DD Wants Car Buying Advice

[TromboneAl]

Hi from Frisco, Colorado.

DD has $5,000 right now, which she will for living expenses through mid-june. She starts work on June 1, salary 52K, in Kansas City.

She's trying to decide what car to get. Used for around 3K or take a loan and get a better car.

She asked me to get advice from my ER Forum buddies.

Your thoughts? Thanks.

 

[REWahoo]

Give us more information Al. Is she a frugalista like you and looking for a tiny econobox, or is she somewhere else along the spectrum?

 

[W2R]

Is she a good mechanic?

Will she be able to get to work if her car is broken (public transportation? walking?)

These are some factors that she may want to consider.

Would her Daddy loan her the money, so that she could get really good terms (such as being able to pay it off early with no interest penalty)?

 

[haha]

Hi from Frisco, Colorado.

DD has $5,000 right now, which she will for living expenses through mid-june. She starts work on June 1, salary 52K, in Kansas City.

She's trying to decide what car to get. Used for around 3K or take a loan and get a better car.

She asked me to get advice from my ER Forum buddies.

Your thoughts? Thanks.

She is your one and only daughter. She has a job coming up. For heaven's sake get a safe, reliable car. She needs her safety, and she needs her time and energy for making a professional and social life for herself, not for struggling with crappy cars.

Ha

 

[JOHNNIE36]

Depending on her personal needs relative to comfort, image, goodies, etc. I'd check out something new that I know you can get for $10k or less. If she doesn't want to have a big payment, check out a three or four year lease or a zero percent interest purchase. Whatever the needs, a young lady like her needs something really reliable in Kansas City.

 

[Sue J]

My 22 year old son just bought a 1999 Subaru Forester for $4000. It feels good and solid and he bought it from a mechanic who fixed it up for his MIL. She didn't want it so he sold it.

We've been a Toyota family for a long time, so I'd look at used Corollas or Camrys. When shopping for a car with my son I found that only having $4000-$5000 really limited him to old cars with the potential for a lot of problems. His old car (1990 Camry) was a money pit and he wanted to avoid getting into that situation again.

When budgeting her $5000, remember that if she starts work on June 1st her first paycheck might be in 2-3 weeks.

What's the cost of living like in Kansas City? Here in Akron, OH 52K is plenty for a single person to live on with housing, utilities, gas and a small car payment. If she needs a loan PenFed is at 3.99% for used cars.

But I bet you knew that.

 

[Buckeye]

I'm with Ha.

 

[aaronc879]

In most cases i'd say "if you can't pay cash, you can't afford it". However, her starting pay is in the upper pay range in that area so she can easily afford a car payment. Kansas City has fairly high crime so a 20-something women doesn't want to be stranded because of an unreliable car. I'd buy a certified used corolla with a 3-year loan and pay it off early. She should be able to save nearly $1000/mo even with rent and a small car payment. So, buy a quality used car(2-3 years old), build a 6-month e-fund then pay off the car early all while putting 10% in a 401K. After 2 years she should be out of debt, have a reliable paid-off car, a solid e-fund and be starting to save for a 20% down payment on a modest house probably worth $200,000 or less in that area.

 

[growing_older]

I want my kids to become self sufficient and moving away from home and buying a first car is part of that process. OTOH, I know what a death trap my first (super cheap) car turned out to be and I was lucky to survive that lesson. I think you want to steer her to SAFE reliable transportation - doesn't have to be luxury - but I'd even give serious thought to subsidizing this purchase if need be. SAFE is priceless.

 

[Meadbh]

I'm with the majority. She needs a reliable car.

If she needs a loan PenFed is at 3.99% for used cars.

What are the loan rates for new cars in the US now? 3.99% seems a bit steep to me. For example, Toyota Canada is currently offering 0% financing on new Corollas, Matrixes (Matrices?) and RAV4s, and Honda is offering 0.9% on Civics.

 

[Moemg]

I'd give her a chunk of money as a graduation present to put down on a decent reliable car .I'd also help her with the deposit on an apartment . So do not close your check book yet .

 

[aaronc879]

I'd give her a chunk of money as a graduation present to put down on a decent reliable car .I'd also help her with the deposit on an apartment . So do not close your check book yet .

