What to do about cars???

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fluter
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What to do about cars???

Postby fluter » Mon Jul 23, 2012 8:44 pm

Ok, first time poster here, who just spent way to long writing about her car troubles, then lost the post when the forum logged me out without me noticing.

But short and sweet might be better anyway:

The car: 1996 Honda Odyssey. On its last legs, and has cost me $1000+ in repairs since January, put a wrench in plans more than once, and been towed twice. Need to plan for its retirement. Very unfamiliar with car buying and selling.

Me(financially speaking): University staff. In my 20's. Childless. long-term boyfriend. Make $31,000 with excellent benefits. Like my job a lot, but no raises in the picture. Have $12,000 remaining in student loans, but paying $500/month to kick them to the curb. Have $4,500 in emergency fund. Have $17,000 or so in a mutual fund (inheritance), which I think of as a house payment and don't touch.

Crunching numbers, I could hopefully save an additional $200/month for car replacement.

My Plan is to auto-deduct (heh), that 200 into my savings account from my paycheck, and try to add that to the $4,500, plus look for additional income, and adding any tax return etc. I'd like to get it to $8,000 or so, when I could buy a much nicer used car that would last me for a long time with only a very small loan or none at all.

But there are other options, and my current maintenance costs/stresses are making me wonder about alternatives (and in any case I need a backup plan in case of the truly bank-breaking repair).

Other options:
Buy a $4000 used car. Still going to have higher repair costs, but better than my present situation.
Take out a loan for a substantially better car (again, in the $8000ish range)
Raid the mutual fund.
Try going carless for awhile (I elaborated on this in my lost post, but I'm afraid it would just cost me as much or more to rent a car for the several weeks a year when it is an absolute necessity for me, even if a car is unnecessary for weeks at a time).

I'm interested in what the forum thinks about all this, and if anyone has suggestions for resources dealing with the whole buying/selling part.

Thanks!!!

Northern light
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Re: What to do about cars???

Postby Northern light » Tue Jul 24, 2012 12:41 am

Do you really need a big hockey mum car, beeing 20 something?

What would a 6-7 year old Honda Civic with 75.000 miles on it cost you? Could you get something like that for $5.000-7.000? Given you really need (not want) a car, I would probably go for something like that and take all the money for it from the mutual fund (keep your EF). The rest of the mutual fund I would put in a safe account with good interest if you are going to use it for downpayment on a house within 10 years.

Treat the money for the car as a loan against your house savings. Borrow $6.000 from yourself and repay with $300 a month for 20 months. You had $200 ta save and the other $100 is not having maintenance costs for the old car, plus better mileage with a smaller car.

Advice, bying car:
Look for something that has been serviced. Try to find a car with newer tyres and hitch (if you need it), because buying it on your own is going to cost a lot more. Such stuff is often almost for freee on a used, >5-7 year old car. To have Toyota workshop put a hitch on my car costs $1.200 (!), while buying it on a similar car used costs nothing extra.

kombat
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Re: What to do about cars???

Postby kombat » Tue Jul 24, 2012 5:06 am

Why do you need a car?

Why not live close to your job, or at least public transit, and take the bus?

I would not use your $4,500 in emergency funds to buy a vehicle. Buying a car is not an emergency. That money should be untouchable except in true disasters.

If you must get a car, I'd get the smallest, cheapest car ($2,000 at the absolute most) that will get you from A to B. Cheaper on gas, cheaper on insurance, even cheaper to repair (smaller oil filters and brakes cost less).

But at your income level, I would strongly encourage you to seriously explore options which would obviate the need for a vehicle at all.

Bichon Frise
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Re: What to do about cars???

Postby Bichon Frise » Tue Jul 24, 2012 8:03 am

I live about 8-10 miles from work (depending on which route I take). I ride my bike EVERY day. And yes, I live in a mountainous and very snowy part of the country. Riding a bike is far from free, but if it eliminates you needing a car (and car insurance and gas). If you can make a $750-$1000 investment today and have everything you need to ride year round it will save you oodles. If you are truly interested, I can put together a list of things I believe to be necessary and a luxury to make bicycle commuting comfortable and enjoyable. And, I am capable of putting a week's worth of groceries for my family on one of my bikes. Of course, I enjoy cycling and log about 5000-6000 miles a year.

