Author Topic: Ready to buy a car, but should I, which one, and insurance!  (Read 4650 times)

nikhilm

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Ready to buy a car, but should I, which one, and insurance!
« on: January 08, 2014, 03:53:45 PM »
Hi Mustachians,

I'm a Bay Area resident, who just finished a bit over an year working. My post tax income (including bonuses) for 2014 will be about $75000. I have no debt. In 2013 I saved about 45% of my income, my net worth is now nearing a 100k including the retirement fund.

I don't need a car for commuting, but I do a lot of hiking and backpacking, and have also started skiing. While I used to carpool with people, now that I'm more familiar with the risks, I want to undertake some solo adventures, and for that and the preparation for that, I'd like to have a car, purely for convenience.

The car would probably be used 4 days a month. While rentals sound like a good idea, the car will be sitting at one point most of that time (I drive 5 hours to a national park, spend 2-3 days hiking, drive back 5 hours). In addition I'm below 25, so rental car companies *fleece* me in insurance and underage fees. I've looked at RelayRides which is significantly cheaper for renting, but again I'd prefer to have something of my own, since RelayRides can't be guaranteed, especially during holidays weekends, and I'd hate to be stuck at home then.

Based on my low usage a really cheap car would be the best option, but I don't want to be stuck in the middle of nowhere, or have a car that is too weak to climb mountain roads. Is it a better idea then to spend a little more and get something nicer.
How about leasing a new car instead, since I will be below 12k miles/year easily (Since it is a recreational vehicle, if I near the upper bound, I can just not drive)?

I enjoy driving so I'm looking for a manual transmission, will need some storage, so a hatchback. I'm fine with a 2dr hatchback, but I would like something sporty, with good acceleration and fun to drive, so dorky Scion XBs and similar are out. Are there any mustachian friendly cars satisfying these constraints? How will a 2004-07 XA or a Yaris or Accent fare in the fun factor?

Since I don't have insurance, how do I test drive a used car sold by a owner? Can I get insurance for a short period without knowing what model I'm going to get?

Sometimes I'm just tempted to finance a new car and pay it of within two years and drive it to the ground. I can downpay $7000 (this has been saved just for buying the car, I have a separate emergency stash) or so and then finance. I currently save about $2500 from the $5050 income per month. So I can afford the car payments without hurting my savings too much. Some non mustachian friends have advised me I should let my heart make the car decision and buy a nice new car since I can afford it. What do you guys think? Can I afford to let my heart in the discussion, at the price of delaying FIRE by a year or two?

Thanks!

Another Reader

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Re: Ready to buy a car, but should I, which one, and insurance!
« Reply #1 on: January 08, 2014, 04:10:10 PM »
In your shoes, I would rent a car when I needed it and get "fleeced" on the insurance for a couple of years.  Way cheaper than buying a car. 

stevesteve

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Re: Ready to buy a car, but should I, which one, and insurance!
« Reply #2 on: January 08, 2014, 04:29:46 PM »
I see just about nothing mustachian about buying a car to drive 4 days a month and the idea of putting $7,000 down and taking out a loan to buy a new one is face punch worthy.  You should talk to someone like JamesQF or the like who seem to be able to buy super cheap cars without a problem.

It strikes me you should do relayrides and if that fails rent a car and if that fails pay the high fee for a zip car.  All of those options sound smarter to me than buying a new car and might very well work out better than buying a super cheap used car and insuring it.

