Automobiles and the young dreamer

[Whakamole]

This young dreamer bought himself a new car when he graduated college nine years ago. I shudder to think of the interest rate to this day (9%!) but I paid it off early, in three years rather than the original five year loan. I've since driven it for the past six years without payment.

Well, now the car is starting to have "issues." Noises that the mechanics are having a problem finding, a rougher ride - hell, the car has over 110K on it. And in a way, I've outgrown it too - this car is fairly low to the ground, small and not very comfortable, and my 33 year old body wants something a bit more... well, not plush, but you get the idea.

My SO has been trying to convince me not to sink any more money into this and just get myself something else. My dad is a bit more charitable, but agrees with her. Even my boss at work made a remark that I should probably think about getting something new.

I can certainly afford it. The car I am looking at, new, would run to about 25-30% of my gross income. (Better than my first car, while, while inexpensive, was close to 50%!) I could even pay for it in cash if I so desired, since I've been a prolific saver in cash recently, though with interest rates being what they are, it's almost not worth it.

But that amount is also about a sixth of my net worth, so this directly impacts my RE schedule. One reason I've been hesistant to buy.

I've thought about buying used, to save money, but there aren't many cars of the model I want available, and since there is high demand (popular brand out here in the NW)... the costs are high. Almost not worth it.

What would you do if you were me? Am I just thinking too long term and this is an occasion where it's OK to "treat" myself, as long as I don't get into the habit?

 

[panhead]

Hey Whakamole:

I'm very curious as to what kind of car you are now driving and what kind of car you are looking at.

Anyway, here are some thoughts. The interest rates that you speak of which make financing a new car so attractive have also created a glut of very good used cars. If you are stuck on one model and it is very desirable, sometimes you just can't find a competive price on a used model, but if you're flexible, I'll bet you could find a very good deal on a used 'something'. The 110 k miles doesn't mean much to me. I've had a lot of luck driving toyotas well over the 200k mark with practically no problems, and other than the trucks, they still looked ok too ! An early celica I had made it to almost 300k !
I guess what I am saying is that I would definitely look at used cars, and maybe change the model I was looking at if it meant saving a bundle. So tell me, is the 110k miles on a ford ? Sorry, have to ask, personal bias !

-pan-

 

[Whakamole]

Sure.

Right now I have a 95 Saturn Coupe. Up until recently, the main problem I had with it is that it was a bit too small - but that's the way it was designed. Now it seems like I'm reaching the end of the 'cheap lifespan' of the car, since I've had to do a bunch of maintenance on it recently and more is coming soon. Even if I do all that, it's still a small car with 100hp.

The car I'm looking at is a Subaru Forester, which is basically a tall Impreza. Mileage isn't as good as the Saturn, but it is AWD which is useful in the rain and snow, and is much safer in a crash (something I've become aware of since I was a passenger in a crash last year.) What really appeals to me about the car is that it is about the right size - a bit larger than a hatchback compact but not a giant SUV.

You can find them used but they tend to be richly priced - Subarus are popular cars in Seattle and you won't find a three year old car selling for half of new. There really isn't that much out there similar.

 

[panhead]

Yup, Saturn, I would say at the time of purchase that was a good decision. I don't think these cars were ever intended to last very long, but most I've seen make 100k miles quite elegantly. It's after that when everything goes to hell. 100k + on a Saturn is definitely time to look anew, she's served her purpose. Forester eh ? My ex gf bought one of these, they are a relatively new design, aren't they ? As in, the last 8 years or so. I don't know much about em, but I will add this: Subaru is probably one of the best companies to buy an AWD from, they have been doing it a long time, they sure do know how to make engines, I've owned a couple and have been VERY hard on them. My only hesitation is transmissions. If it is available and you are comfortable with one, I suggest the manual. Automatics were historically weak in Subarus, but I don't know about the recent ones. By weak, I mean they make 100k, then need an overhaul.
Hell, if ya like the car, buy it. It ain't no Ferrari, and it's a reasonably priced, safe, well equipped car.
My $0.02, although it's probably worth a lot less !!!

-pan-

 

[Whakamole]

Yeah, I'm getting that impression of Saturn. I made it to 100k with no problems at all except the EGR valve, and then thought that it would last another eight years. I must have jinxed the car! It's not worth much on the resale market, but Saturn does have its fans and maybe I can find one who is willing to give my first car a lot of TLC. (Oddly enough, I almost bought a Subaru instead back then. Hmm.)

