Author Topic: How much car can I "afford"  (Read 2573 times)

mozar

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How much car can I "afford"
« on: November 12, 2019, 02:55:44 PM »
Hello, I'm at an impass with myself for how much to spend on a car. This is my first time buying a car. I'm thinking about either the honda fit or Prius C. Are there other considerations besides going with the cheapest car with the lowest mileage?

I've been unemployed for two years and I had a job interview today where I would need a car.
I have 155k in index funds. 30k is liquid. I bring in 1500 a month in rental income. My expenses are 2100 a month before rental income. I don't know what should determine how much I should spend on a car.

honeybbq

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Re: How much car can I "afford"
« Reply #1 on: November 12, 2019, 03:06:48 PM »
You've given very little information. Unemployed for 2 years is a long time. What have you been living off of for the past 24 months?

How much will you make?
Why do you need a car if you've been without for so long?
Can you not bus/bike/walk?

With no further information my answer would be: as little as possible.

mozar

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Re: How much car can I "afford"
« Reply #2 on: November 12, 2019, 03:23:08 PM »
I've been living off savings. The starting salary is 17 an hour. They said they would try to find sites for me close to public transportation but it would be difficult in the long run. And the public transit takes a long time. It took me 2 and a half hours just to get to the interview. I also want the car to last at least 5 years. A beater that fails in a few months is not ideal.

Say a car is 10k and a similar car is 11k with a few less miles. How am I supposed to decide?

honeybbq

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Re: How much car can I "afford"
« Reply #3 on: November 12, 2019, 03:34:06 PM »
I've been living off savings. The starting salary is 17 an hour. They said they would try to find sites for me close to public transportation but it would be difficult in the long run. And the public transit takes a long time. It took me 2 and a half hours just to get to the interview. I also want the car to last at least 5 years. A beater that fails in a few months is not ideal.

Say a car is 10k and a similar car is 11k with a few less miles. How am I supposed to decide?

JMO but 10k vs 11k is splitting hairs. I'd pick the one that seemed like it would last the longest, which may or may not be the one with the smallest # of miles. I think 10k for a used car is reasonable in your situation. Are you looking at private party or carmax, etc? I'd try to find one that looked like it had been babied... maybe has all the service reports, all the oil changes, etc. Also find a good used brand like a Honda.

(I drive a 2005 Honda...)

BECABECA

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Re: How much car can I "afford"
« Reply #4 on: November 12, 2019, 04:03:55 PM »
A $5k used Toyota, Honda, Scion should last you 10 years easily. Iíd recommend looking at the reliability statistics from this site before deciding on any specific model or model year:
http://www.dashboard-light.com/reports/Subcompact.html

jeroly

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Re: How much car can I "afford"
« Reply #5 on: November 12, 2019, 04:23:58 PM »
I've been living off savings. The starting salary is 17 an hour. They said they would try to find sites for me close to public transportation but it would be difficult in the long run. And the public transit takes a long time. It took me 2 and a half hours just to get to the interview. I also want the car to last at least 5 years. A beater that fails in a few months is not ideal.

Say a car is 10k and a similar car is 11k with a few less miles. How am I supposed to decide?

These days you should be expecting to be able to get 200,000 miles or more out of a car if properly maintained, so to pay an extra 10% for a couple thousand fewer miles is basically throwing money away.  Now, if it was 20,000 extra miles, then paying the $11k could make sense...

mozar

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Re: How much car can I "afford"
« Reply #6 on: November 12, 2019, 04:46:22 PM »
20k miles is worth paying more for. Good to know.

ApacheStache

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Re: How much car can I "afford"
« Reply #7 on: November 12, 2019, 06:03:16 PM »
I recommend checking out https://www.carcomplaints.com/. They have reliability and typical repair cost metrics for most modern vehicles, as well as a Best and Worst lists.

Also how you can afford depends on what your budget looks like and how much you're willing to spend on gas, insurance, maintenance, vehicle features, etc.
« Last Edit: November 12, 2019, 06:05:25 PM by ApacheStache »

use2betrix

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Re: How much car can I "afford"
« Reply #8 on: November 12, 2019, 06:18:47 PM »
I've been living off savings. The starting salary is 17 an hour. They said they would try to find sites for me close to public transportation but it would be difficult in the long run. And the public transit takes a long time. It took me 2 and a half hours just to get to the interview. I also want the car to last at least 5 years. A beater that fails in a few months is not ideal.

