooter.  Or look into whether your campus provides access to zipcar (or similar) and whether that could help you meet your transportation needs, which you should be seeking to minimize.  If you're concerned about the death trap highway, stay off it.

Your life probably seems complicated and your schedule overly full now -- working your way through school.  It's not; you have no dependents, and people expect you to take on few long-term commitments and to need to live cheaply.  Take advantage of your youth and comparative flexibility by avoiding taking on financial obligations you are in any case in no position to meet.

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Re: Am I absolutely insane to buy a new car?
« Reply #17 on: December 04, 2012, 05:26:21 PM »
OP, the younger you are, the more important it is to save. I am extremely lucky to have begun my journey to Financial Independence at age 24. Imagine how you should feel at age 20(ish)!

Buying this car is a mistake that I think you are just smart enough to one day regret. Yes, even at 0.9%. I understand your need for a car. Winter happens, girls happen. If the Explorer does not have any serious issues, slap winter tires on it and it will be vastly improved in the snow. If people can do it their 1980's Honda Civics, you can do it in your Explorer. When it snows, don't they cancel class? Can't you e-mail assignments to class? I am not trying to be a jerk, but I have never been in a position where I had no choice but to drive in bad weather.

grantmeaname

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Re: Am I absolutely insane to buy a new car?
« Reply #18 on: December 04, 2012, 05:34:11 PM »
I am not trying to be a jerk, but I have never been in a position where I had no choice but to drive in bad weather.
Also, if you live far enough north that the snow is ever bad, you also live far enough north that it snows every year. If you don't know how to drive safely in two inches of snow, snow tires or the newest and most magical car in the world won't help you be a safe driver. Slow down, use your lights, leave a shit-ton of following distance, brake before you need to, and you'll be fine. All the gadgets and gizmos in the world won't come close to driving properly.

chucklesmcgee

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Re: Am I absolutely insane to buy a new car?
« Reply #19 on: December 04, 2012, 05:40:37 PM »
So my (probably flawed) flawed logic:

1. The price difference between new and used isn't that much. No matter what, I want less than 50,000 miles, preferably 40. This car is something I plan to drive until I can't anymore. $15,000 gets me a Civic with around 30,000 miles. A few thousand more and I'm in new territory.

I built (configured online, pardon) a bare bones new Civic (automatic) for $19,755. You throw in tax, title, inspection and registration fees and you're easily looking at $21-$22k. No idea what loan application or origination fees are but you're looking at something that's $7000 more than an overpriced barely-used dealer marked-up car. I bought my Lexus for less than that difference. You're completely stupid.

2. I'm at the point where I don't know if the Explorer is going to start the next time.
Well is it actually failing or not?

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Reliability is king. I want a good 5 years of nothing but oil changes and tire rotations. I'm not a car guy and have no desire to be.
Well that's big talk coming from a chump with no money. Tell us all about your "wants" and "needs" and how that justifies you spending money you don't have.


Quote
I'll be driving at least 9,000 miles a year just on school. This car is going to get used.

Oh wow! 9000 miles! That's like...oh I don't know...slightly below average annual car mileage. And whether or not you're going to USE the car isn't the question, now is it? It's whether it's a cost-effective thing you can afford.

Quote
3. Qualified for .9% financing vs. 3%-4% I'd pay on a used car.

Oh great! You'll be paying a slightly lower percentage of fees to buy a more expensive, depreciating thing with money you don't have.

Quote
5. Both my parents would prefer I have safety features like traction control and stability control, plus side airbags. Getting those features on previous model years requires going to higher trims, pushing the price even closer to new.

My 2000 Lexus has all of those features (and the butt warmer one of the other posters alluded to). Bought it 6 months ago for $5500. Actually just had the electronic stability control kick in the other day when I took too sharp of a turn on an icy road. So stop making stuff up and trying to rationalize your stupid purchase. If mommy and daddy prefer you have the safety features, perhaps you can mooch something out of them.

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6. December is the best time to buy any car, but new I think especially because dealers want to hit sales targets and reach bonus levels.
Because 2014 models are right on their way and no one is going to want the 2012 models still hanging around from early this year as "new".