yyc-phil

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Re: Ready to buy a car, but should I, which one, and insurance!
« Reply #3 on: January 08, 2014, 04:33:28 PM »
I bought a new car a year ago exactly, after my trusted and sporty 1998 Civic died on me (my fault, I won't elaborate....).  Because of my job as a flight attendant at the time, I needed a car to commute to and from the airport a few times a week, and no other adequate form of public transportation from downtown where I live was available in Calgary, except taxi, at about $100 roundtrip. But since I needed that car only for the commute, I opted for the cheapest, most economical car I could find. I tried the usual suspects (Honda Fit, Toyota Yaris, KIA, etc.), and while they all offered great value for the money, there was no fun factor whatsoever. While I always bought used cars in the past, I came across a deal for a Fiat 500 I could not pass for a brand-new model that had been sitting for three months at a Dodge dealership (in a city where pick-up trucks/SUVs are kings and the chances of selling a Fiat were pretty slim) after it had been won in a contest and the winner chose money instead of the car. I test-drove it, and I was hooked. What a fun car to drive, peppy, with great handling, and enough room to haul stuff with the rear seat folded down. It is not a family car by any stretch of the imagination so if there are more than two people in your equation, it will not suit your lifestyle, but otherwise, this sporty little thing attracts the attention, is way more stylish compared to anything in this class and price (the Mini is another contender, but more expensive even for the base model) and has fantastic gas mileage as a bonus. Under snow and icy road conditions, it performs impeccably if fitted with four good winter tires.

Now this was last year. Since then, I got a new job which requires me to fly to a remote location and spend three weeks there, followed by two weeks home. Since it is not practical and economical to drive to the airport and leave my car parked there for three weeks, I just take the cab to the airport if I have an early morning flight, and the downtown shuttle when I come back home. When I am home for my two-week stay, I rarely use the car, so it stays parked in my garage most of the time except for a trip to the grocery store or the occasional Sunday drive, which seems to be your projected usage. If this is the case, if I were you, I would simply be car-less, and explore other available options if I ever needed a vehicle: rent a small SUV for camping trips or to go skiing (apply for a travel reward credit card that includes car rental coverage), use a car-sharing system like Car2Go to run occasional city errands, and bike/walk/public transit the rest of the time. That would be the Mustachian way. If you really want your own car, which is fair, go for something cheap and economical, but fun, like the Fiat 500 or the Mini.

daverobev

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Re: Ready to buy a car, but should I, which one, and insurance!
« Reply #4 on: January 08, 2014, 04:41:58 PM »
Just rent. You have all the flexibility. You won't have ongoing costs.

You're doing a great job saving. Having a car is a real luxury, especially as you don't need it.

You can afford it. But it will be a significant damper on your savings rate. Find a car rental co with a good loyalty program and stick with them, IMHO.

PS: 'too weak to climb mountain roads' and 'stuck broken down' are really silly things to say. A well maintained, 20 year old car is unlikely to 'just break down'.

If you insist - and I don't know what insurance is like where you are, but if it is bad for anything remotely stealable - look into an older, full size sedan. Cheap to buy, solid, cheap to insure. Cheap to run? No - but you're doing low miles.

mlipps

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Re: Ready to buy a car, but should I, which one, and insurance!
« Reply #5 on: January 08, 2014, 08:26:22 PM »
Let your heart make the car decision? It's a car, not a baby. Don't get a car. Your reasons all suck.

doyouknowwhy

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Re: Ready to buy a car, but should I, which one, and insurance!
« Reply #6 on: January 08, 2014, 09:25:10 PM »
You can buy a decent honda or toyota that will last you well over 12 years. 

Greg

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Re: Ready to buy a car, but should I, which one, and insurance!
« Reply #7 on: January 09, 2014, 08:56:39 AM »
Backing up a bit:
I want to undertake some solo adventures, and for that and the preparation for that, I'd like to have a car, purely for convenience.

Seems to me that solo adventures go against the advice of most search and rescue types.  I'd find a friend with similar goals and interests, and a car, and start there.  You know, the buddy system.

Thegoblinchief

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Re: Ready to buy a car, but should I, which one, and insurance!
« Reply #8 on: January 09, 2014, 03:02:44 PM »
Ask an insurance agent to quote you insurance on an imaginary vehicle of your choosing.

Factor ~$0.50/mile in depreciation/maintenance. (Gas will be equivalent whether you own or rent)

Compare what's cheaper: owning/maintaining a vehicle for x miles/year or the cost of renting each time?

