Author Topic: Buying A Cheap Car  (Read 7355 times)

Bruised_Pepper

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Buying A Cheap Car
« on: October 14, 2013, 08:13:28 PM »
I'm originally from Virginia.  Virginians love their trucks.  I love my truck.  But, I just moved to a city where a pickup really isn't practical--Pasadena, CA.  Of course, having read through the Mustache Manifesto, I now realize that it was never practical to begin with.  As I begin my mustached-journey, here's what I'm thinking:

The truck (Ford Ranger) is worth $7,150.  The outstanding loan is $3,500.  Now that I'm pretty much done with the cross-country moving expenses, I was planning on paying off my loan with my remaining $5,000 savings.  However, I also have student loans that I would like to put that money into.  So, my thought is to pay the loan to get the pink slip, sell my beloved truck for $7,000, netting $3,500 off of the equity.  Then using that $3,500 to buy a cheap, fuel-efficient car (I currently get 18 MPG city--d'oh.) 

Doing that, I'd have a paid-off car without touching any of my savings.  Then I could plunk $3,000 of my savings on my student loans instead. 

I'm okay with this, and I think it's the right financial move.  However, I'm not mechanically-saavy, and I'm worried about buying a cheap car that will immediately break down.  By contrast, the Ranger is practically guaranteed to last forever (they're legendary in reliability, and I have a stick shift).  Any advice on avoiding a clunker?

Frankies Girl

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Re: Buying A Cheap Car
« Reply #1 on: October 14, 2013, 10:08:25 PM »
Do your research on reliable used cars (consumer reports is a good non-biased ratings site, but you may have to pay, but there are many sites including this one that list some decent used vehicles), and check the bluebook values to get the price ranges. Get an independent mechanic to give any serious contender a once over (you will need to check and see how much this would cost).

http://www.mrmoneymustache.com/2012/03/19/top-10-cars-for-smart-people/

Fuzz

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Re: Buying A Cheap Car
« Reply #2 on: October 14, 2013, 10:46:36 PM »
I'm not sure in your situation it makes a ton of sense to sell the car. A key factor is what your income is--if you could pay it off in 3-4 months or less, than it doesn't seem so exorbitant relative to your income. MMM recommends lots of cars in the $7,000 range. Also, if you don't drive it that much, then it's not too expensive on gas. Ride that bike!

If you do shop, take a look at the County websites around you. I bought two vehicles at County auction that have been cheap to own and operate. The police sell their cars after 100,000 miles, which is nothing. Just don't get a car that was doing traffic work.

Also, I think the best way to find a cheap car is to be patient and wait for a deal to come along.

Bruised_Pepper

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Re: Buying A Cheap Car
« Reply #3 on: October 14, 2013, 11:40:00 PM »
I'm not sure in your situation it makes a ton of sense to sell the car. A key factor is what your income is--if you could pay it off in 3-4 months or less, than it doesn't seem so exorbitant relative to your income. MMM recommends lots of cars in the $7,000 range. Also, if you don't drive it that much, then it's not too expensive on gas. Ride that bike!

I like the idea of keeping such a reliable model of truck over gambling on a older car, but I feel like I'm throwing away $3,500 if I do.  Plus, I could easily improve my gas mileage by 50%.  I'm doing my best to limit my gas intake anyway by taking public transportation (I get huge subsidies through my job). 

Still, feels like wasting cash. 

gooki

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Re: Buying A Cheap Car
« Reply #4 on: October 15, 2013, 01:42:27 AM »
Sell it. $3500 is plenty to get a reliable cheap car.

ketchup

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Re: Buying A Cheap Car
« Reply #5 on: October 15, 2013, 05:31:38 AM »
Sell it. $3500 is plenty to get a reliable cheap car.
This.  My 1988 Chevy Sprint (~53MPG) was $1000, and my 1996 Volvo 850 wagon was $2000.  Even a $2000 car to me feels like luxury.  My Volvo is way nicer than any car needs to be.

Mr.Macinstache

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Re: Buying A Cheap Car
« Reply #6 on: October 15, 2013, 08:17:42 AM »
IMO, if you haven't any mechanical skills, you have no business buying a cheap car. Buying the wrong one can burn up 1000's of dollars. Buying a beater means you need to have the skills/tools to work on it.

The cheap cars are being sold for a reason. They aren't being sold becuase they're running perfectly fine. Figure on something needing to be fixed. And be careful, again with no mechanical skills, do you have the knowledge to go used car shopping on the cheap?