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I realize that if I go new, I'm spending more than I absolutely have to. But I'm also getting more. Trouble free miles and full warranty coverage mainly. Those are worth something right?
Yeah, and if you buy a Ferrarri, you'll be getting even more! Question's not whether you're getting more, but whether you'd reduce your long term car expenses after considering opportunity costs buying a new car vs. buying a used car which you have to replace slightly sooner. Which you won't.

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Does new make any sense in my situation?

Nope, sorry. You have no money. You need money to buy things. Espeakey the english? You're drastically underestimating the longevity of decently car models these days, most can go 200k+ without much of a problem. Even then it's not like they'll just up and die one day. Yeah you'll have slightly higher maintenance costs when you take it in for service, but it'll be way cheaper per mile.

I'd just stick with the Explorer and save the money you would have made in car payments.  In a year you'll have more than enough for repairs on the Explorer or a used car.

randymarsh

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Re: Am I absolutely insane to buy a new car?
« Reply #20 on: December 04, 2012, 05:47:33 PM »
I'm not ruling out used at all, but are the 2-3K options really viable? Driving 50 miles a day, at least 5 days a week. What's the point of buying a cheap car (like I did before, albeit with a horrible choice) and then having repairs? Even a 3K Civic/Camry is going to need work being driven 12,000 miles a year. They're good, but they're not that good.

Estimated costs if I fix my current situation and find roommates and go carless:

Rent: $250
Groceries/household stuff: $250
Utility share: $30

Then I'm right at the costs I'd have living at home with the new car payment. If I lowered the car payment, I'd definitely come out ahead at home. I was planning to apply for an internship in the summer that pays at least $20/hr and that one is definitely not within walking distance. In 18 months when I graduate, I'm stuck looking for jobs in the immediate area and I can't think of a single employer in my field (besides the campus itself) within walking or biking distance.

Is my math wrong? How is living close to school with no car save me money or let me look at better jobs?

iamlindoro

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Re: Am I absolutely insane to buy a new car?
« Reply #21 on: December 04, 2012, 05:57:16 PM »
Quote from: thefinancialstudent
I currently pay:

Rent: $623
Electricity:$40
Natural gas: $30
Gas: $100
Groceries/Household stuff: $250
Other: $100

I would be paying (new car assumption):

Car payment: $300
Gas: $130 in a 33 MPG car
Other: $100

Quote from: thefinancialstudent
Estimated costs if I fix my current situation and find roommates and go carless:

Rent: $250
Groceries/household stuff: $250
Utility share: $30

Ignoring the fact that $250 is outrageous grocery costs for one person for a month, how is your estimated cost w/ roommates ($530) not lower than your stated current cost of living ($1143) PLUS CAR PAYMENT ($530) for a total of $1673?  Your current costs plus car payment are over TRIPLE the cost to have roommates, no car, and live near campus.

Anyway, question asked and answered.  Not a single person here thinks you should buy a new car.  Buy one or don't, that's the way the vote came down.  This is a really, really bad idea for you.  If you have to have a car, if you refuse to move to a more cost effective living situation that negates the need for a car, then at least buy the POS you still can't afford, but will at least put you in a more shallow hole.
« Last Edit: December 04, 2012, 05:58:52 PM by iamlindoro »

randymarsh

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Re: Am I absolutely insane to buy a new car?
« Reply #22 on: December 04, 2012, 06:05:29 PM »
I would never keep living where I'm at and add a payment.

Thanks for the responses everyone, I appreciate it. I'm just not where you guys are at yet.

iamlindoro

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Re: Am I absolutely insane to buy a new car?
« Reply #23 on: December 04, 2012, 06:11:53 PM »
Further, I think you might be suggesting that you are not currently living at home, but moving from your current situation home, and taking on the car payment.  You say that you'd be breaking even-- but by your own math, since I presume you still will incur "other" and grocery costs:

Car payment: $300
Gas: $130 in a 33 MPG car
Other: $100
Groceries/Household stuff: $250

This presumes that your parents charge you no rent, and no utilities.  You're at $780 on your $500 a month income.  But let's be even more generous and say you're going to let your parents feed you, buy every household need you have, etc. 

