Getting a car coming out of college

Saving & investing, frugality & simple living. They're all part of the wealth equation.
Here's the place to discuss getting (and keeping!) your money.

Moderator: lvergon

DDVX
Posts: 12
Joined: Mon Jun 20, 2011 9:16 am
Contact:

Getting a car coming out of college

Postby DDVX » Thu Oct 11, 2012 3:08 pm

Hey guys, I am graduating this December and my car is finally dying on me. It is 17 years old and the repairs it needs are worth far more than its current value. So, I plan on getting a new/used car.
I am graduating in engineering and have a guaranteed salary (based on current job offers I have) of $70k+ but potentially up to $100k if I score one of the other jobs I have been interviewing for.
My question is, with no debt coming out of college, and about $4,000 left over from internship money, what price range should I be looking at for cars, max? I've been looking at the Honda Accord as a nice, reliable car, but I definitely want to make sure that I have the money left over to, if not max out, definitely invest heavily in a Roth IRA and of course max the 401k of the company I work for.
Thanks for your time and advice! I appreciate it. I don't want my good initial salary to get the best of me and make me spend more than I should on luxuries. Investing is high on my list of priorities and I don't want to get myself into a hole early on. I am 22.

Edit: I will also say that the reason why I am not waiting for my a few months/year into my future job, is that when I say my car is dying, it is almost undriveable. The repairs would cost $4000 and the car itself is worth $1500. Correct me if you think the best plan would be just to repair it, but I'd rather not take a $2500 hit just to drive around this thing for 6-8 more months.

While I know I could definitely get a cheaper car than the Honda Accord, I am simply asking if I have the cushion room to afford a nicer car like the Accord because of my base salary (as a want, as opposed to a need).

Tightwad
Posts: 1356
Joined: Mon Nov 01, 2010 5:15 pm
Contact:

Re: Getting a car coming out of college

Postby Tightwad » Thu Oct 11, 2012 5:48 pm

That's sounds like an ok plan. You should be able to find a nice used Accord that will last for a long time. How will you pay for it until you get a job? Is that what the internship money is for?

DDVX
Posts: 12
Joined: Mon Jun 20, 2011 9:16 am
Contact:

Re: Getting a car coming out of college

Postby DDVX » Thu Oct 11, 2012 6:06 pm

Well ideally I can make my current car work for another 1-2 months. Since I live very close to campus I don't have to drive often. If that doesn't work, I am fortunate in that my parents have agreed to loan me the first few months until I get on my feet. Intern money is for the car, whether that is a down payment, or the few first months, or a mix of both.

User avatar
timwalsh300
Posts: 636
Joined: Mon Jun 23, 2008 6:54 am
Contact:

Re: Getting a car coming out of college

Postby timwalsh300 » Thu Oct 11, 2012 6:47 pm

I was in a similar situation coming out of college: old car in its final stage of life, starting to earn a good salary. I bought a new Prius and paid it off well within a year of continuing to live like a student and save aggressively. It probably wasn't great to have the bulk of my net worth tied up in a car back then, but more than 4 years later I have no regrets. 70,000 miles and I still love the car. I've replaced the tires once, but nothing else; not even a light bulb. I plan to still be driving it with well over 200,000 on the odometer. I'm sure that an Accord, at a fair price, would provide the same kind of value.

Tim

Bichon Frise
Posts: 1108
Joined: Fri May 04, 2012 2:23 pm
Contact:

Re: Getting a car coming out of college

Postby Bichon Frise » Thu Oct 11, 2012 10:00 pm

how much to fix it yourself?