On the used car front, it is possible to score a nice car for $2000 or so. My car is only worth about that. It has some dings and bumps, but nothing major and nothing you would notice without looking closely. It has mainly highway miles (at least 75%), 130k miles and is well taken care of. No weird smells, no rips in the interior and my spouse just finished replacing the hub assemblies and all 4 struts (no impact on value). And it has a trailer hitch. :) I have no hesitation driving this car across the country with my family towing our small little trailer.

Good luck.
Bichon Frise

"If you only have 1 year to live, move to Penn...as it will seem like an eternity."

avocado wrote:Good to see you back, I was starting to miss your incisive commentary!

Savarel
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Re: What to do about cars???

Postby Savarel » Tue Jul 24, 2012 8:35 am

Use the mutual fund money to buy the car that you need, the cheapest reliable car you can find, and then pay yourself back via a "car payment", until its all paid back.

No sense in paying interest you dont have to pay. Especially since interest on an $8000 used car is going to be 6%-7% at best.

etselec
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Re: What to do about cars???

Postby etselec » Wed Jul 25, 2012 12:51 pm

Seconded to borrow from the mutual fund and then pay yourself back.

Once you're done paying yourself back, keep paying that same amount into a "car fund" so that you'll have cash available to buy your next car and won't be put in this position again.

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Eagle
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Re: What to do about cars???

Postby Eagle » Thu Jul 26, 2012 10:55 am

Savarel wrote:Use the mutual fund money to buy the car that you need, the cheapest reliable car you can find, and then pay yourself back via a "car payment", until its all paid back.

No sense in paying interest you dont have to pay. Especially since interest on an $8000 used car is going to be 6%-7% at best.


When I got married I paid for the ring and the wedding expenses I was responsible cash. I agree buy the car cash and pay yourself payments forgoing the interest to the lender. ;)

Take someone with you who can negoitate the price of the car. Do the research on the best vehicle for your situation. I researched a year when I purchased my first car. Then took an uncle with me to help negotiate the actual purchase.
~ Eagle
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vash1012
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Re: What to do about cars???

Postby vash1012 » Mon Jul 30, 2012 6:57 am

Tips for buying a car:

1. Know what fees and taxes are required in your state. You can find this online, Edmunds.com has a section on it i think. Do not pay for any undercoatings, fabric protectors, coat protectors, windshield treatments, etc. The dealers will almost always just take those off the price if you tell them you won't pay for it. If they don't, you probably want to go somewhere else. These things are just profit insurance for the dealer.

2. If you decide to finance, negotiate the PRICE, not the monthly payment! Never ever negotiate the monthly payment. It is a surefire way to get ripped off.

3. Be prepared to walk out. If you are buying a 6-7 year old car to get you from point A to B, I doubt you'll have much problem with falling in love with one car, but in order to get a good deal, you have to be willing to go somewhere else. On new cars, the wiggle room for dealers is probably less than you would think, but on used cars it can be quite a lot.

4. If you have a mechanic that you trust, get the car you decide on inspected before you buy.

Good luck! Car shopping is a huge pain.

partgypsy1
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Re: What to do about cars???

Postby partgypsy1 » Mon Jul 30, 2012 8:14 am

OK I'll be the dissenting opinion. I am the last thing from a car person. My lil brother who knows alot about cars, can do the buy the 2K-4K car, fix it up, use it. I do not know where you guys are seeing all these 2-4K cars that are more reliable, younger, etc than her current car. I was able to find a car like that, but that was 14 years ago. Last time we were looking (2006) I could not find a nice reliable car in that price range.

What we did, is save up money (5K) and take out a loan for 2.9 percent on a certified used vehicle, which was paid off in 2 years but we are currently using. I personally would rather spend more money up front on a reliable car, and try to keep up on it's maintainance, than buy a cheaper car that will need more repairs and will need to be replaced sooner. If you prorate the payments, the cost is the same per year but the hassle is lower.

Rachel
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Re: What to do about cars???

Postby Rachel » Mon Jul 30, 2012 2:27 pm

Having recently shopped for a car for the very first time, I gathered some links that might help you as it helped me:

Smart Money
http://www.smartmoney.com/plan/insurance/how-much-auto-insurance-do-you-need-10731/

http://www.smartmoney.com/spend/autos/how-to-save-on-a-new-car-1304920315125/?link=SM_searchFeaturedResult

http://artofmanliness.com/2010/04/11/how-to-buy-a-used-car/

My advice is to buy a used car, rather than a new car. To always get the used car assessed by a mechanic before buying. To not buy until you know the specific car you want, and then choose a car and negotiate like crazy. By paying cash, you can especially do this. Don't be afraid to walk away. This is a buyer's market.

