Is $13,900 too much for a car on a $40,000 a year salary?

In My Humble Opinion (IMHO)
#1

Maybe a silly question. Dave Ramsey devotees encouraged to comment.

I have a 50 minute commute to work. My current car has 355,000 miles, the a/c doesnt work, the radiator fan doesnt work. It’s ok as long as I keep moving. If youre moving forward there is enough air passing over the radiator to prevent overheating. 30 mins of my commute is ok as its interstate. Once I get into town, the last 20 mins I deal with by shutting off the engine at red lights and turning on the heat in slow traffic. (uncomfortable to say the least in 90+ temps in the southeast USA in summer).

Used cars seem to be selling at a premium in the current economy. My gut and personality says find something reliable for $5000 (could pay cash) but that sort of deal seems a bit hard to come by. Such cars exist, but they are high mileage. Like pushing 200K miles type high mileage. I may get lucky and find a gem but I also may get a money pit, then i’m out my 5K and i’m paying for repairs.

Anyways, I got an '06 Accord yesterday. Sorta. I became hesitant when it was time to sign, so they said keep it till tuesday. It’s really nice to have A/C and smooth ride and relatively low miles (95000) and no fear of being stranded on the interstate. I dont have any other outstanding debts, but my stomach has been turning since yesterday.

Is 13,900 (financing $11000) a bit extravagant on $40,000 per year? I know there is no fixed answer, everyone’s circumstances are different.I just want opinions. My gut is saying take it back but then the idea of another day of driving in the summer with the car heater blasting makes me want to hang myself.

#2

Like you said, everyone’s situation is different. Cars are an expense and not an investment so it just depends on how much you value the car over everything else you could spend the same amount of money on.

That said, I don’t think it is too much comparatively speaking. There are people in your income range that buy a new car or sometimes even two for much more money than that. I would say you are being moderately frugal and smart by buying a decent used car. If you think you got a fair deal, take care of it and enjoy it.

#3

Financing? You should be able to swing that. The cheapest new car is much more than that. I make less than half of what you make, but I would seriously consider it if I were in the same position. And I am a very conservative buyer of large purchases.

Whether it’s a good deal, I don’t know, check KBB and the like. Accords aren’t exactly a car that should give much pause.

#4

I don’t think its extravagent in the least. But I don’t know your financial situation. For all I know you got a dozen moma babies you are sending checks to.

But dude, a fan fix doesn’t cost that much money. Have you considered doing THAT first? Thats probably like one or two car payments to get fixed. And if you did fix the fan do you think the car is good for another say 6 months? If so, the fan fix is probably the more financially prudent way to go. And maybe you can survive another few months of summer heat. At which point with a little luck you are good till late spring next year.

It’s good that you are worrying about spending too much with what you’ve got/make. If only more people did that. On the other hand, sometimes it makes sense to spend a little bit and be a bit less than totally miserable :slight_smile:

#5

You called it “relatively low” but I think 95,000 miles is a lot. I had a 1994 Honda Accord that started to have expensive issues at around 120,000 miles. Have you priced any brand-new cars? You could, for instance, get a brand-new Honda Fit for about $15,000.

#6

I did. It’s slightly less than KBB. Not a fantastic deal, but not getting ripped off either.

Yeah I know. I’ve been fixing this and that for a while now. It’s how i’ve managed 355,000 miles. But the CV joints crackle and pop when I turn etc etc on and on. Its a beater. Needs new tires.

It’s out of my personality to NOT just do a fan fix. But i’m sick of it. I took a 1hr drive yesterday and remembered that driving doesn’t have to be an exhausting misery. But i’m afraid that emotion may be overriding my rational side.

#7

You think? 95,000 miles on a modern car isnt all that much. Growing up in the late 70s/80s, 100,000 miles was considered very high mileage and I also still have that instinctive reaction in my head. But i’m not sure thats true on newer cars assuming you do the scheduled maintenance.

$15000 for a fit? Thats based on the Honda website. A civic for example is $15,700 at Honda.com. I considered it. Sounded good. Add A/C and you’re at $18,605. :frowning:

I’d do no A/C in certain parts of the country. But it’s not realistic in the SE USA. Unless you’re ok looking like you just showered in your clothes between May and September.

#8

The Honda Fit was just an example (mostly because I own one). If you do a Google search for “least expensive cars”, you can find a very few that cost less than the $13,900 you’re thinking of spending.

I recommend taking this 2006 Honda Accord to a good mechanic on Monday to get a thorough checkup, to find out what repairs will be needed in the next year or two.

#9

I’m not sure what you think 96,000 miles is “relatively low” compared to, other than your own car. At 100,000, the dealer wouldn’t even be trying to sell it; it would go straight to the auctions.