The Forester is a recent model, it just came out in 1998 (I had looked at it then.) But it's just a different body on top of the Impreza car, and that's an older design. Reliability over the past six years has been good, and my mechanic gives it the thumbs up. I'd get an automatic though, just because I don't like driving manuals in stop-and-go traffic.

But do I get the sunroof?

 

[John Galt]

I've only owned one Subaru. It was excellent.
Re. other high mileage vehicles, Cadillacs were the
best for us. I got 200,000 miles out of a 1988
Cad. Never had it tuned up. Sold it with the
original spark plugs! Right now we have a 1991
Jeep Cherokee (196,000) and a 1997 Dodge Ram pick up
(135,000), both doin' the job for us.

John Galt

 

[Nords]

Re:  Cars are a depreciating commodity

Cars, especially new ones, are obstacles to ER.

Our ER goal is to buy cheap cars, ignore them as much as possible (except for routine maintenance), and drive them into the ground. If a car is an important part of your image, then its expenses are going to adversely impact ER. 4WD & high safety ratings are also expensive, although they carry a great "sleep at night" factor.

I bought new in 1981 and swore never again. Even when the purchase is below cost, the depreciation is fierce. We've found that we can support repair bills of $1000-$1500 per year and still keep ahead of five-year depreciation.

Since then spouse and I have gone through six cars-- an '81 Mazda GLC hatchback (the "new" one), an '80 Dodge Colt, a '90 Honda Civic, a '93 Suzuki Swift, our current '94 Ford Taurus wagon, and our current '97 Nissan Altima. Over two decades we've spent a total of $33K, and we sold the worn-out bombs for a total of $5K. We used to buy them at three years of age and under 30K but now we go as high as six/60K. Engines & drivetrains have made a lot of longevity improvements.

The cars have been all over the world-- Europe, Azores, East Coast (New York to Florida), California, and Hawaii. They've been driven hard short-haul commuter miles near salt water on terrible roads in all kinds of weather. Every one of them went to 100K miles (or will be there soon) with very little trouble (except for the $3000 rebuild of the Taurus' automatic transmission). After 100K it gets interesting-- water pumps, starter motors, catalytic converters, rotting cooling systems, bad A/C compressors, leaking A/C cores, axles & CV joints, a master cylinder, even the engine computer. We've poured a couple thousand into the cars that we were comfortable with and overall we've regretted going higher than $3000 in repairs over two years. I'm also getting pretty cynical about automatic transmissions, and they're not as much fun to drive anyway.

But if you think you can make it for another six months, you can try some alternative targeted marketing. Talk to Subaru dealers about cars coming off leases and ask them to give you a call. Carry "I buy cars" cards and stick them on the windshields of every car you like. Put up "Wanted" ads on community bulletin boards & discussion boards. Scan the classified papers every weekend and set up e-mail alerts at the online classifieds. If you're looking but not in a hurry, eventually you'll find that distressed seller.

You could also play devil's advocate with yourself and try to pick a different car with similar safety ratings, traction, & drivability. You might find that Honda, Saturn wagon, Mercedes, Volvo, or BMW fits your needs just as well.

But I still lust after Honda Insights & Toyota's Prius. We'll have to see how their batteries hold up after five years.

 

[John Galt]

Since I retired for good I've bought 4 vehicles
(not counting motorcycles). The most I paid was
$8,000. My intention is to never pay more than 10K
when I buy, and remember, we don't drive rust buckets.
A story...........About 5 years ago I was looking for a 4WD
truck or SUV. Stopped in a dealership and was kicking
tires when approached by a salesperson who asked
if he could help me. I told him I was just looking but
if he had a 4WD pick up for under $10,000 I might be
interested. He said, "I can't help you.", turned on his
heel and went back into his office.

John Galt

 

[cute fuzzy bunny]

I rented a forrester for a week in boston, and got to drive it in a nasty snowstorm.

Drove and handled quite well in the snow. I found the sitting and driving position uncomfortable after more than an hour in the car, and some of the controls layouts were a little odd. I dont remember any specifics on that, just thinking "hmm, how saablike" several times.

In this size and price range and if you want 4wd, consider the toyota rav4 or the honda crv. The honda's prior to 2003 had a funny seating position where the wheel wasnt quite close to centered in front of the drivers seat. The wife drives a 2001 Rav4. Loves it. We got it loaded with leather, a sunroof and every other option on the planet for under $22 new. A whole lot of them on the used market.