Say a car is 10k and a similar car is 11k with a few less miles. How am I supposed to decide?

If you have been unemployed for two years, I would say it sounds like you pretty desperately need a job. I would not be telling them about your issues in finding transportation to work either that public transport took 2.5 hours, or that you donít have a car. The topic shouldnít come up (itís not typically something employers would ask) and if it does come up, Iíd make it clear itís not an issue.

As an employer, those are not things I would like to hear from a potential employee. If the topic came up, Iíd say the correct answer is, ďIíve used public transportation in the past but for this job Iíll need to get a car, which I have money saved for and planned to buy anyways.Ē

SwordGuy

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Re: How much car can I "afford"
« Reply #9 on: November 12, 2019, 06:57:34 PM »
I've been living off savings. The starting salary is 17 an hour. They said they would try to find sites for me close to public transportation but it would be difficult in the long run. And the public transit takes a long time. It took me 2 and a half hours just to get to the interview. I also want the car to last at least 5 years. A beater that fails in a few months is not ideal.

Say a car is 10k and a similar car is 11k with a few less miles. How am I supposed to decide?

If you have been unemployed for two years, I would say it sounds like you pretty desperately need a job. I would not be telling them about your issues in finding transportation to work either that public transport took 2.5 hours, or that you donít have a car. The topic shouldnít come up (itís not typically something employers would ask) and if it does come up, Iíd make it clear itís not an issue.

As an employer, those are not things I would like to hear from a potential employee. If the topic came up, Iíd say the correct answer is, ďIíve used public transportation in the past but for this job Iíll need to get a car, which I have money saved for and planned to buy anyways.Ē

The correct answer, if it's asked out of the blue, is "I will reliably show up at my assigned place of work on time and prepared to work."      That's all they need to know.

mozar

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Re: How much car can I "afford"
« Reply #10 on: November 12, 2019, 07:25:40 PM »
There are assumptions about me and about how the job interview went. The interviewer asked me upfront if I had a car and I told him I would buy one as soon as I got a start date.
They have people coming in from all over the region to interview.  If I had mentioned how long it took me to get there (I didn't) I don't think they would have thought twice about it. If I had a car it would take me about 20 minutes to get to the main office. Which is a reason I want to buy a car!
I'm surprised any body on this forum would think I'm desperate for a job. I've been following the mustachian ways for years now.
I know I'm opening myself up to criticism by posting here but there's no need to make stuff up.

Villanelle

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Re: How much car can I "afford"
« Reply #11 on: November 12, 2019, 07:42:46 PM »
I think you are asking the wrong question. What you can afford is only relevant if you  are worried about running out of money.  It sounds like you aren't.  So the question should be, "how little can I spend to get what I need".  Determine what you need as far as size and features.  Then figure out how many years of reliable car life you want to purchase.  Some quick research on the reliability of the cars that meet your size and feature needs, then some basic math with how many miles you plan to drive per year. 


Zamboni

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Re: How much car can I "afford"
« Reply #12 on: November 12, 2019, 07:48:12 PM »
When I read your original post, my first thought was to congratulate you for still having so much in assets after 2 years without external employment (I would say you have actually been employed as a landlord . . . technically . . . but we know what you mean). You've obviously got frugal living muscles!

The couple of car models you have mentioned should be available in a huge selection. That's probably what's driving your question: too many options. Do your internet research first on AutoTrader or a similar site to see what you can get for your money in a typical purchase. If you want a silver car, then you can quickly see online what is available in your area at that moment for a silver Prius C, for example. But, there's really no substitute for getting out to look at cars up close . . . so see if you can find a place near public transit that has a half dozen or more cars that fit your profile.

Go check the cars out and, since it will probably be a big used car lot, tell the sales person what you are looking for and ask lots of questions. The main thing is too be firm with yourself and the sales person about the budget. If you have decided you want to spend $10K, then don't be tempted up to a $15K car. Tons of great cars available for $10K. Find one you really like! Sometimes the lower mileage car actually costs LESS than a similar higher mileage car because of color or options or some other weird factor, like it has just been on their lot for a long time so they are trying to move it.

