So, at the age of 26, I am now preparing to buy a car for the very first time. This will be the first car I’ve ever owned - I borrowed my parents’ cars in high school, and in college and law school I used public transit. As a result, I know absolutely nothing about cars - how to select them, the process involved in financing them, and so on. Could the Teeming Millions help me out?
I could particularly use advice on:
1.) Financing. Assuming I get a loan from my bank, how much money should I expect to put down? 10% 20% Nothing at all?
2.) Price. I plan to buy used - what’s the cheapest I could go and maintain a reasonable chance of not getting a lemon? Is $5,000 realistic? How about $10,000?
3.) Actually picking a car. (related to point 2, of course). What’s a good car? I don’t particularly like to drive, and I don’t give a damn if my car is particularly cool or not. I just want it to be as cheap to operate and maintain as possible, and hopefully not kill me.
That could depend on your credit rating and how well you know your banker. If you have good credit and your banker knows you, you may not need a down payment. Your loan-to-value ratio can also be a factor. It is not unreasonable to expect your banker to want you to put up 10%. 20% seems a bit steep and IMHO would be more likely found at one of those “We tote the note” places. I would try to avoid those places if possible.
2 and 3. Since this is IMHO, you should look for (assuming that you’re in America) about a 4-5 year old Japanese import like a Honda Civic or a Toyota Corolla. Both of these have excellent reliability ratings. I’d think that you could find one in the $7500 range. I’d recommend getting a CARFAX when you get serious. If you can get any service records, that’s always a bonus.
The lemonade used car guide is very helpful. **Ms. Attack **used it to plan her campaign to buy our last car (an excellent Hyundai) and is now starting the procedure to buy our next car.
Consumer Reports guide to Used Cars. (available in a bookstore) Gives recommended cars, cars to avoid (really pissed off a used car dealer,when every car he pointed out on his lot was on the “cars to avoid” list! We went elsewhere), guides to problems with different model years. Just lots of good information.
One thing to note which I was surprised by when buying my first car in June…
Some lenders won’t approve a loan to buy a car which exceeds a certain mileage, or is older than their specified model year. Some dealers will try and use this for leverage to convince you to finance through them, which is not always your best deal - do your research thoroughly! If you’re looking for a fairly late model low mileage car, you’ll be more likely to have a greater range of lender choices.
Obviously, the newer the car, and the fewer miles it has on it, the less likely it is to succumb to the attrition of parts wearing out and needing replacement.
That said, you can get some perfectly decent cars for not too much money. Our 1998 Honda Civic cost us just over $4,000 last year. At the time, it had about 130,000 miles. Since then, we’ve put about 15,000 more miles on it, and so far it’s run flawlessly, with only regular oil changes and filter replacements. It will need a new timing belt in a few thousand more miles, but the mechanic says that it’s in good shape and should give us plenty more miles yet.
It’s not exactly luxury motoring, but it has a CD player and A/C. It cruises comfortably at 80 on the freeway, and overall (i keep records) it has gotten about 34 MPG in the thirteen months that we’ve owned it. If you have a few more grand to spend, you could get a more recent model with lower mileage.
One thing you should do when you buy a used car is find yourself a reliable and trustworthy mechanic, and keep up with the routine maintenance like oil changes. Spending money on a car when it’s working fine sometimes seems like a pointless exercise, but an ounce of prevention can be worth a ton of cure in some cases.
You can almost certainly get a car you’d be satisfied with for under $10,000, and maybe for under $5000, though it’d have less life left in it, and as araminty pointed out, it may be harder to find financing for an older car.
www.cars.com is a pretty good place to research cars. One thing you can do there is enter your zip code and a maximum price, and get a list of cars that are available in your area for under that price. That would at least give you an idea of some of the things that are available.
Your long-term financial health will be considerably improved by buying a car for which you can pay cash. To get a good buy, you’ll do well to locate a car-savvy friend who can help you evaluate what’s on offer.
Seven years ago I bought a Subaru for a friend - it had 92,000 miles on it, and I was able to get it for $950. With minimal maintenance, it now has 220,000 and is still going strong.
Hyundai is increasing in reliability ratings, and Honda and Toyota are decreasing. That said, a good used Toyota Tercel or Corolla or Honda Civic are still considered very reliable cars. If you decide to go the Hyundai route, be careful of how old it is - the older ones are not as reliable as the newer models. We ended up with a Toyota Corolla, but we actually tried to buy a Hyundai Elantra (the dealerships in town are horrible, and basically wouldn’t sell us a car).
Financially, the more down payment you can make the better.