Car payment: $300
Gas: $130 in a 33 MPG car
Other: $100

You're at $530 per month with a $500 a month income.

The math doesn't add up under ANY scenario with a car purchase.  You are, best case scenario, negative $30 a month.  God forbid you need to buy a textbook, cover a trip to the doctor, perform an emergency repair, etc.  The maximum amount you are allowed to spend on a vehicle is the amount you have in cold, hard cash (and even that is too much since an auto purchase shouldn't wipe you out entirely).

chucklesmcgee

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Re: Am I absolutely insane to buy a new car?
« Reply #24 on: December 04, 2012, 06:21:16 PM »
I'm not ruling out used at all, but are the 2-3K options really viable? Driving 50 miles a day, at least 5 days a week. What's the point of buying a cheap car (like I did before, albeit with a horrible choice) and then having repairs? Even a 3K Civic/Camry is going to need work being driven 12,000 miles a year. They're good, but they're not that good.

They aren't going to break down and not keep driving if that's what you mean. 12,000 a year is nothing for a car. You may need to have more maintenance done when you take it in, but the costs will be way less than your monthly payment and if won't break down or require extra trips for service, who cares? You'll buying something you don't need with money you don't have if you get a new car.

bogart

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Re: Am I absolutely insane to buy a new car?
« Reply #25 on: December 04, 2012, 06:33:19 PM »
Even a 3K Civic/Camry is going to need work being driven 12,000 miles a year. They're good, but they're not that good.

I bought a 97 Ford Taurus with 120K miles in 2007 for $2.5K, drove it until 2011, sold it for $500 with 180K miles on it (so 10K miles per year), and ... I'm trying to remember.  I probably put new tires on it, I definitely had the battery and the alternator replaced, and the a/c wasn't working right when I sold it (neither were assorted other things, which is why I decided to replace it, but the a/c issue had been going on awhile).  So at the outside counting the tires I probably spent $1.5K on maintenance/repair issues, assuming I've forgotten a few.  The car thereby met my rule-of-thumb that a general-purpose car should run one year per $1k in purchase/maintenance/repair costs.  And for the record, I bought that car as a "safe" one to drive my infant son in. 

So, sure.  Finding a $2-$3k car to meet your needs shouldn't be a big deal.  Though I remain unclear why you need to sell the Explorer: does anything about it not work right now?


In 18 months when I graduate, I'm stuck looking for jobs in the immediate area and I can't think of a single employer in my field (besides the campus itself) within walking or biking distance.

Is my math wrong? How is living close to school with no car save me money or let me look at better jobs?


Does the job you have now influence your prospects after you graduate?  That's a serious question; my advice would be to focus on your studies and do a get-by job, but not knowing your field that advice could be off the mark.

Russ

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Re: Am I absolutely insane to buy a new car?
« Reply #26 on: December 04, 2012, 06:44:06 PM »
ITT new guy doesn't get it

I'm not ruling out used at all, but are the 2-3K options really viable?
YYYYEEEEEEEEEEEESSSSSSSSS

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Driving 50 miles a day, at least 5 days a week. What's the point of buying a cheap car (like I did before, albeit with a horrible choice) and then having repairs?
because it costs fewer dollars than buying a more expensive car. this is good for someone who has negative dollars.

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Even a 3K Civic/Camry is going to need work being driven 12,000 miles a year. They're good, but they're not that good.
tell that to the numerous people on this board who drive similar mileage on similarly old cars. oh wait, you just did

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Estimated costs if I fix my current situation and find roommates and go carless:

Rent: $250
Groceries/household stuff: $250
Utility share: $30
household goods are high, but w/e
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Then I'm right at the costs I'd have living at home with the new car payment. If I lowered the car payment, I'd definitely come out ahead at home. I was planning to apply for an internship in the summer that pays at least $20/hr and that one is definitely not within walking distance. In 18 months when I graduate, I'm stuck looking for jobs in the immediate area and I can't think of a single employer in my field (besides the campus itself) within walking or biking distance.
You can totally get jobs without owning a car. I've done it three times now. You get a job, and you move to where the job is.
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Is my math wrong? How is living close to school with no car save me money or let me look at better jobs?
Your math is accurate enough. If you buy an inexpensive car (or keep your current one) you will come out ahead at home. If you buy a new or even almost-new car you will come out way behind.

randymarsh

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Re: Am I absolutely insane to buy a new car?
« Reply #27 on: December 04, 2012, 06:47:26 PM »
It's correct that parents pay for all living expenses (groceries, rent free, etc. ) while I'm at home.