I realize you might get a slightly better deal in a private transaction from an individual, but that's a pain in every case and particularly a pain if you are relying on public transit to go look at cars. Also, a dealer will usually fix things for free if something mechanical goes wrong within a few days of the purchase (recently ran into this with my son's used car.)

OtherJen

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Re: How much car can I "afford"
« Reply #13 on: November 12, 2019, 08:05:28 PM »
I don't know if this will help, but I drive a 2012 Prius C (purchased used in 2015), and I like this car so much that I plan to drive it until it wears out.

Also, it's a sturdy car. The driver's side was T-boned by a police cruiser a few years ago (I had the right-of-way and the cop claimed not to have seen me). Both driver's side doors and the vertical support panel had to be replaced, but I was completely unharmed and the car is in great shape after repairs.

Bernard

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Re: How much car can I "afford"
« Reply #14 on: November 12, 2019, 09:14:54 PM »
Disclosure: I'm a lifelong car guy and I hate Priuses. They are soulless appliances with 2 engines plus a computer that has to manage them. A ticking time bomb waiting to be disposed of.

That out of the way, you can get a GREAT used car between $3,500 and $5,000. Once you have a million bucks in your war chest, you can update to a $10K car.

ministashy

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Re: How much car can I "afford"
« Reply #15 on: November 13, 2019, 01:56:26 AM »
Speaking as someone who's also currently on a used car hunt, and have successfully bought one in the past (7 year old Honda Civic off of Craigslist, paid $6500 for it and have gotten 9 solid years out of it so far), these are my current car-hunting tactics, so maybe they'll help you:

Determine what I want/need (in my case, a compact car with decent trunk space that gets good gas mileage and won't kill me on maintenance costs as it gets elderly).

Go to Craigslist/Autotrader, set up a search for all cars between $1000 and (insert the top amount you're willing/able to spend here), and how far I'm willing to go to pick one up (25 miles from my address is my max usually, but that can vary if you're in a more rural area).  Setting the bottom end at $1000 keeps the junkers and stupid dealer '$0 down!' ads off your results.  Add any other criteria that are absolutely required (for instance, I only search for cars with clean/rebuilt titles under 115K miles, since I know from previous experience I can probably get a good ten+ years out of them.  Your criteria will no doubt be different:  if you don't know how to drive stick, you'll only want to search for automatics, etc.)

Take a look at what's on offer for my area.

Find the most promising listings (lowest price+lowest mileage+best condition), then do a Google search for that year/make/model and 'reliability' (example: 2015 Ford Escape reliability).  This usually gets me to either Edmunds or cars.com review sites, where I sort reviews by newest first (since those folks have likely had their car the longest, and will talk about any problems they had, vs older reviews that will have more owners talking about their shiny new car fresh off the lot).  This will take a bit of time, but will help you narrow down what year/makes/models are the best match to what you're looking for.

Once I know broadly what year/make/models of cars are the best fit, then I go back to Craigslist/Autotrader and start searching listings more specifically.  Start picking out cars that meet my criteria (with bonus points if they have nice extras and are still within your budget), then I go out and start doing test drives.  Oh, and I make sure to check the Kelly Blue Book prices on every car I end up going to see in person--when I find the 'one', I want to have as much information as possible, so that I can put myself in the best bargaining position.  I've also started checking Yelp reviews on car dealers to see if I'm going have to fend off any hard sell tactics, or if they have a poor rep for trustworthiness.

Once I find the 'one', I arrange and pay for an inspection by a mechanic I trust.  If the mechanic gives the car a clean bill of health, I'm good to go!  If they don't, then I'll have to decide if I want to haggle the price down some more, or just move on. 

I know this is possibly more info than you wanted--here's hoping it helps.  And I'm definitely interested if anyone else has any tactics/tips that have worked for them.
« Last Edit: November 13, 2019, 01:58:48 AM by ministashy »

mozar

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Re: How much car can I "afford"
« Reply #16 on: November 13, 2019, 08:40:44 AM »
@Villanelle can you give an example?
@Zamboni too many options hits the nail on the head. I'm going to test drive some cars today.

