Car Talk
Posted on December 5th, 2007 – 3:41 PMBy Kara McGuire
So…the last post about financial goals prompted some questions about what cars my family drives. I can see the unasked question lurking in the background– which is, are we saving for the inevitable death of our vehicles? or are we going to have the dreaded car payment?
So here are the answers to all of the above:
We are saving for our car deaths, although not as much as we should.
My husband drives the smelliest (yes, I found a rotten banana under a kid carseat last year), rusty old
17 Responses to "Car Talk"
I just bought a new car in June, so I had to do this recently. Needing a strut job on my beloved purple caravan marked the end.
I buy cars by trying them on. I am 6′4″ with a long torso. Cars are not designed for people with long torsos, period.
So I basically crossed sedans off the list to start with. I ended up settling on a Rav4, and was hoping for used models. The problem is that the used market was so inflated that it only cost about $1500 less for a used one than a new one, so I ended up buying new. I had started a “car fund” basically as soon as I was steadily employed, so I was able to put about half up front. I’ve already restarted making a “car payment” to myself, though it’s much smaller now, because I also have a real car payment to deal with. Hopefully by the time this car is dead, I’ll be able to pay cash for my next car.
“I suppose I should open yet another account to differentiate between the car fund and the emergency fund (sigh!).”
In a style I hope to emulate, but have not yet, my father & his wife use Quicken to track their finances. Their ‘car fund’ is a virtual account in the software - but lumped together with other savings in one account at the bank. Part II of their planning is to dedicate a portion of income every month to the car fund - partly for maintenance, but mostly as a pre-emptive ‘car payment’ so they can pay cash when its time to replace a car.
“How do you select your cars? Is it price? Style? A combination of the two? Do you go used? New? Do you try to buy it sans car payment or finance it without a second thought? Maybe some of you lease?”
We buy used cars for cash based primarily on function, but party on desire. The result is a subaru outback for her & a small pickup for him (me). Desire would have resulted in a big pickup for me, but fiscal prudence mandated a small one. When I was single, desire was a larger part of the purchasing decision, so I had a fullsize pickup.
We have a ‘97 Honda Accord with almost 110K miles on it that we hope to sell next summer and go down to one car. I hardly need it…but when I DO need it (maybe 2x a month) it sure is handy to not strand the wife & kids at home.
We bought our 2003 Saturn Vue new in that spring. 0% finance, will be paid off this spring, probably with about….drumroll, please…30K miles on it. Holy still-new car batman!
Looking back, we might have gotten it cheaper by financing and paying it down. But the 0% finance just seemed like the right thing. Once we find something we like, we are suckers for good salespeople and Saturn fits that bill to a tee. You get ONE spin in a car at all other dealerships, and like FIVE at Saturn. So at least you know what you’re getting before you make the decision.
It’s been a good car and we will keep it for a long time I think. It gets a bit small with 2 kids, but it works. Next time I’ll try to be a bit more judicious with finding a “used, low mileage” and figuring out the financing better. But when we drive so little, I can’t justify dedicating huge chunks of savings to a car fund when I’m not funding retirement as well as I’d like.
Kara - you can find a picture of the tall guy from the Simpson’s episode you are referring to here: http://upload.wikimedia.org/wikipedia/en/7/70/Verytallman.png
My wife and I have only purchased used cars that we intend to drive until they “expire”, but we don’t worry about financing them. We purchase cars known for their reliability and longevity so we typically get quite a few years of service beyond the loan period, when we enjoy no payments. Unfortunately, we have yet to discipline ourselves to set aside funds during that time specifically for the next purchase.
We have a “1 car payment rule” where we limit ourselves to one car payment. Wife wanted AWD so used Honda Pilot financed via credit union (1.5% less than bank at the time) zero down. We’ll pay off the 60 month term early (36 months?) and then do another 0 down 60 month on car #2. Guess we don’t give financing a second thought as rates are relatively low (6%) and it doesn’t bother me. I would only lease if I wanted to drive new cars…better to lease if you want a new car every 3 years.
My husband had a car loan on his new 1998 Pontiac Grand Am for 14k when we were first married in 1999. We bought my 2 yr old 1997 Geo Metro for 7k cash soon after. We paid off his car within a year or two and were fine for awhile. He still owns his car, now 9 years old. My Geo started having problems in 2005 so we sold it and bought a used 2005 Chevrolet Aveo for 11k. We financed it but I’m not sure why we did that since we had the cash and ended up paying it off within a couple months since I didn’t like having a car payment. I also don’t think that I would buy a small economy car again for myself because I think the mid-size or full-size cars last a lot longer and that makes it worth it. I would probably buy a Honda Civic for my next car. My husband wants to buy another Pontiac for his next car, possibly a Pontiac Vibe or equivalent “sports” wagon. I love that term. It tries to make station wagons seem cool. Oh and we bought my Aveo through msn autos- I would do that again. There are lots of listings on there and we got a good deal.
We also use the “one car payment rule” - as of right now we have a beater car for daily work commute and misc errands and a “nicer” car for family excursions that we are still paying off (less than one yr left). Biggest decision factor in purchasing a car - safety, although style, gas consumption, and long term reliability also play into it. I’m willing to pay for safety. There are just some things in life one should not skimp on: soft toilet paper, quality meat, and safety for the family. Since we drive a small sedan we wanted something that didn’t feel like a coffin with wheels (like our beater car). Went with a Volvo S40 - bought new and picked it up in Sweden. Car was cheaper that way and we got a free trip to pick it up (no - I do not work for Volvo, but the program was awesome). As our family grows and we need a larger vehicle and it comes time to replace the beater a V70 or XC70 sounds like a winner for me. I freakin’ hate SUV’s and minivans - bigger death trap than people realize. I’m pretty young and the place we bought our car from actually treated me like an adult - still do when I go in for service. That plays a big part as a return customer to me. Treat me well and I’ll come back (with my money)… When viable, I like to buy new - but drive them to the ground. My last car had 298K miles when I replaced it. I hate purchasing used problems. For me the safety net of the warranty off-sets the initial depreciation.
