New Car Purchase

In My Humble Opinion
1

Tired of throwing away good money after bad on keeping my 1993 Nissan Altima running, I’ve decided to take the jump into buying a ‘new’ car (it’ll probably be a new used car but who knows). I plan to look up my credit rating tonight but was wondering about something, being fairly new this:

Beyond my mortgage, I have about $7k in various debt I’ve been paying down. I have about $3k in savings I could throw at it or at a new car or else just keep. For the record, $3k would keep the house paid off and the lights on and food in the fridge for two months if something was to happen. Would it be (in your opinion) best to
(A) Use the $3k to pay down the existing debt
(B) Use the $3k as down payment on a new car
© Don’t touch the $3k and just finance with as little down as humanly possible.

By “best” I mean not only for me but to look decent when I try to finance the car. I’m not sure what my exact credit rating is but it was fairly good when I bought the house a couple years ago and I haven’t defaulted on any debts or anything since then. Since my son has gone from kindergarten to full-day first grade, my childcare expenses have dropped from ~$450/mth to a mere $100/mth so my budget has opened up an extra $350 a month without really changing things.

Part of me says that $7k in debt and $3k in savings is doing better than a lot of people and I shouldn’t be so worried about it. But I went through some particularly hard times once upon a time and have a hard time approaching money matters casually.

2

Oh, and if you want to recommend a decent, economical car with good milage, have at it :slight_smile: I’m not looking for a ton of bells and whistles, just something that’ll get me from here to there for as long as possible without me being embarassed and without parts of the engine falling off.

3

We’re on our second Honda Civic, as far as car recommendations go. The first one was 8 years old and though it wanted some repairs, was still worth keeping. Unfortunately it was involved in a 4-car-pileup and was totalled, nearly 7 years ago. We bought another Civic as soon as the insurance check came, and it’s held up well also.

Financial: IANAFA (Financial Analyst) but one approach would be to “split the difference” and put 1500 toward each item - the car and the credit card debts.

Another approach, figure out which will yield you the lowest monthly payment (more $$ to credit card, vs more $$ to car). Or lowest total expense by the time each one is paid off.

Chances are, a car loan would have a lower interest rate than the credit cards, so that would imply leaning toward larger car loan, lower credit cards. Also, if you run into unexpected expenses (for whatever) later on, you can use the paid-down credit cards.

4

I second the recommendation for the Honda Civic. Mine is 11 years old, with 170K miles on it, and still runs great. I get 45-50 mpg highway and 35-40 city/mixed.