RWD

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Re: How much car can I "afford"
« Reply #17 on: November 13, 2019, 09:52:17 AM »
I think you are asking the wrong question. What you can afford is only relevant if you  are worried about running out of money.  It sounds like you aren't.  So the question should be, "how little can I spend to get what I need".  Determine what you need as far as size and features.  Then figure out how many years of reliable car life you want to purchase.  Some quick research on the reliability of the cars that meet your size and feature needs, then some basic math with how many miles you plan to drive per year.

Yup, this. We can "afford" a Lamborghini but would rather reach FI sooner.

Villanelle

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Re: How much car can I "afford"
« Reply #18 on: November 13, 2019, 10:09:41 AM »
@Villanelle can you give an example?
@Zamboni too many options hits the nail on the head. I'm going to test drive some cars today.

An example of what?  When I say you should determine your needs, there is a great example above--a compact car with good trunk space and good MPG (that last should fo without savings).  Okay, not look at subcompact cars, and find 3-5 that are well rated for maintenance and longevity.  Let's say those are models A, B, C, and D.  Your research tells you that D seems to die at 150k, where as the others can be expected live to 200k.   

Great.  Now you estimate you are going to drive $10k miles per year.   

SO, to know how many years you will get out of the car, you subtract the current mileage from 200k ,then divide by 10.  If a specific available car has 50k mile son it, you can expect to get 150k more, so thats 15 years of driving.  Divide the purchase price by 15 and you have a cost per year.  DO that for all options you find.  (This is assuming that your early research tells you that maintenance costs will be about the same, and there is nothing special about any of the specific vehicles that skews the numbers, like differing MPG.  If the MPG is different, you can do the math based on your 10k/year estimate to figure out how that affects things.)

You mention too many options.  That's why you start with what you need.  If you truly just need something to get one person from A to B, then you automatically rule out anything other than sub-compact cars. From there, reliability reports will likely rule out some, and you will be down to a few models.  Don't even waste the energy looking at anything else.  You have a list of a few cars that work for you and run cheaply.  Next all you need to do is find the right one.  The cost/year is one way to consider things.



Wolfpack Mustachian

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Re: How much car can I "afford"
« Reply #19 on: November 13, 2019, 10:20:12 AM »
Disclosure: I'm a lifelong car guy and I hate Priuses. They are soulless appliances with 2 engines plus a computer that has to manage them. A ticking time bomb waiting to be disposed of.

That out of the way, you can get a GREAT used car between $3,500 and $5,000. Once you have a million bucks in your war chest, you can update to a $10K car.

Why such animosity towards Priuses? They have the lowest average maintenance cost of any car from 2006-2016. If you don't like them because of style/power/whatever, feel free to specify that. If you're disparaging a very reliable car with great fuel economy to someone who is looking for a good used car, that's not really cool...

https://www.greencarreports.com/news/1104478_toyota-prius-hybrid-is-cheapest-car-over-10-years-that-you-can-buy

bacchi

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Re: How much car can I "afford"
« Reply #20 on: November 13, 2019, 10:24:54 AM »
Disclosure: I'm a lifelong car guy and I hate Priuses. They are soulless appliances with 2 engines plus a computer that has to manage them. A ticking time bomb waiting to be disposed of.

That out of the way, you can get a GREAT used car between $3,500 and $5,000. Once you have a million bucks in your war chest, you can update to a $10K car.

Why such animosity towards Priuses? They have the lowest average maintenance cost of any car from 2006-2016. If you don't like them because of style/power/whatever, feel free to specify that. If you're disparaging a very reliable car with great fuel economy to someone who is looking for a good used car, that's not really cool...

https://www.greencarreports.com/news/1104478_toyota-prius-hybrid-is-cheapest-car-over-10-years-that-you-can-buy

Word. The Prius is slow and dorky but they're solid cars.

zoochadookdook

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Re: How much car can I "afford"
« Reply #21 on: November 13, 2019, 11:09:09 AM »
I'm going to take a realistic approach here.