And you don't need to spend much. I'd look at older Subaru or Volvo wagons. That way you get AWD in mountains. Subies in particular are quite fun to drive. They're going to suck at gas mileage but so what - you're not driving it that much!

burly

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Re: Ready to buy a car, but should I, which one, and insurance!
« Reply #9 on: January 09, 2014, 03:46:57 PM »
In addition I'm below 25, so rental car companies *fleece* me in insurance and underage fees.


I've heard this many times from my peers... I am just about to turn 26 and I must have rented moving trucks and a car at least 5 times so far with my first being 21 years old in Germany using Avis... I've never been 'fleeced' with fees... It's usually 10-15 dollars for a younger driver.. That's it.  Have you actually looked into a rental?

Paul der Krake

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Re: Ready to buy a car, but should I, which one, and insurance!
« Reply #10 on: January 09, 2014, 04:18:38 PM »
In addition I'm below 25, so rental car companies *fleece* me in insurance and underage fees.


I've heard this many times from my peers... I am just about to turn 26 and I must have rented moving trucks and a car at least 5 times so far with my first being 21 years old in Germany using Avis... I've never been 'fleeced' with fees... It's usually 10-15 dollars for a younger driver.. That's it.  Have you actually looked into a rental?
Well it feels outrageous when you're renting the car at $25/day and the young driver fee is $20/day, regardless of how spotless your driving record is. All in all it's not that much money but us humans are wired to cry foul whenever we perceive injustice.

mlipps

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Re: Ready to buy a car, but should I, which one, and insurance!
« Reply #11 on: January 09, 2014, 04:27:13 PM »
In addition I'm below 25, so rental car companies *fleece* me in insurance and underage fees.


I've heard this many times from my peers... I am just about to turn 26 and I must have rented moving trucks and a car at least 5 times so far with my first being 21 years old in Germany using Avis... I've never been 'fleeced' with fees... It's usually 10-15 dollars for a younger driver.. That's it.  Have you actually looked into a rental?
Well it feels outrageous when you're renting the car at $25/day and the young driver fee is $20/day, regardless of how spotless your driving record is. All in all it's not that much money but us humans are wired to cry foul whenever we perceive injustice.

Hertz will waive the fee completely if you join their gold plus reward program. It's free and they treat you like a celebrity.

nawhite

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Re: Ready to buy a car, but should I, which one, and insurance!
« Reply #12 on: January 09, 2014, 04:28:10 PM »
If you can get relayrides when you want them, its really hard to beat that for your use case. Most people price out their cars absolutely stupidly. Here in Denver I can get a Pontiac Vibe for $25/day. That is literally a rounding error vs buying and maintaining your own car.

My wife and I don't drive for work and we live right by light-rail so we're looking at driving less than 4000 miles/year. Our insurance costs alone for 1 car are about $125 every 6 months for decent coverage. So you get 5 days of RelayRides every 6 months for the cost of insurance. Purchasing a used car is $2000 on the low end for what you're talking about. So you want 4 days per month. At $25/day for RelayRides, you'd have to own the car and go 4 days EVERY SINGLE MONTH for 20 months. But remember insurance costs, that extends you out to more like 24 months. And you haven't spent a single cent on other maintenance or parking while it sits. For maintenance, I'd expect $30/year on oil since you don't drive much, $50/year in tires (amortized), $20/year on other fluids like wiper fluid, and on a $2k car probably $100/year (amortized) on repairs and towing if you're lucky. So even payback vs RelayRides comes somewhere around 2.5-3 years. And this is for a $2000 car.

Granted a 3 year payback is like a 25% ROI so I think it theoretically could come out ahead, but only if you got a REALLY cheap car and were pretty lucky about repairs. I'm a big fan of our Pontiac Vibe for space, price and MPG. A Civic Hatchback is also pretty sweet for those categories. Personally I'm not a big fan of the Subies because they are kinda expensive for their age and if you get one pre-2001 (to get into the $2k price point you have to go at least that old) you run a risk of having a bad headgasket (about 2/3rds blow a head gasket between 100k and 200k miles. Costs about $1500 to get repaired).

You want to put $7000 down on a new car?!? Facepunch!