Russ

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Re: Am I absolutely insane to buy a new car?
« Reply #28 on: December 04, 2012, 06:48:26 PM »
Thanks for the responses everyone, I appreciate it. I'm just not where you guys are at yet.

The only way to get there is to practice.

Ozstache

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Re: Am I absolutely insane to buy a new car?
« Reply #29 on: December 04, 2012, 06:50:12 PM »
Thanks for the responses everyone, I appreciate it. I'm just not where you guys are at yet.

The fact that you are at least questioning such a purchase at your stage of life is very encouraging. With all the sound and frank advice you are getting here, you can't say you're not forewarned about the expensive path you are about to tread. You can be where others are at simply by heeding such advice. It's your choice.

chucklesmcgee

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Re: Am I absolutely insane to buy a new car?
« Reply #30 on: December 04, 2012, 06:51:17 PM »
Quote
Driving 50 miles a day, at least 5 days a week. What's the point of buying a cheap car (like I did before, albeit with a horrible choice) and then having repairs?
because it costs fewer dollars than buying a more expensive car. this is good for someone who has negative dollars.

(Cost of Used Car) + repairs <<< (Cost of new car)
You want something that's the lowest cost per mile to drive, with some consideration for safety and the value of your time.

Or we're getting trolled.

Russ

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Re: Am I absolutely insane to buy a new car?
« Reply #31 on: December 04, 2012, 07:00:00 PM »
Or we're getting trolled.

Nah he's been around a while. Just doubtful, I think.

randymarsh

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Re: Am I absolutely insane to buy a new car?
« Reply #32 on: December 04, 2012, 07:11:39 PM »
Sorry I should have mentioned that the Explorer is dying. Purchased at 178,000 miles in 2008 (dumb). 220,000 now. Numerous repairs every single year I've had it. Currently have a transmission issue going on. Just had a wheel bearing replaced. Dad paid for that and new tires. Midas tells me every time I get an oil change that my suspension and exhaust could use work. Was pulled over in the summer for the exhaust being too loud (might have been a bored cop though). I would have no problem with keeping what I have, but it's been a huge money sink. Interior is in great condition for it's age. This has definitely made me cynical about higher mileage used cars - trying to shake that impression.

chucklesmcgee

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Re: Am I absolutely insane to buy a new car?
« Reply #33 on: December 04, 2012, 07:13:45 PM »
Sorry I should have mentioned that the Explorer is dying. Purchased at 178,000 miles in 2008 (dumb). 220,000 now. Numerous repairs every single year I've had it. Currently have a transmission issue going on. I would have no problem with keeping what I have, but it's been a huge money sink.

Ok so how much have you put in in repairs?

randymarsh

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Re: Am I absolutely insane to buy a new car?
« Reply #34 on: December 04, 2012, 07:18:07 PM »
Or we're getting trolled.

Nah he's been around a while. Just doubtful, I think.

Not trolling I promise! Just...don't know what I'm doing.

The cost of occasional repairs isn't what I'm really worried about, it's the hassle and time cost. Trips to the mechanic, missing class/work etc. I did that all freshman year and it was a constant headache.

randymarsh

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Re: Am I absolutely insane to buy a new car?
« Reply #35 on: December 04, 2012, 07:25:10 PM »
I don't have complete records at my apartment, but I'd estimate at least $1,000 a year. Engine was replaced for $2,500 (currently has 107,000 miles are it), paid for generously by my father. $450 for a fuel pump replacement. $300 for a radiator. $500 for a EGR sensor. $50 for a computer chip that controls the headlights. That's $3,800 and my dad just paid for new-but-used tires and the wheel bearing replacement. Not sure what that cost.