She shouldn't need any help. She's starting out at nearly 20% above average pay for her location on day one. She could spend the entire 5K on her apartment deposit and a down payment for a car and she'd still be in good shape since she should only need half her pay to live on.

 

[calmloki]

Devil's Advocate here:
What is the fascination with putting one's children in debt? I'm kid free, so all those with chillen can point out that i just don't understand, but i've watched my sister steer my niece into a series of cars she can't afford because the niece needs side air bags and new enough to be trouble free ect. The niece fails to care for the cars, so real quickly they are dinged up and, sans maintenance, unreliable. They are then traded in and a new debt is taken on. Which grows.
Some of you have alluded to the rattle-traps you drove to start with - presumably because it was what you could afford. Isn't that the normal course of things; you buy what you can afford, taking greater risk early and learning until you are better off and can afford better - and appreciate it! Maybe i'm way older than you young whippersnappers, but i sure drove a bunch of cars without seatbelts, and airbags? Pfft! I betcha Al & Lena have done a bit of training and their daughter has the good sense to do maintenance, know when something is wrong and have it fixed, and focus on driving, thus avoiding (pulls # from air) >90% of possible accidents. Haven't had a car that cost over $3000 in my life and i still manage to get back and forth. I see no reason that a good used Toyota can't be purchased from a private party on Craigslist for $3000. My handy tip? Shop location - an upscale well cared for home speaks well for the condition of the car.

Or maybe a Subbie with new timing belt done: subaru outback wagon

 

[bhoferp]

Kansas City gets snowy and icy in the winter. Be sure she has front wheel drive, at least. Four wheel drive is better. Crime tends to be mostly in certain areas, and I doubt she will have a tendency to be in those areas, but knowing the areas and caution is always good. Have her get AAA so she can get help in case of car trouble or sliding off into a ditch. If she were my daughter, I'd go for a down payment on a new car. Came out of many years of lurking to respond to you, but please feel free to ask any questions you wish about the area. I live about 3 miles NW of the Kansas City MO line. You can live here mighty fine as a single person on 52K per year.

 

[growing_older]

you buy what you can afford, taking greater risk early and learning until you are better off and can afford better

That's pretty much what happened to me. My first little tin box of a car was cheap - but also dangerous. I was lucky. And I learned without actually having the disaster I might have had. My next cheap car was a used reliable big sedan, that was so much safer than that first econobox.

I'm not suggesting that your daughter needs to buy anything new or luxurious. I am suggesting that having learned the true value of "safe" I will make every effort to teach that to my kids without them having to repeat my actual dangerous actions. If that means I subsidize a first new car to buy a bit more metal, that's a price I'm willing to pay. I know I can't protect them from everything, but this one I will at least try to influence.

 

[Nords]

DD has $5,000 right now, which she will for living expenses through mid-june. She starts work on June 1, salary 52K, in Kansas City.
Your thoughts? Thanks.

I'm not sure that a car purchase should be correlated to annual income. Especially an entry-level job in a recession with record layoffs. I'd think she'd want to avoid conspicuous consumption and debt in just about any economy and no matter what her salary is.

There's probably a "project car" level around $2500 that she doesn't want to dip below, and "hot ride" level around $25K that she'd have trouble getting a loan for. In between is a wide range of reliable choices with some "you'll be working for a long time" upgrades.

Has she chosen a place to live yet? Is there any chance that she'd be taking public transportation/bicycling/walking and using a car less frequently? Will she be using a company vehicle or hauling a lot of work-related stuff around in her own?

Does she have any mechanical skills or friends who can help her change a head gasket? Does she have a good mechanic to look over a prospective used-car purchase or will she be happier with a dealer's warranty? Does she have any maintenance or troubleshooting skills to take care of the car before symptoms turn into problems.

There'd be fewer surprises with an entry-level used Honda or Toyota or Nissan in the $5K-$10K range. Two-door sedan or two-door hatchback, possibly a beat-up pickup truck. Less than seven years old. A dealer's used warranteed vehicle would probably be near the upper end of that range and a Craigslist prospect (checked out by a mechanic) would probably be closer to $5K.

