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Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: ryanht13 on December 09, 2015, 02:00:48 PM

Title: Need to buy a car - HELP!
Post by: ryanht13 on December 09, 2015, 02:00:48 PM
Here is the situation:

I just totaled my 2007 Honda Civic w/ 60,000 miles.
After deductible, I will get $8,500 back from Geico.

I drive a lot (~30,000 miles/yr). At least 24,000 of those miles are for my large sales territory, and I'm reimbursed $0.58/mi. Because I'm a sales professional and get paid for mileage, I want something very dependable and good gas mileage.

I am a very aggressive saver/investor (max 401k and ira). I have a low interest mortgage, but have limited credit history. I literally only have ~$1,000 in cash that I could apply to this car. I have plenty of money to liquidate my taxable investment account, but I'm wondering if I just finance the car at a low interest rate and keep my investments.

Thoughts on financing/cash? New/Used? Car recommendations?
Title: Re: Need to buy a car - HELP!
Post by: Mother Fussbudget on December 09, 2015, 04:32:00 PM
(This has been covered ad-nauseum here, but I'll bite...)

Buy a used Honda Civic or Honda Civic Hybrid - it's a car you know, and like.  You might be able to find one for less-than $8,500 and invest the difference.

Do a CraigsList search for 2007-2008 Honda Civic, between 60,000-and-85,000 miles, and sort by $$$ lowest first.  My search showed 3x cars less-than $8,500 in my area.
 
Pay off the car IMMEDIATELY once the Geico check arrives.  You can either put it on a credit card, or preferably find a company that will finance for a lower interest rate than the CC's.  Keep in mind loan-origination fees will potentially make dealer-financing more expensive than a credit card - especially if you pay off the CC before the next billing cycle (owing ZERO interest).
Title: Re: Need to buy a car - HELP!
Post by: lbmustache on December 09, 2015, 04:54:50 PM
You might want to build your credit history if you don't have much.... but $8500 should be more than enough money. I would get a used Prius: they're cheap right now (low gas prices), super reliable.

You could honestly finance $2k or so on a credit card. But again, depends on whether or not you need/want to establish more credit history.

I financed my car through a credit union and there was no loan origination fee - I thought that was mortgages only? Maybe this varies by state?
Title: Re: Need to buy a car - HELP!
Post by: lbmustache on December 09, 2015, 04:57:20 PM
Here are some Prii for you: http://www.autotrader.com/cars-for-sale/cars+under+13000/Toyota/Prius/Long+Beach+CA-90815?endYear=2016&makeCode1=TOYOTA&maxPrice=13000&mmt=%5BTOYOTA%5BPRIUS%5B%5D%5D%5B%5D%5D&modelCode1=PRIUS&searchRadius=0&showcaseListingId=413152067&showcaseOwnerId=562602&sortBy=mileageASC&startYear=1981&Log=0

I did a search with the max price being $13k. You could probably negotiate them down to $11-$12k. I don't know what state you are in or the taxes. But like the first poster mentioned, there have been a MILLION threads on both topics: reliable cars, and financing vs cash.