TreeWeezel

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Re: Buying A Cheap Car
« Reply #7 on: October 15, 2013, 08:40:17 AM »
I wouldn't ditch the Ranger till you're sure you won't want to
1.  Pick up used washers/dryers/bulky furniture off Craigslist
2.  Pull a trailer for hobby, side-project, or recreation reasons
3.  Be able to easily move yourself to closer/cheaper/better apartments as needed.
4.  Win favor from your friends by helping them move, or make a side business of local moving.

I'd just drive better for ~25 mpg and drive less...obsessing over mpg is usually false economy.  Car shopping is a hassle to find a good deal and to speculate on condition, plus you get hit with taxes/fees each time you do it. 

Japanese cars have to be really old to be cheap so usually rust catches up first, cheap European cars have long-lasting bodies and engines but need a lot of love, nobody knows what happens to a Korean car once the warranty ends, and a cheap American car puts you in the same exact situation.

thurston howell iv

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Re: Buying A Cheap Car
« Reply #8 on: October 15, 2013, 08:45:23 AM »
Buy a 97 or newer Honda Civic or Toyota (so you have OBD II) . Ideally one that's not been beaten on by some teen. They are out there- high miles are fine. Super cheap to buy, cheap to maintain, easy to repair with limited mechanical skill. My 97 civic hx has 225k and has zero issues and gets 38mpg if I drive fast. If I slow down or do more highway I can get 43-45 and I suppose if I did more stuff like the crazies on ecomodder.com, I could probably get over 50+...

I've also bought and sold a few 97-99 Ford Escorts. Super cheap and easy and a non-interference engine (so if your timing belt breaks- the car will stop but nothing will get damaged)  Tons of them in junk yards for extra parts.  Even more than the Hondas...
 
« Last Edit: October 15, 2013, 08:47:08 AM by thurston howell iv »

prodarwin

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Re: Buying A Cheap Car
« Reply #9 on: October 15, 2013, 08:48:18 AM »
Sell it. $3500 is plenty to get a reliable cheap car.

This.

As a bonus, 3 years from now, your $3500 car will be worth $3000. 
Plus you can drop full coverage, which I'm assuming your loan requires.
Plus lower taxes on the value of the car.
Plus the noted gas mileage increase.
Plus the time-value of the other $3500 toward loans/investments.

The difference in cost is pretty huge when you do the math.

ketchup

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Re: Buying A Cheap Car
« Reply #10 on: October 16, 2013, 06:05:59 AM »
IMO, if you haven't any mechanical skills, you have no business buying a cheap car. Buying the wrong one can burn up 1000's of dollars. Buying a beater means you need to have the skills/tools to work on it.

The cheap cars are being sold for a reason. They aren't being sold becuase they're running perfectly fine. Figure on something needing to be fixed. And be careful, again with no mechanical skills, do you have the knowledge to go used car shopping on the cheap?
Every car is being "sold for a reason".  If that reason ends up being "I'm done trying to fix this damn thing." then yes, you're going to have a bad time.  The key with cheap cars is knowing which one to get, and which ones to run far away from.

My first car (that wonderful blue 1988 Chevy Sprint that got 53mpg) I bought from a guy that needed to sell it for two reasons:  One, he didn't drive it much, and his wife wanted the old ugly thing out of their driveway.  Two, he was an older gentleman that was developing back issues so he could no longer comfortably drive a standard.

My second car (my Volvo 850 wagon that I bought in July) I bought from a guy selling for only one reason: He was moving out of the country.  He came to the US from Estonia in February, thought he'd be staying longer, but ended up going back, so he had to sell the car.

"Picking the right one" is always important when car-shopping, but with the cheap cars its even more true.  As long as you take your time and do your homework, you should be just fine.

Eric

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Re: Buying A Cheap Car
« Reply #11 on: October 16, 2013, 06:09:31 PM »
I'll just throw it out there.  I realize you've always had a car, so it seems like you'll always need one.  But really consider, do you actually need to own a car?  It's pretty much gorgeous outside year round there.  Between a good bike with a rack or trailer and public transit, how often do you need to drive?  And if it's less than once a month, it might be more economical for the time being to rent or borrow a car for the times you do need to drive.

Russ

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Re: Buying A Cheap Car
« Reply #12 on: October 16, 2013, 07:33:28 PM »
I'm not sure in your situation it makes a ton of sense to sell the car. A key factor is what your income is--if you could pay it off in 3-4 months or less, than it doesn't seem so exorbitant relative to your income. MMM recommends lots of cars in the $7,000 range. Also, if you don't drive it that much, then it's not too expensive on gas.

I wouldn't ditch the Ranger till you're sure you won't want to
1.  Pick up used washers/dryers/bulky furniture off Craigslist
2.  Pull a trailer for hobby, side-project, or recreation reasons
3.  Be able to easily move yourself to closer/cheaper/better apartments as needed.
4.  Win favor from your friends by helping them move, or make a side business of local moving.