Russ

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Re: Am I absolutely insane to buy a new car?
« Reply #36 on: December 04, 2012, 07:38:33 PM »
hopefully you still have the receipts. sell the explorer for a couple grand while it's still running and buy one of the aforementioned inexpensive japanese cars.

chucklesmcgee

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Re: Am I absolutely insane to buy a new car?
« Reply #37 on: December 04, 2012, 07:42:35 PM »
I don't have complete records at my apartment, but I'd estimate at least $1,000 a year. Engine was replaced for $2,500 (currently has 107,000 miles are it), paid for generously by my father. $450 for a fuel pump replacement. $300 for a radiator. $500 for a EGR sensor. $50 for a computer chip that controls the headlights. That's $3,800 and my dad just paid for new-but-used tires and the wheel bearing replacement. Not sure what that cost.

Wow, so roughly $4,000. To drive 42,000 miles over 4 years.  Huh that's oh, I don't know about $10,000 less than you'd be making in car payments on your new car over the same time! Yeah,   sure has been a huge money sink!

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Trips to the mechanic, missing class/work etc. I did that all freshman year and it was a constant headache.

Ok, now that's something. I don't think Ford Explorers are especially famed for their reliability or much else besides cargo capacity. Even so, there's no way a new car is your solution.

bogart

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Re: Am I absolutely insane to buy a new car?
« Reply #38 on: December 04, 2012, 07:59:02 PM »
Sorry I should have mentioned that the Explorer is dying. Purchased at 178,000 miles in 2008 (dumb). 220,000 now. Numerous repairs every single year I've had it. Currently have a transmission issue going on. Just had a wheel bearing replaced. Dad paid for that and new tires. Midas tells me every time I get an oil change that my suspension and exhaust could use work. Was pulled over in the summer for the exhaust being too loud (might have been a bored cop though). I would have no problem with keeping what I have, but it's been a huge money sink. Interior is in great condition for it's age. This has definitely made me cynical about higher mileage used cars - trying to shake that impression.

Ok.  First off, there are a lot of miles between 0 (what you want to buy) and 220K (what you own).  About 220K, in fact.  Also, you don't need to buy a car -- any car -- tomorrow.  Actually, in this regard, you are a pretty well-positioned vehicle shopper:  you are in search of a car, but you have one that works that you can use for now.  Does thinking of the Explorer that way help?

Why don't you spend a few weeks shopping for a used car you can afford (my advice would be to start with ones you could pay cash for using the $2k balance in your checking account, and again, remember, I know of what I speak ... I bought a car for not much more than that within this decade.  There are several Hondas on my local Craiglist listed just today that are owner-listed, ostensibly in good running condition (obviously you do want to get this checked out), $2K or less 200K miles or less, and less than 20 years old.  Some not much more than 10 years old.).  You don't have to do anything (buy anything), just look around at what you can find and think about how nice it would be not to add a car payment to your expenses.

I've been where you are; in grad school, I sold my perfectly good Datsun 210 because it was requiring about a $200 repair each month and was about 12 years old and had about 140K miles on it, and it just seemed like it was time to replace it (I knew the person who got the car from me, and it ran many, many more years).  I replaced it first with a used truck that I didn't get properly vetted (and should have recognized that the time pressure being put on me to buy it was a red flag), subsequently sold that (honestly, i.e., full disclosure) as something that needed its engine rebuilt, and financed and bought a new truck that I very much wanted.  It wasn't a disastrous plan; the truck (a small foreign model) was an inexpensive model, I drove it for many, many (14 years, 200K miles) with no problems, and enjoyed it.  And I had no student or other loans when I took on the car loan, and was in a degree program that provided me with a stipend (i.e. I was being paid to go to school).  Still, it wasn't one of my brighter financial moves and it's not something I can advocate -- particularly not if those other conditions (regular if modest stipend, no debt) aren't met.