Regardless of your salary, $13,900 is too much for an Accord that’s done 95,000 miles in 6 years. Edmunds.com says the dealer retail for an Accord EX (the better equipped version) 4 cylinder automatic with that many miles, even in perfect condition, is $11,500 in the Atlanta area. That’s the average sale price, not the lowest possible.

Even a V6 with leather and GPS should only be in the high $13k range.

As a general rule, I would never spend more than 10 grand on a car with 100,000 miles on it, even a Honda. Lots of things can start wearing out and breaking at that age.

The sticker price for a 2013 Nissan Versa, Toyota Yaris or Mazda 2 is less than that. After cash back offers and the like, there are dozens of new cars you can buy for less than $14,000. If you include unsold 2012 stock, there are probably twice as many. That’s not to say that the OP should buy a new car, just that $14k for an old one isn’t a great deal.

Financing, counterintuitively, gets harder as the price of a car goes down. Banks won’t finance a $6k beater at all, and some won’t finance anything under $10k.

As far as the buying price versus salary thing, I don’t see any reason why that’s extravagant. I paid $14k for my last (new car) on a $30k salary, before putting $5000 down, and I certainly don’t think it’s worth driving a beater at your salary. You’ll be putting as much money into keeping the car running as you will in payments on a new(er) car.

#10

If you’re asking if you can buy more car for less then yes. You could buy a 2000 any-econo-box, have the transmission rebuilt for $3000, and be well under $14,000.

#11

They’re overcharging you, where did you go? I live in a high cost-of-living area and picked up a pretty 2006 ford five hundred sedan (with 60k miles on it) for $11,500, and that was 3 years ago. At Carmax, so there was no haggling. I wouldn’t trust a random used car lot, if that’s where you went.

#12

You can’t really compare the cost of used vehicles across brands. Big Fords hold less value than mid-sized Hondas. A loaded 1996 Five Hundred is now worth about $9,500.

#13

It’s a V-6 with leather. No GPS though.

Anyways, your post got me off the fence. I’m taking it back.

#14

It wasnt a random used car lot. It was the main Honda dealer in this area. It matched up with Edmunds/ Kelley Blue Book. But yeah, i’m taking it back.

Yeah but it’s a Ford. No offense, and maybe it’s my age showing. I’ve had a hard time getting over my prejudice that American cars are not so great.

#15

Well, did my good deed for the day, then. :slight_smile: Good for you; I know it’d be impossible for me to do that once I’d had a day to bond with the car. Don’t give up, though; the 2006 model was among the best Accords ever for reliability, according to this.

#16

13,900 on a 40k salary isn’t extravagant. 13,900 on a car with 95k miles on it is ridiculous unless you’re buying a luxury car.

Why on earth would you go 11k into debt for a car with 95k miles on it?!

My Pontiac G6 cost about 14k, brand new (granted, this was in 2008). I got lucky and ended up with 0% APR, and that was with average-to-cruddy credit (this was right before GM completely fell apart and got taken over by Uncle Sam).

GM (and probably other companies) is desperate these days to sell cars (they regularly send me stuff in the mail begging me to buy another one of their cars), take advantage of it. Shop around, research, find yourself something new, or at least newER.

#17

I’m sure you can afford it, but not sure it’s a good deal.

Personally I was looking at cars a while back and found that a $14-15k used car with 60k miles gets a higher interest rate and is ultimately more expensive than the $18k zero-mile one with 0-3% interest. I’d at least look at what is out there new. You get a warranty, you probably get 5 more years of service before you get “high mileage” problems, and you avoid other surprises like noticing the car is two different colors because it was wrecked and the paint is fading unevenly or whatnot.

#18

OK, I’m glad that you decided not to proceed, but if your budget is limited, a V6 with leather isn’t the way to go. Look at the four-cylinder Accords with cloth seats. And I don’t think a dealer is the best place to find a bargain. You’d do better at a used car lot or private party sale. But you will need to get the car looked at by a mechanic. And you’ll need to line up financing, so talk to a bank or credit union to find out how much they will loan you.

And I agree with Emtar KronJonDerSohn; the financing may be cheaper on a new car, so do look at the prices for low-end new cars.

#19

Too late to edit previous post.

My attachment to Honda and the mild slam on Ford is just due to experience. My current Honda is a beater with lots wrong, but the engine still hums along, no transmission issues. I haven’t had a car payment since 2004. Since '04 i’ve had to replace a radiator and 2 timing belts. The timing belt is normal stuff. I’ve added 200,000 miles since 2004. That amount of miles with basic maintenance is astonishing to me. Thats my reasoning behind being favorable to Honda. I’ve heard good things about Ford in recent years, but even so my experience says pay a bit more for a Honda or even a Toyota.

#20

Well yeah, but they are just selling it at bluebook price. But so do most dealers. Unless it’s some fly by night lot. Assuming that, i’m not sure that “no haggling” is a virtue.