Between my spouse and i, we do most of the repairs on our vehicles. My vehicle is worth maybe $2k on a good day. It would have cost that much to replace the hub bearing assemblies and struts if I took it to a mechanic. If not more. Instead, I bought the parts for $500 (which shipped straight to our door, thanks amazon), spent a saturday cursing and kicking myself for going down that path, but I finally got it back together and it is working well. Next time, I bet I could do it all in about 2-3 hours.

on the other hand, way back in the day an older co-worker told me when I explained my dream of owning a porche, "why not?! you're young and only live once." I never bought that car, as I wouldn't value it THAT much, but some may. And perhaps, that isn't so wrong. In other words, buy something you can afford, are comfortable with and makes you happy. Nothing more, nothing less.

pssst...the koreans make excellent vehicles that are cheaper b/c it doesn't say honda or toyota on it.
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!

kombat
Posts: 1978
Joined: Tue Mar 11, 2008 12:19 pm
Location: Ottawa, Canada
Contact:

Re: Getting a car coming out of college

Postby kombat » Fri Oct 12, 2012 5:01 am

I would set a cap of around $15,000 for you. I'd highly recommend you do not buy a brand new car. I've made that mistake, and it's horribly painful. I paid $40,000 for a VW Jetta and it didn't even have leather seats.

Buy a used car instead. 2-3 years old, with less than 35,000 miles. Focus on a Mazda 3, Honda Civic, or Toyota Corolla. Lastly, I would also strongly advise against borrowing any money from your parents.

Or, you can ignore me completely. All I'd ask is that you post an update 6 months from now and let us know how things are going. If you ignore me, then that update will be much more entertaining. :)

User avatar
timwalsh300
Posts: 636
Joined: Mon Jun 23, 2008 6:54 am
Contact:

Re: Getting a car coming out of college

Postby timwalsh300 » Fri Oct 12, 2012 5:09 am

I think the mistake was paying $40k for a car in general. A new Accord starts at $22k.

Good if you can find a nice deal on a Honda with less than 35,000 miles (compared to buying new) but I remain skeptical that such deals are out there.

Tim

babysteps
Posts: 87
Joined: Thu Jun 23, 2011 3:24 pm
Contact:

Re: Getting a car coming out of college

Postby babysteps » Fri Oct 12, 2012 6:16 am

If you can, you might want to wait until you see which job you take before buying a car.

2 reasons - 1, you'll have a better idea of how much/what kind of driving you'll be doing (what if you get a job in a city with great public transit? what if your job *comes* with a car? - hey, you can dream) and 2, you'll know what your "cushion" is more specifically - exact salary and whether you're going to be living in a high- or low-cost area.

Of course, if your old car truly dies first, see how far your $4,000 (plus whatever you can sell your current car for) will get you in a (semi-) reliable used car which you can sell once your job starts. In case of emergency, keep the number of a local rental car agency handy (or a sharing friend with a car).

Unless you meant your parents can loan you a car (rather than/in addition to $), in which case wait!

slweal
Posts: 8
Joined: Sat Jun 09, 2012 5:04 pm
Contact:

Re: Getting a car coming out of college

Postby slweal » Fri Oct 12, 2012 10:40 pm

Buy a used rental car. I got a 2010 toyota corolla for $10,800. Yes it had 45,000 miles, but pay a couple grand more and you'll get something with under 30,000 miles. I've had it almost a year. No issues.

All big rental car companies throw out their cars before (usually well before) they reach 50,000 miles. They have certified dealerships just for this purpose where you can test drive and purchase the vehicles.

People say rental cars are treated poorly by drivers, but I assure you the rental companies take care of them, because they need to rent them out. Regular maintenance is standard.

dontgopoor
Posts: 28
Joined: Mon Jul 30, 2012 3:59 pm
Contact:

Re: Getting a car coming out of college

Postby dontgopoor » Sat Oct 13, 2012 8:05 am

DDVX - Definitely go used.

The Accord is a great car (I bought one within a year of grad school and put 100k miles on it and never had a problem). But there are other good models and brands out there.

I'd buy the best car I could find for the cash I had (whether $4k or more with the parent loan). Figure out how much net cash is available for the car (take into account what insurance will cost up front and other cash needs). Research cars in that price range (Edmunds, Consumer REports for reliability, Autotrader and Craigslit for market prices, Kelly blue book, NADA blue book, and Edumnds Fair Value for in theory pricing).