On negotiation:
You are more likely to find success with negotiating at the end of the month, when car dealerships need to make their quotas. Often times, you can tell the car dealership's pricing strategy (high profit margin, lower volume vs higher volume sells, lower profit margin) by comparing the prices of cars against the Kelly Blue Book value and NADA value. This gives you more information at your disposal when negotiating.

Also, when shopping for cars, give the minimum information necessary about yourself -- car salesman are trained to ask leading questions so they can pin down the most you'd be willing to pay -- and then always find something at your maximum (before taxes, titles, and fees). Most importantly, do not pay for an extra services -- extended warranties, service plans, etc.. If you want a separate warranty, you can shop for these by yourself.

When looking at the price, factor in dealer fees, taxes, tags, and titles. In many states, dealer fees must exist, but there can be a wide range of what they are. In some places, this fee is negotiable or can be taken off completely. For instance, in Maryland, it is mandated to be 200 dollars where in North Carolina, there is no cap and this is a common way to make money on the backend of the sale.

See this comparison of dealer fees: http://blog.truecar.com/2011/07/26/which-additional-fees-should-i-pay-at-the-dealership-what-is-the-doc-fee/

Finally, good luck!

dontgopoor
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Re: What to do about cars???

Postby dontgopoor » Mon Jul 30, 2012 4:36 pm

How many miles on that Odyssey? It will have some value if you sell it. But have you had a reliable/trustworthy mechanic tell you what needs to be replaced? Are you repairing things before they break or waiting for the breakdown?

My family put 130k miles on our Honda - lifetime repairs under $1k excluding tires, oil, filters, etc. We sold it after 7 years for high Bluebook value.

I have an 11 year old Honda with 149k miles - never a breakdown other than a dead battery but I did put $1000 a year into preventive maintenance the last few years.

Unless you need to carry lots of people or things, I agree with the other posts that suggested a smaller car. Sell your Odyssey for blue book value (research auto forums for help with that or have someone experienced help you). Don't trade it in. Research Autotrader and Craigslist for what other cars like yours have sold for.

Buy a used car in a private sale - not at a dealership unless you can get a price that's as good as a private sale price. Again, this will take some research but worth the effort.

Know what model and year range you want. Take your time, weeks or months, until you find the right car. Be flexible on the color and some of the options. But know the right price. Be willing to travel a few hundred miles for the right car.

I waited 4 months to replace my 149k mile Honda (I gave it to my son to take to school) with the same model of a newer year (but still 6 years old). I found one with 18k miles on it at a bargain price. I searched the for-sale ads every day.
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fluter
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Re: What to do about cars???

Postby fluter » Wed Aug 01, 2012 7:48 am

Thanks everyone for your replies, and apologies for not chiming in again more quickly.

I didn't buy the car originally, it was handed down to me when my parents upgraded. For it's size, the mileage isn't bad, and I'd rather keep it than trade for something else in it's current price range, since at this point it's the devil I know.

I'm going to keep saving, but seriously look at trying to go carless if I hit another huge repair till I can save for something newer, smaller, and reliable.

Does anyone have input on these two following snags to going carless?

I like to be able to visit family 2.5 hours away, and getting there via public transit either requires doubling the travel time, or getting halfway and needing someone to go out of their way to pick me up. That seems hard to get around...I'd probably rent a car for any weekend trips, and deal with transit for any longer stays.

I work at a 2 campus university, and when classes are in session there is a free shuttle between them. I live close enough to the campus I don't work at to walk or bike there, and take the shuttle. However there are several few weeks a year (Maybe a month and a half in total?) when I drive to the campus I work at, because the shuttle isn't running. It's about 11 miles away and a 25 minute drive. The nearest transit stop is still about 4 miles away from work. I'm going to try and bike it a few times this fall to see how it goes, but I'm not sure I'm brave enough to winter bike commute in Maine in January! Moving closer to the campus I work at would make us more car dependent if anything, since there's no transit out there, and very little within walking distance. Living where we do now means that a car is unnecessary for most of our daily needs. I make do with my old one, and my boyfriend is car-less.

dontgopoor
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Re: What to do about cars???

Postby dontgopoor » Sun Aug 12, 2012 5:32 am

Calculate the annual cost of commuting and travel without a car - including the cost of when the free shuttle does not work, car rentals for weekends and family visits. Then compare to the cost of owning a car (and have a reputable mechanic inspect your car to see what it needs to run right and include that cost in your calculation; preventive maintenance is always cheaper than repairs).
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