Shop around.  At least assess what your low-end options are.




randymarsh

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Re: Am I absolutely insane to buy a new car?
« Reply #39 on: December 04, 2012, 07:59:45 PM »
I don't have complete records at my apartment, but I'd estimate at least $1,000 a year. Engine was replaced for $2,500 (currently has 107,000 miles are it), paid for generously by my father. $450 for a fuel pump replacement. $300 for a radiator. $500 for a EGR sensor. $50 for a computer chip that controls the headlights. That's $3,800 and my dad just paid for new-but-used tires and the wheel bearing replacement. Not sure what that cost.

Wow, so roughly $4,000. To drive 42,000 miles over 4 years.  Huh that's oh, I don't know about $10,000 less than you'd be making in car payments on your new car over the same time! Yeah,   sure has been a huge money sink!

Quote
Trips to the mechanic, missing class/work etc. I did that all freshman year and it was a constant headache.

Ok, now that's something. I don't think Ford Explorers are especially famed for their reliability or much else besides cargo capacity. Even so, there's no way a new car is your solution.


I get that a new car is too much, but it's really not accurate to say "You drove 42,000 miles in 4 years for just $4,000 (+$3,500 originally paid) Great deal". Financially it's not horrible, but the effort and time required to get those miles was excessive.

DreamingofFreedom

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Re: Am I absolutely insane to buy a new car?
« Reply #40 on: December 04, 2012, 08:11:11 PM »
Before I started reading MMM, I was planning on buying a new car at the end of the year too.  I had some similar reasons- it was a great time to buy from dealers, I could afford it, and I would save money by not paying for any repairs at all for the first few years, and fewer repairs after that. 

Looking back, I think these weren't actual reasons to buy a car.  They were just ways to help me convince myself to spend.  I was lying to myself by thinking that I would be doing myself a favor for buying a nice new Honda. 

Thanks to MMM, I have realized that I can't afford a new car.  I am out of school and have a larger monthly income than you do.  You can't afford a new car, either.  Even if you really want one.

Will

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Re: Am I absolutely insane to buy a new car?
« Reply #41 on: December 04, 2012, 08:26:48 PM »
+1 to what everyone else has said above, plus I just happened to read this about the very car you have chosen:

Quote
Consider that Consumer Reports dropped the Honda Civic from its “recommended” list after its model-year 2012 redesign, not because it was an awful car, but because it wasn’t deemed as good as some of its competitors. “CR testers found the 2012 Civic to be less agile and with lower interior quality than its predecessor,” according to a press release. (Honda has since rushed a nominal redesign of the Civic for 2013 that seems to address most of its perceived deficiencies).

chucklesmcgee

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Re: Am I absolutely insane to buy a new car?
« Reply #42 on: December 04, 2012, 08:36:38 PM »
I don't have complete records at my apartment, but I'd estimate at least $1,000 a year. Engine was replaced for $2,500 (currently has 107,000 miles are it), paid for generously by my father. $450 for a fuel pump replacement. $300 for a radiator. $500 for a EGR sensor. $50 for a computer chip that controls the headlights. That's $3,800 and my dad just paid for new-but-used tires and the wheel bearing replacement. Not sure what that cost.

Wow, so roughly $4,000. To drive 42,000 miles over 4 years.  Huh that's oh, I don't know about $10,000 less than you'd be making in car payments on your new car over the same time! Yeah,   sure has been a huge money sink!

Quote
Trips to the mechanic, missing class/work etc. I did that all freshman year and it was a constant headache.

Ok, now that's something. I don't think Ford Explorers are especially famed for their reliability or much else besides cargo capacity. Even so, there's no way a new car is your solution.


I get that a new car is too much, but it's really not accurate to say "You drove 42,000 miles in 4 years for just $4,000 (+$3,500 originally paid) Great deal". Financially it's not horrible, but the effort and time required to get those miles was excessive.

You're being inconsistent here. You're telling us you think it would be a financially reasonable idea to spend $15k in loans on a new car over four years because your car has been such a money pit, costing you $4k a year in repairs over the same period.  It's either cheaper to drive the new car or it's not. And it's not. If you think otherwise, state why.

I'm guessing this will cost you at least $5,000 more over 4 years, ballpark.