Sometimes 5k 6k cars don't work out. It happens. I bought my 5500$ honda civic 5 years ago and despite doing the maintnance (new intake manifold, new timing belt/water pumps, brakes, exhaust, clutch, fluids religiously) it STILL blew a headgasket randomly one day (3 months after most of that) and would have been another 1500-so I went with a honda fit for $3000.

My point is even if you follow every single step-something could happen. I think 9-10 years is a great goal but probably shouldn't be the actual expectactions.

Then again maybe I'm just unlucky lol

BobTheBuilder

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Re: How much car can I "afford"
« Reply #22 on: November 13, 2019, 12:45:27 PM »
In my opinion, there are currently two classes of cars on the market that make sense for commuting and no special needs:

Sedans from 2010 to 2016 with 4 cylinders and no significant driver assistance features other than ESP (ACC and the like are for convenience but not necessary for safety) / A cheap Prius if you can find one

Newer cars with potentially live saving features like automatic emergency breaking etc., and more advanced hybrid electric drives for saving gas, at a higher purchase price.

Within the e.g. 2010 to 2016 econo-box cohorte, it does not really matter what you buy. Given a working market, you get what you pay for.
I would go for a 2012 or so model that will probably last 5-8 years until electric cars become cheaper in purchase price than gas cars, if I wasn't safety obsessed.
A ~3 year old car with more advanced tech might be over the top if you just rejoin the work force.

ysette9

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How much car can I "afford"
« Reply #23 on: November 13, 2019, 01:02:40 PM »
I canít believe no one has mentioned Consumer Reports yet.

Go to the library and find the latest Consumer Reports Car Buying Guide. Look up the potential cars that interest you and take note of their reliability ratings by model and year. This will help you parse out whether you should consider a 2010 VW Jetta as well as a Civic or give the former a pass.

Then go to Craigslist as others have mentioned to see what is available in your area. When you find a couple that look promising, look on Yelp to find a well-rated mechanic nearby. Do a test drive and take the car to the mechanic and pay for a pre-purchase safety check. Use this to decide whether the car is in good enough shape to buy. You can also use the findings to negotiate a lower price if some work needs to be done. (Iíve done this on minor things like needing to replace a battery.)
« Last Edit: November 13, 2019, 01:05:22 PM by ysette9 »

RWD

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Re: How much car can I "afford"
« Reply #24 on: November 13, 2019, 01:27:38 PM »
I canít believe no one has mentioned Consumer Reports yet.

I've never looked at a physical copy of Consumer Reports. Does it have a complete table of all years/models or just predictions on the new cars? All the stuff online is paywalled.

ysette9

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Re: How much car can I "afford"
« Reply #25 on: November 13, 2019, 01:41:45 PM »
I canít believe no one has mentioned Consumer Reports yet.

I've never looked at a physical copy of Consumer Reports. Does it have a complete table of all years/models or just predictions on the new cars? All the stuff online is paywalled.
Yep, includes both new models and old models going back in time. They survey CR members about their car purchase and experiences as part of building a database of how cars perform over time.

clarkfan1979

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Re: How much car can I "afford"
« Reply #26 on: November 14, 2019, 01:44:49 PM »
MMM did a post on used cars with lots of great info.

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


To summarize, look for cars that have 100K to 125K miles are are 8-10 years old. They should have no problem lasting another 5 years and 75K miles. Honda and Toyota are highly recommended.

MMM considers the Pontiac Vibe and Toyota Matrix as a the same car. They are both very similar and came out of the same factory. However, the cost of the Pontiac Vibe is much lower. If you plan on driving it into the ground, buy the Pontiac Vibe. If you plan on driving for 2-3 years and re-selling, buy the Toyota Matrix.



zoochadookdook

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Re: How much car can I "afford"
« Reply #27 on: November 14, 2019, 08:44:19 PM »
MMM did a post on used cars with lots of great info.

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


To summarize, look for cars that have 100K to 125K miles are are 8-10 years old. They should have no problem lasting another 5 years and 75K miles. Honda and Toyota are highly recommended.

MMM considers the Pontiac Vibe and Toyota Matrix as a the same car. They are both very similar and came out of the same factory. However, the cost of the Pontiac Vibe is much lower. If you plan on driving it into the ground, buy the Pontiac Vibe. If you plan on driving for 2-3 years and re-selling, buy the Toyota Matrix.