Did I accidentally go to don't-grow-a-'stache-you're-doing-just-fine forums? Nope, just checked, it's MMM and therefore it's FACEPUNCH TIME. What the fuck guys? It's a truck. In the city. OP even explicitly says
Quote from: OP
a pickup really isn't practical

I don't think "it's not that expensive!" or "it doesn't waste that much gas! Especially if you don't drive it!" are really valid arguments here. The cars he's looking at are $3500 cheaper. $3500. That alone is at least a month or two off your FI date, not including the ongoing savings from not driving an 18 mpg behemoth, plus cheaper insurance, etc. Sure, OP could just not drive it. They could also not drive a car, and still have an extra 3.5 grand, and still save on insurance and other things.

And let's examine what that $3500 will buy you if you choose to spend some of it... Well I could calculate it out but let's just say that you could rent a hell of a lot of U-Haul trucks for that much money.

Sell the truck. Examine whether or not you actually need a car as Eric says, but either way sell the truck. Worst case (not that I suggest this, but you'll know if it's right for you): if you regret getting rid of it, buy an equivalent truck used on CL and you're out nothing but a little time. It's like a magic closet where people pay you to store your things.

I'd offer car advice if I knew anything about buying them, but I don't.

edit: real numbers this time
« Last Edit: October 16, 2013, 07:48:28 PM by Russ »

Bruised_Pepper

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Re: Buying A Cheap Car
« Reply #13 on: October 16, 2013, 11:28:43 PM »
So, I switched over my car insurance to California insurance.  I was expecting my rates to double here in Los Angeles County...they QUADRUPLED.  Excuse the dated (but strangely applicable) saying: this is highway robbery!

Now, I'm really thinking about (as someone mentioned) selling the truck and not replacing it at all.  Then I'd be up $3,000-4,000, period.  I could use that and the previously-mentioned $3,000 savings to make a huge payment on my student loans, and be 100% debt-free within the year. 

I'm already walking and taking the bus/train a lot (and love it).  My work gives subsidies on the monthly metro passes.  My work also subsidizes ZipCar membership (with 4-5 cars right outside my office), so ZipCar could be a good backup plan while I'm evaluating the car-free lifestyle. 

It all seems to line up that I don't need this truck AT ALL.  Thanks for the input, guys, but I think the objective just changed! 

TygerTung

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Re: Buying A Cheap Car
« Reply #14 on: October 17, 2013, 02:59:21 AM »
It will be cheaper to just hire a car, or borrow for beers if you need to move something massive. Get a bike trailer or make one, you can move a lot of stuff with those. This website here tells you how to make one for about $10 http://www.cycletrailers.co.nz/

That guy who reckons you should keep it 'just in case you might need it eventually one day' is mental. I had a 1975 corolla, and it only had about 40hp or less, and I towed cars on car trailers, moved massive lathes on trailers and all sorts. You don't need a big car for towing, you need a small car. Crazy!

frompa

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Re: Buying A Cheap Car
« Reply #15 on: October 17, 2013, 06:11:24 AM »
I second and third all those who say, sell the truck and don't replace it.  Check to see if you have access to zipcar or other short term car rentals, and then take the jump.  Regular bike travel is a breeze, especially if you add the trailer option.  Between that, regular public transit, and occasional short term car rental, you'll likely be MUCH better off without the vehicle in your possession.  Good luck!

thurston howell iv

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Re: Buying A Cheap Car
« Reply #16 on: October 17, 2013, 12:07:42 PM »
I know your objective just changed but if you're stuck with insurance for a while check out AAA. I did not even know that they offered insurance. However, when I was in San Diego, not only did I have a regular membership but I also had them cover the cars and house. They were way cheaper than anybody!

AND they offered a mini-DMV service so you wouldn't have to wait in line for license and dmv type issues.

Bruised_Pepper

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Re: Buying A Cheap Car
« Reply #17 on: October 17, 2013, 12:53:03 PM »
Good idea, Thurston.  It will likely take a little while for this to get going.  I've got a few minor things to do before I can sell it, plus it may not sell right away for the price I want, so I'll look into driving that insurance number down in the meantime. 

Eric

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Re: Buying A Cheap Car
« Reply #18 on: October 17, 2013, 12:59:12 PM »
Now, I'm really thinking about (as someone mentioned) selling the truck and not replacing it at all.  Then I'd be up $3,000-4,000, period.  I could use that and the previously-mentioned $3,000 savings to make a huge payment on my student loans, and be 100% debt-free within the year. 

It all seems to line up that I don't need this truck AT ALL.  Thanks for the input, guys, but I think the objective just changed!

YES!  *pumps fist*