I like my cars cheap and dirty, just like I like my wo..
Seriously, I never pay more than about $3000 for a car. Above that level and you have to pay MN state sales tax. I also only carry liability insurance, so getting much more than $3-5k means a car that is not disposable in the worst case accident or theft.
Naturally a car at this price point means that I’m driving old cars, some even of legal drinking age, that require repairs and maintenance. I do many repairs myself and have developed contacts in the salvage parts business. For the bigger fixes, I have a few trusted mechanics that I don’t mind paying a few hundred $$ here and there. I’d rather put their kids through college than pay for some fancy overdone dealership showroom floor by buying a new car and financing it.
These methods have served me well. Over the past 7-8 years, I’ve owned 3 different cars, costing about $5000 total.
Forever indebted? Ironic pledge for a personal finance forum… 
http://en.wikipedia.org/wiki/Image:Verytallman.png
We currently buy new cars and pay cash. The first car I purchased was used because we had ~$4k to spend, but since then we have saved to reach the amount of money we need for a new car while driving the existing one. I hate having to take the car into the mechanic for fixes and don’t know/don’t want to know how to do it myself, so the limited hassle of a new car is worth it. That said, we price compare the different vehicles that meet our needs/wants, test drive a couple, and base our decision on what works best for us.
I’ll never buy new. As a financially-minded person, I can’t swallow the instant drive-off-the-lot-depreciation of a new car. I buy used cars less than 3 years old. Before buying I do lots of research, and when I find a car I like, I then have an independent mechanic do an inspection. I tell the dealer that I will pay for the inspection. $100 is pretty cheap to ensure you’ll have a working car, and the results of the inspection can help you negotiate the price.
I’ll also never buy more vehicle than can fit my family and their bags for a road-trip. I don’t need an additional 500 cu ft. of storage, just in case I want to carry crates of chickens one day. My car should get my family around, with the best possible safety and gas mileage. To me, a personal vehicle is not for hauling lumber, supreme comfort and luxury, cruising the Lakes, or accommodating a soccer team. I’ll rent a car if I need to do any of those things.
We, too, strictly enforce a “one car payment” rule. We take out the shortest possible loan term that we can afford, and then pay it off early on top of that.
By the way, I often have a hard time with this American mentality of having to buy a minivan once kids are born. All right, if you have three kids or more, maybe I understand due to the space constraint created by the child seats. But seriously, why do we have to have a minivan just bacause we have children? The so-called “mini”vans that we drive in the U.S. would actually be monster cars most anyplace else in the world. But in other parts of the world, people don’t drive such big vehicles even if they have kids. In Europe or Japan, people drive regular cars even if they have two kids in child seats. So I question this “Oh, we have a kid, so it’s minivan or big car time” mentality that I often see in the U.S.
You’re right Tony, I guess I should have offered to buy you a burger off the dollar menu instead! Thanks for the pix, guys.
How long did it take you to find them?
On the mini-van opinions, I certainly take no offense. I hadn’t planned on getting a new car and had to be convinced. But the deal was so good and the Escort was too small and so we ended up with the grocery getter.
I will say that lugging kids in and out of carseats without having to bend down is a luxury and I do like that you can fit the 75 pound dog and a double jogging stroller in the back. I also like that I can fit 7 people in it for longer metro excursions that otherwise would have meant two families driving two cars.
But I can definitely see why not to have one and I doubt we’ll purchase another when this one dies (if there is even such a thing left as a mini van as many companies are getting out of that biz).
Growing up in Japan, I can tell you that we drive smaller cars not because we don’t think we need anything bigger. The streets are just too small, plus cars are prohibitively expensive. You also need to prove that you have parking available. It’s a small country, space is tight. But trust me, the lines to buy the Hummers and SUVs are out the door, around the corner, and down the street.
Brian, according to Japanese Automobile Dealers Association (Jihanren), for 2007 thus far, a total of 209,105 SUVs (categorized as Offroad 4WD) have been sold in Japan. That’s a little over 19,000 such vehicles sold per month. That sounds like a lot, but during the same 11-month period, almost 3.2 million passenger vehicles have been registered in Japan. SUVs, therefore, constituted a mere 6.5% of the passenger vehicles sold, and that 6.5% includes smaller SUVs with displacements of 2.0 L and smaller (e.g., kei-cars).
In addition, according to the numbers provided by Japan Automobile Importers Association (Nippon Jidousha Yunyuu Kumiai), a whopping total of 641 Hummers have been sold in Japan for the 11-month period of 2007 (58 per month).
So, where did you see the long lines to buy SUVs and Hummers that you mention? I am in Japan a lot, and yet have never seen such a phenomenon.
I’ve been buying and driving cars for 20+ years. I usually purchase a late model honda or toyota with just over 100k miles on it and drive it for another 100k if I can. I’ve got a great mechanic and I’ve never spent more than $3200 on a car so far. I have a auto club and usually drive about 36,000 miles a year.
My cars might not be pretty but I’d rather spend my money elsewhere.