Upstream of that, look into the honda pilot. A kick ass collection of standard features for a very reasonable price.

Another option is to buy a used rental, and I've rented Forresters from Hertz before. If you've never bought a former rental, you'll have a negative gut reaction. I've bought two hertz rentals and so has my dad. Uniformly a good purchase experience and zero problems with all four cars - we averaged 150,000 miles on each of them and except for ordinary maintenance, no problems of any kind.

Consider it...its washed and vacuumed every use, fully maintained, and as long as you stay away from the v8 sports cars, its probably been driven from the airport to a business meeting and back and hardly has seen any use. Generally they're a year or two old with 15-30k miles on them.

I see they're selling 2003 Rav4 4x4's with about 27k miles on them for under $18k...nice price...

 

[Whakamole]

I see they're selling 2003 Rav4 4x4's with about 27k miles on them for under $18k...nice price...

True, but they are only a few K more new. And I know how it's been treated from mile 1.

BTW John, friend of mine bought a 4wd Chevy Blazer for under $6K. Nice car.

 

[riverrat]

My first car was a 38 ford my dad gave me when I was 10 to drive around on the property. Later he gave me a 35 Dodge when I was 12 to drive up to town so he wouldn't have to drive me. By the time I got my license I had a 49 merc and a 54 merc. Used to park the 49 on a hill so I could pop the clutch to start it. I had a love/hate relation with all those old cars but in aggregate didn't spend over $ 400 for all of em.

Flash forward to post college years, marriage & kids - and car needs change fast. Need for safety and reliabilty makes newer cars worth it. I've bought new: 2 Nissans, 2 Toyotas and 1 Honda. Been very satisfied with these purchases. Maybe the old clunkers of my past had an influence. If you can stay away from the add ons, extended warranties and other entrapments a striped down new car beats a used car any day. Buy a new car then play the Stones "new car"as you tool down the road a smellin the interior. It will only cost you two or three years of extended work life.

 

[cute fuzzy bunny]

True, but they are only a few K more new. And I know how it's been treated from mile 1.

As the couple available in Portland were equipped, they'd run about 25k new. 7k cheaper, less in sales tax (if applicable), less in registration fees and insurance as well.

Since money you never spend can be thought of as "tacked on" to the end of your ER portfolio, that 7k saved turns into $35,000 in 20 years at an 8% return...not including the taxes, fees and insurance savings. Of course, after inflation thats only worth about $24k in todays dollars.

But new does have that comfort of knowing what happened to it. With the exception of the new car I bought about 5 years ago. When I got it home I was fiddling around with stuff and found some broken safety glass under the passenger seat. In investigating, there was broken bits of safety glass in the seam of the back seats as well. Turns out the car had been vandalized by a pissed off customer and the dealer hadnt done a very good job of cleaning it up and replacing the stuff that had been damaged.

I can tell the new car dealer around the corner from me has several unhappy customers as someone broke EVERY windshield on the lot a few weekends ago.

I felt uncomfortable with the "former rental" thing too, until I got sick of driving the damn cars and nothing major would go wrong with them to give me the excuse to get rid of them...

 

[sgeeeee]

I shopped and eventually bought a mini-SUVs last October. I built a big speadsheet and put in all the specs that are important to me for all the small SUVs available. I read countless car reviews. Researched safety records, etc. It became obvious that the Honda CRV was the benchmark everyone compared to. It met my spec list too. So that became my first choice. But either Honda isn't making enough of these vehicles or they aren't shipping them to Arizona. When I tried to test drive, I would have to call all over the state just to find one. Then there was no selection. The dealers wanted me to put down a downpayment to reserve the right to bid on the next one they got in. I decided to pass on the CRV.

The next most widely acclaimed mini-SUV was the Forrestor. Because of the kind of driving I do, clearance is a critical spec for me and I ruled the Forrestor out because it didn't offer what I needed.

Next on my list was a Mitsubishi. Dealers were eager and clearance was okay, but my wife didn't like it. She would have deferred the decision to me, but I could tell she wasn't thrilled with the vehicle. And that's still a lot of money for us to spend on something she was less than thrilled with.

That brought me to my number four choice -- the Saturn Vue. We both liked it immediately. In fact we liked it better than we liked any of the first three choices that came off my spreadsheet. We got a deal that we liked and so far (after 14,000 miles) we are very happy with it.