Buy from a private seller - always a better price and less of a chance that something bad is hidden.

And have the car looked at by an independent, trusted mechanic before you buy. The Car Talk website has guidance on this, last time I looked.

Then, 6 to 24 months into your job, when you have a sense of your living expenses, commuting needs, stability of your employer - then look into upgrading into another used car for cash. You could do this a couple of times if you want but that's another issue. If you buy smart, you won't lose money on the first used car.

I had too many undergrad and grad school friends buy expensive cars only to lose their jobs for strange reasons and end up having to dump the cars at a hugh loss.
www.dontgopoor.com
SOLD: Don't Go Poor and Miserable Being Sold Happiness - teaching consumers how to buy

Capo
Posts: 142
Joined: Sat May 14, 2011 9:44 am
Contact:

Re: Getting a car coming out of college

Postby Capo » Sun Oct 14, 2012 9:25 am

You're in a great spot. 22, higher starting salary than most, and no debt.

I suggest you keep it that way. Either fix your current car or just use a few grand you have on hand to buy something really cheap (used civic, corolla, etc.). Make sure you live cheap, save 50-75% of your income, and "retire" young and wealthy (retire = freedom to do what you want, not just sit on your porch).

You are definitely in a position to do just that if you play it smart.

Bichon Frise
Posts: 1108
Joined: Fri May 04, 2012 2:23 pm
Contact:

Re: Getting a car coming out of college

Postby Bichon Frise » Sun Oct 14, 2012 9:45 am

slweal wrote:Buy a used rental car. I got a 2010 toyota corolla for $10,800. Yes it had 45,000 miles, but pay a couple grand more and you'll get something with under 30,000 miles. I've had it almost a year. No issues.

All big rental car companies throw out their cars before (usually well before) they reach 50,000 miles. They have certified dealerships just for this purpose where you can test drive and purchase the vehicles.

People say rental cars are treated poorly by drivers, but I assure you the rental companies take care of them, because they need to rent them out. Regular maintenance is standard.


apparently you've never heard of a "spill & fill" oil change. which is better than nothing i suppose.
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!

DoingHomework
Moderator
Posts: 5606
Joined: Wed Sep 23, 2009 9:01 am
Contact:

Re: Getting a car coming out of college

Postby DoingHomework » Sun Oct 14, 2012 12:37 pm

Bichon Frise wrote:pssst...the koreans make excellent vehicles that are cheaper b/c it doesn't say honda or toyota on it.


I've never owned a Korean car but I've rented quite a few. I have been very impressed. But alas, when it came time to buy, I knew the Acura(Honda) would be reliable for a decade but I wasn't so sure about the Hyundai.

User avatar
Eagle
Posts: 1186
Joined: Thu May 17, 2012 10:05 am
Contact:

Re: Getting a car coming out of college

Postby Eagle » Mon Oct 15, 2012 1:12 pm

DDVX - buy another used car for $2-4K. Then pay cash for a nice car once you save up for it. Don't bite the bullet and buy a car with a loan with a ton of interest.
~ Eagle
www.eaglesoaringhigher.com

DDVX
Posts: 12
Joined: Mon Jun 20, 2011 9:16 am
Contact:

Re: Getting a car coming out of college

Postby DDVX » Mon Oct 15, 2012 4:31 pm

Hey guys,
Sorry it took so long to reply and I appreciate all of the responses. I'm going to wait it out a month or two if my car allows it and see what happens. Based on my acceptance of a job offer and the condition of my current car will have a big bearing on how I handle this. One of my job offers has a $600 monthly bonus specifically for car notes, so accepting that job will definitely change my mindset compared to some of the more vanilla job offers I have.

I'll definitely start looking into used cheaper cars, and I'll update this once I have my plan figured out. Thanks again!


Return to “Personal Finance”

Who is online

Users browsing this forum: Bing [Bot], Google [Bot]