 

[JOHNNIE36]

I'm still of the opinion that you should be looking at a new vehicle in the $10k range. See if you can get 0% financing and a loan length that won't take the car out of warranty. Just check out what you can get. Can't beat new and you'll sleep better knowing that the car should get her through sleet and snow. Try to strike a deal where if the car is in the shop for any reason, whe gets a loaner free. None of that having to rent a car. This is a buyers world! Go to work with that in mind.

 

[aaronc879]

I'm still of the opinion that you should be looking at a new vehicle in the $10k range.

You do know this isn't the 1980's, right? There is no new car that I know of that you can get for 10K bottom line. I think the Hyundai Accent and Nissan Versa are just under 10K base but they are bare bones and after tax, title, license are still over 10K.

 

[Moemg]

I believe in recycling so I just give my daughter my used car and I buy new . Last car I gave her was a 1994 Geo Prism . It's still going strong at almost 200,000. I'm probably going to give her my Camry Solara this year and buy new .

 

[Rambler]

We are looking at buying a Honda Fit for our son in college DD will get lthe same value sometime down the road.

My two cents are: Make sure the car is reliable and that it will last at least 5-7 years. That means maybe a 2-4 year old low mileage Honda or Toyota, or new. The flip side is that used car interest rates are usually higher than for new cars, and there are lots of specials out there right now, so she may be able to get a better deal on a new car. A few years back I would not have bought Korean (long horror story with my brother's car). But, they may be better now...I have simply dismissed them as an option from bad previous experience.

Al, can you loan her the money from your MM account...at a rate that would be about the same as you are getting anyway? I wouldn't do something like that except for the first time around buying a car for a young person, but it may be helpful for her without causing you much if any grief.

R

 

[samclem]

She's an adult with a good (future) income, I don't see why she'd need or expect help from you for this purchase.

She might not be able to qualify for a loan until she has a job. Until that time, have you got a car that you could loan her? It would give you an excuse to drive out and visit her, help her get set up, leave the car and fly home. Then, in a few months she can buy a car, and you can retrieve yours (and pay her another visit).

Car prices are low now, interest rates are low, and she needs a safe, reliable car. If she'll have the discipline to drive it and take care of it for 10-12 years, she won't spend much more for it (per year) than she might spend for a few used cars over the same period. She probably doesn't have the desire or time to tinker with a bunch of nagging little problems that do arise when you buy a used car. Toyotas and Hondas depreciate so slowly that there's not much money to save by buying one that is a few years old. OTOH, I think Kias and Hyundais do depreciate more rapidly over te first few years, and many wil probably last a long time--if she finds a model she likes, that might be a good bargain for her. A nice 2008 Hyundai Sonata can be had for less than $15K. If she buys a new Hyundai, the powertrain is under warranty for 10 years/10K miles, and virtually everything else on the car is covered for 6 years/60K miles. The new car dealers are desperate, and the Ford Fusion got good reviews, good crash test results, and is heavy enough to be safe.

 

[Maurice]

I'd get something reliable that will last a long time, but not something new. Maybe something like a 3 year old Civic coming off a lease.

 

[jambo101]

Anything wrong with another Toyota Echo?I'm sure low mileage 04 and 05's can be had for your price range,Mine has just turned 200k with no problems at all,i was so impressed with the reliability and economy that i've added an 08 Yaris sedan to the stable.

 

[FinanceDude]

Well, it is one of her first BIG decisions, so of course she wants pop's help. I would look at two options:

1)New domestic car (practically giving them away, most have a 100,000 warranty, any mechanic can fix them. With huge rebates and incentives, she could get something like Ford Focus for a decent price. Since she was raised in frugality, she will have it paid off in 2 years or les anyways.....

2)3 year old import. Honda Civics run forever, as do Corollas. I am sure they are everywhere. Even the Nissan Sentra is not a bad car........

I would not get her a 10 year old car or anything, for a few thousand more she get reliable transportation and one less worry for you and her.......

 

[kumquat]

Good advice available upthread.

I'd add:

• Simple is better, try to find one without power windows, power locks or any other complexities.
• Unpopular is cheaper. You may get a better deal in a D3 car than an import.
• Maintain it and it will [-]have a better chance to[/-] last