Anyway, if I have a point in all this it must be that it might be worthwhile for you to shop other vehicles too.

Good luck.

 

[Skylark]

With an older vehicle, you are in the golden years of getting payback from your investment in the vehicle. The name of the game is years of service and reducing the vehicle cost per year (or mile).

What are you really buying with a vehicle? Reliability is the key factor, with suitability for its purpose number two. If you wish you may also consider style and comfort as additional factors. If your current vehicle is still satisfactory, STRETCH OUT THE SERVICE LIFE.

To get an idea of what an older yet still reliable vehicle is worth, consider it's replacement cost versus repairs and maintenance to keep it going. How much sales tax will you pay on the replacement? How much will it cost to register and insure? Financing costs on the new vehicle? Last but not least, what is the new vehicle cost?

Eventually you do have to make a judgement on whether it is worth repairing the vehicle, and guess at the likelihood of additional repairs in the near future. If you compare the replacement costs, it can give you an indication of about how much you might be willing to risk on a repair.

I would repair an otherwise sound and reliable vehicle up to an amount of about 4 to 6 months car payment on a newer used car (depending on how good I felt about the old vehicle holding up). If I thought that future repairs would go above this amount in a year, I would start looking for another 2 to 3 year old vehicle with low miles.

Eventually you do have to get rid of an old vehicle. It is really a judgement call on whether there will be multiple repairs needed over the next year or so.

 

[cute fuzzy bunny]

Shopping around makes a whole lot of sense. We looked at quite a few models before we settled on that Rav4.

I like to look at cars that take a major beating in depreciation in their first few years. Thats why I bought an Infinity a few years ago. Great car, nice reliability, and you can get them a couple of years old for a song. Even the new ones are sometimes sold with five-figure reductions just to move them.

One brand that caught my eye is Toyota's new bargain brand Scion...aimed at the younger crowd although to Toyota's chagrin the predominant buyer is much older folks and a lot of retirees. The styling is a little unorthodox on the wagon/suv model, but you get used to it quick. You get a well equipped toyota built product for about 13-14k brand new. Nice deal. They had a couple of them sitting around at one of the local brewfests last summer and I looked them over for a while. If you like the styling, they're pretty sharp.

 

[Whakamole]

I like to look at cars that take a major beating in depreciation in their first few years. Thats why I bought an Infinity a few years ago. Great car, nice reliability, and you can get them a couple of years old for a song. Even the new ones are sometimes sold with five-figure reductions just to move them.

One brand that caught my eye is Toyota's new bargain brand Scion...aimed at the younger crowd although to Toyota's chagrin the predominant buyer is much older folks and a lot of retirees. The styling is a little unorthodox on the wagon/suv model, but you get used to it quick. You get a well equipped toyota built product for about 13-14k brand new. Nice deal. They had a couple of them sitting around at one of the local brewfests last summer and I looked them over for a while. If you like the styling, they're pretty sharp.

I agree about the first statement. If buying used, I want a car that depreciates like crazy since I get the benefit. If new - may as well get something that doesn't depreciate much, so I can sell it for close to what I paid for it after a few years.

The Scions are OK but edmunds says no cruise control. :/

 

[cute fuzzy bunny]

The new TC coupe has cruise control, and there is rumor that the other two models will get it.

I've always had it in my cars, and rarely used it.

 

[BigMoneyJim]

I've never bought a new car. I bought a one-year old loaded truck but sold it within 3 or 4 years to reduce costs.

I've had extremely good luck with used cars. I used to work on them, but these days I've been talking myself into paying others to do the work since I don't have a driveway/garage and my apartment forbids working on them. But I think my knowledge and experience working on cars helps minimize getting screwed over by car mechanics.

My sister and her ex-husband, on the other hand, have had terrible luck with used cars and are probably saving money buying new.

I think the secret is in selection. My lowest "ROI" cars were the ones I really wanted and selected based on cuteness, sportiness and such. The highest ROI were just good deals that I happened upon on 4-door sedans. I wasn't particularly fond of them, but they were comfortable, reliable, quiet and featureful. My sister and her husband always picked cars based on likes.

I don't expect to ever buy myself a new car. Then only scenario I can see myself buying new would be marrying a woman who insisted on a new car for safety or reliability, but even then how much less safe or reliable is a 1-year old car?