So you're concerned about the value of your time and lost work/school attendance. What percent of the time has the car just up and died unexpectedly when its needed repairs? Or has it just simply needed to be in the shop for a few days? How many days of work have you missed in the past 4 years because of this? How many extra times have you had to take it in for service compared to a new car? You make $10,000 a year, does it make sense to have to work for an extra six months so you can drive something that will save you a few days in the shop over 4 years?   You're willing to work for a month, nonstop, just so that you can avoid one day in the shop?


secondcor521

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Re: Am I absolutely insane to buy a new car?
« Reply #43 on: December 04, 2012, 09:40:30 PM »
You're not insane, you're just exceptionally good at rationalizing a very bad choice.  Something most people do every day.  It still is a bad choice.

You're painting with too broad a brush; because you've had trouble with your Explorer, you're reacting too far the other way to avoid such trouble.  The problem with your Explorer isn't that it's used, it's that it's an Explorer.

I'm 43 and within a year or two of financial independence.  I have enough cash in the bank to buy a new car tomorrow.  And yet I still contentedly drive a 1995 Toyota with 180+K miles on it that is worth about $2500.  It has had a total of less than $500 in repairs in it's lifetime and never left me stranded.

2Cor521

Jamesqf

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Re: Am I absolutely insane to buy a new car?
« Reply #44 on: December 04, 2012, 09:53:15 PM »
I'm not ruling out used at all, but are the 2-3K options really viable? Driving 50 miles a day, at least 5 days a week. What's the point of buying a cheap car (like I did before, albeit with a horrible choice) and then having repairs? Even a 3K Civic/Camry is going to need work being driven 12,000 miles a year. They're good, but they're not that good.

Yes, they are perfectly viable.  I've only owned one vehicle in my life that I paid more than $3500 for.  (That was the Insight, bought used for $8500 or so.)  All of them since the '80s have been Honda, Toyota, or Subaru.  None have given me problems that weren't easily & cheaply fixed.  (OK, there was the previous pickup that I couldn't get to pass the smog inspection, but it still ran OK, and I sold it on Craigslist the same day I placed the ad.) 

Sure, these days I could go out and buy just about any new car on the market (and pay cash for it), but why?  Part of the reason I CAN do that now is that I never did it.

If you're worried about reliability and/or cost of repairs, why not learn something about basic auto mechanics?  Most of those things done to your Explorer are simple enough to do yourself (or would be on the sort of $2K cars we're recommending) at far less cost.

randymarsh

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Re: Am I absolutely insane to buy a new car?
« Reply #45 on: December 04, 2012, 10:34:08 PM »
Each repair probably took a minimum of 3 days to fix. The engine took at least 5. Not counting days where I knew something was up and needed to get it checked out. There was a 4 month period I was out of the country and it wasn't driven much. I came back and had an issue almost immediately.

The latest incident happened as I came home from a 2 hour drive. Heard a snap and pulled to the shoulder on the highway. Wasn't sure if it was safe to continue, but I finally made it to my apt. Then made it a mile from my mechanic's, had to stop at my high school (smoke coming from friction on the tire/bearing, not a car person).

In the past week, I've had it die on me 4 times while driving out of my parking spot. It seems to do OK for the most part once warmed up, but I noticed an odd sound on my last trip home and it feels like there are short pauses where the wheels aren't getting equal amounts of power. Reverse is used sparingly.

It's not that the repairs by themselves are horribly expensive (although easy for me to say that when I didn't pay for most of them.), but that they're completely unpredictable, but happen every few months on average. With my car now, I have no idea if I can get back home if I go somewhere. I missed at least 3 days of school freshman year due to car troubles. 2 days of work I remember. There would have be more days, but sometimes I got "lucky" and my dad was home so I could take his truck or I borrowed a family member's spare car. Also had issues in high school but can't remember if they made me late/absent.
« Last Edit: December 04, 2012, 10:57:53 PM by thefinancialstudent »

Ozstache

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Re: Am I absolutely insane to buy a new car?
« Reply #46 on: December 04, 2012, 10:41:40 PM »
Which bit of "buy a reliable used car instead of a new one" are you not understanding?

randymarsh

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Re: Am I absolutely insane to buy a new car?
« Reply #47 on: December 04, 2012, 11:01:41 PM »

chucklesmcgee

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Re: Am I absolutely insane to buy a new car?
« Reply #48 on: December 04, 2012, 11:41:32 PM »
Each repair probably took a minimum of 3 days to fix. The engine took at least 5. Not counting days where I knew something was up and needed to get it checked out. There was a 4 month period I was out of the country and it wasn't driven much. I came back and had an issue almost immediately.