The matrix/vibe that share the recalled corrolla engine in 2008-2010/09 should be avoided. They burn a considerable amount of oil in quite a few cases. The corollas had a recall; pontiacs did not but the same issues. I believe the matrixs did.

mozar

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Re: How much car can I "afford"
« Reply #28 on: November 15, 2019, 11:37:36 AM »
Thanks for the post reminder. I hadn't considered cars over 100k.

Wolfpack Mustachian

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Re: How much car can I "afford"
« Reply #29 on: November 15, 2019, 12:37:36 PM »
Thanks for the post reminder. I hadn't considered cars over 100k.

I mean, there's risk in anything, but I haven't bought anything with less than 100k in a long time, and they've all ran well for long periods of time. They've all been Hondas or Toyotas.

Chris @ Saturday Financial

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Re: How much car can I "afford"
« Reply #30 on: November 15, 2019, 01:15:05 PM »
Adding my anecdote: I drive a 2005 Accord that I bought 6 years ago for ~8k including the maintenance I knew I'd need to do right after buying it. It's still going strong.

+1 for recommendations in the $5k to $10k range. My goal with cars is to get something that will average less than $1k/yr in depreciation.
« Last Edit: November 15, 2019, 01:16:51 PM by Chris @ Saturday Financial »

Malcat

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Re: How much car can I "afford"
« Reply #31 on: November 15, 2019, 06:50:41 PM »
Thanks for the post reminder. I hadn't considered cars over 100k.

I mean, there's risk in anything, but I haven't bought anything with less than 100k in a long time, and they've all ran well for long periods of time. They've all been Hondas or Toyotas.

And I've had multiple low mileage cars turn out to be expensive lemons that required unexpected repairs given their age and mileage.

My bad experiences with low mileage cars makes me so much more willing to buy higher mileage cars because individual car risk is individual. Low mileage or even brand new doesn't guarantee a risk free purchase, so you might as well go with higher mileage and a lower price so that you have more money in the bank if it needs repairs.

Wolfpack Mustachian

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Re: How much car can I "afford"
« Reply #32 on: November 15, 2019, 07:02:46 PM »
Thanks for the post reminder. I hadn't considered cars over 100k.

I mean, there's risk in anything, but I haven't bought anything with less than 100k in a long time, and they've all ran well for long periods of time. They've all been Hondas or Toyotas.

And I've had multiple low mileage cars turn out to be expensive lemons that required unexpected repairs given their age and mileage.

My bad experiences with low mileage cars makes me so much more willing to buy higher mileage cars because individual car risk is individual. Low mileage or even brand new doesn't guarantee a risk free purchase, so you might as well go with higher mileage and a lower price so that you have more money in the bank if it needs repairs.

This is an excellent point. There are really no guarantees. I went through a momentary bout of insanity and looked at Dodge vans a year or three old but ended up buying a high mileage Honda van for less than 1/4 the price. The math was simple - if it got me through a couple of years maintenance free or without a major maintenance issue, it would easily be worth it compared to the almost new Dodge van. If something came up requiring fixes costing more than it was worth, I would ditch it and get another high mileage cheaper one, but that same thing could happen with the newer Dodge and then I would have thousands and thousands more sunk into it. Our van has already gotten 50-60k miles on it from us with no major maintenance issues. I am fully aware that at some point we'll likely buy an older vehicle that will require major maintenance "early" on in our purchase of it, but we will have come out tens of thousands of dollars better doing this for years than we would have the other way any way I look at it. That money we saved will more than cover the maintenance expenses.

MoneyQuirk

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Re: How much car can I "afford"
« Reply #33 on: December 02, 2019, 03:03:18 PM »
I think 5% of your networth is a good estimate of how much car you can afford. That would put you at about 8k worth of car.

Buy used. Buy with low mileage. Buy with no warning lights on. Buy a reliable brand.

mozar

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Re: How much car can I "afford"
« Reply #34 on: December 02, 2019, 04:42:01 PM »
I had come to that conclusion as well. I decided to buy a 2009 prius. Then my dad told me if I could wait a few months he would give me his well maintained car.