By the way, white and neutral-colored (beige, tan, champagne) cars in my experience are almost never pulled over by the police. These colors also seem to be cheapest on the used market. White vans and trucks in particular are common fleet vehicles, and I've blown by speedtrap cops 10mph over the limit a couple of times and was completely ignored.

 

[cute fuzzy bunny]

One of my trips to jail started out in a white truck.

 

[Daddy]

I see so many people driving 4WD vehicles up here in the Northeast (Boston) and honestly, it's needed maybe 4 or 5 times out of the whole year for snow.

I bought a new Corolla last year and read-up on how to get it for close to or even below invoice price. I bought the Corolla for $300 more than the dealership paid for it. If I waited until the week after Christmas when dealerships will slit their wrists for business, I probably could have gotten the car for much less than invoice.

Anyway, the Corolla should last me 10 years at least and the oil only needs to be changed every 7,500 miles (highway) or 5,000 (city). The gas mileage is 35-40mpg on the highway. It's a brand new car but I'll definitely be saving a boatload over the long haul.

 

[cute fuzzy bunny]

I see so many people driving 4WD vehicles up here in the Northeast (Boston) and honestly, it's needed maybe 4 or 5 times out of the whole year for snow.

I lived in boston for 32 years and "enjoyed" some awful winter weather. From the moment I bought my first 4WD until I moved to california, we had extremely dry winters. The plow drivers pissed and moaned about the lack of overtime.

I told my friends when I moved that the reason why they had experienced good weather recently was because I had bought the 4WD truck, in a sort of "it rains right after you wash your car" line of thinking.

I offered them a deal...pay me to keep the truck sitting in my driveway at my old house after I moved, or suffer the consequences.

They passed. I believe the last 10 winters in the Boston area have been the worst of any decade in recorded history...

 

[BunsGettingFirm]

I too live in the Northeast. I have also lived in the Colorado Rockies. No, you don't need 4x4. All you need are some decent clearance and a great set of snow tires mounted on their own rims. That way you can swap them on at the first snow and swap them off as soon as you don't need them. You can get those delivered to you for $400 from Tire Rack.

As you said, what you're looking for is good utility, a decent ride height so that you don't feel like you're going to get crushed by all the monster SUVs, and decent foul-weather handling. You can get the equivalent sensation from a Scion xB, a Pontiac Vibe (aka the Toyota Matrix), or the Ford Focus wagon. All of these cars offer flexible cargo spaces and good ride height. Also, none of them have to be had with all-wheel drive, so you can save the $1200 and use part of the money on a set of snow tires. Another good choice is a used minivan. Yes, a minivan. That's what most SUVs are used for anyways. You can pick up a used one with 25K miles for $14K. Slap some snow tires on them, and you can pretty much go anywhere.

 

[cute fuzzy bunny]

Actually the real problem with driving in snow isnt your vehicle and ability, its limited to the lowest common denominator thats in front of you.

Then next to you.

Then in front of you.

Then on the curb.

Then next to you.

Snow seemed to bring out two kinds of people. The ones who thought "heyyy...my 1967 firechicken with the bald tires could use a nice spin around the city in the middle of this 20" drop" to "snowwww...hmm...I think they told me in high school driving class to double my speed, tailgate and change lanes as often as possible when it snows".

 

[Whakamole]

You know, I drive pretty well on snow. Maybe because I drive SLOW. I remember during the last big snowstorm here, a towtruck driver was being interviewed on TV and he noted that he was towing mostly 4WD vehicles, whose drivers I'm guessing didn't have a lick of sense when it came to driving in inclement weather.

In any case, getting back to my original post... I've realized that I was letting others dictate my vehicle. I think people still equate the kind of vehicle you drive with how successful you are. My dad was burned on the last used car he bought (which I'm fairly sure he didn't get inspected), and while my SO isn't so picky about new cars, I have to wonder a bit because she can't afford one, and maybe she is trying to live through me. A bit disconcerting.

As for me, like most people I'd "like" a new or newer car but I don't like paying for one, and I want to pay cash! So I'll likely just try to get this one fixed, get the body worked on, struts replaced, noises fixed and keep on chugging for a year. It's got another year in it, at least

 

[unclemick]

SO's can be hell(heh heh). A new GEO storm and a new Dodge Ram pickup. Both during the accumulation phase(i.e. both during the working years) - didn't dent savings that bad. Cut other things in the budget. But - in those days the plan was age 63 retirement not 49 as it turned out.