The latest incident happened as I came home from a 2 hour drive. Heard a snap and pulled to the shoulder on the highway. Wasn't sure if it was safe to continue, but I finally made it to my apt. Then made it a mile from my mechanic's, had to stop at my high school (smoke coming from friction on the tire/bearing, not a car person).

In the past week, I've had it die on me 4 times while driving out of my parking spot. It seems to do OK for the most part once warmed up, but I noticed an odd sound on my last trip home and it feels like there are short pauses where the wheels aren't getting equal amounts of power. Reverse is used sparingly.

It's not that the repairs by themselves are horribly expensive (although easy for me to say that when I didn't pay for most of them.), but that they're completely unpredictable, but happen every few months on average. With my car now, I have no idea if I can get back home if I go somewhere. I missed at least 3 days of school freshman year due to car troubles. 2 days of work I remember. There would have be more days, but sometimes I got "lucky" and my dad was home so I could take his truck or I borrowed a family member's spare car. Also had issues in high school but can't remember if they made me late/absent.

Well if it sounds like it's getting unpredictably worse then that might rule out continuing with the explorer. But you can definitely sell it and pick up a reliable used car for not much more than what you'd get for the Explorer plus the sales tax and fees you would have been charged for the new car. (Money for tax licensing and everything else, by the way, would come from where?)

NWstubble

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Re: Am I absolutely insane to buy a new car?
« Reply #49 on: December 05, 2012, 01:20:08 AM »

Ok.  First off, there are a lot of miles between 0 (what you want to buy) and 220K (what you own).  About 220K, in fact.  Also, you don't need to buy a car -- any car -- tomorrow.  Actually, in this regard, you are a pretty well-positioned vehicle shopper:  you are in search of a car, but you have one that works that you can use for now.  Does thinking of the Explorer that way help?

Why don't you spend a few weeks shopping for a used car you can afford (my advice would be to start with ones you could pay cash for using the $2k balance in your checking account, and again, remember, I know of what I speak ... I bought a car for not much more than that within this decade.  There are several Hondas on my local Craiglist listed just today that are owner-listed, ostensibly in good running condition (obviously you do want to get this checked out), $2K or less 200K miles or less, and less than 20 years old.  Some not much more than 10 years old.).  You don't have to do anything (buy anything), just look around at what you can find and think about how nice it would be not to add a car payment to your expenses.

I've been where you are; in grad school, I sold my perfectly good Datsun 210 because it was requiring about a $200 repair each month and was about 12 years old and had about 140K miles on it, and it just seemed like it was time to replace it (I knew the person who got the car from me, and it ran many, many more years).  I replaced it first with a used truck that I didn't get properly vetted (and should have recognized that the time pressure being put on me to buy it was a red flag), subsequently sold that (honestly, i.e., full disclosure) as something that needed its engine rebuilt, and financed and bought a new truck that I very much wanted.  It wasn't a disastrous plan; the truck (a small foreign model) was an inexpensive model, I drove it for many, many (14 years, 200K miles) with no problems, and enjoyed it.  And I had no student or other loans when I took on the car loan, and was in a degree program that provided me with a stipend (i.e. I was being paid to go to school).  Still, it wasn't one of my brighter financial moves and it's not something I can advocate -- particularly not if those other conditions (regular if modest stipend, no debt) aren't met.

Shop around.  At least assess what your low-end options are.

+1. If you are set on buying a car (which you should be questioning) take bogart's advice.
Everyone has given you good info, now it is up to you to make the most of it and not fall into the consumerism trap that most people do.