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Day 17 – Buying a Car
By JLP | April 14, 2006
When it comes to buying a car, we have many choices to make:
Old or New
Most likely, it is best to buy a car that is around two years old. This is because cars typically depreciate the most in the first two years. This isn’t always true. For instance, back in 1998, my wife was in an accident that totaled her Honda Civic. We had to get a new car so we first looked at used Civics. Time was of the essence so I didn’t get to spend a lot of time shopping around. However, the Civics I saw that were used were only $1,500 – $2,000 cheaper than a brand new Civic. Also, at the time of our purchase, Honda had a pretty good financing deal. So, we went with a new Civic. In this case, I think we made the smart choice.
Of course my dad thought I was nuts. However, that was 1998. It is now 2006 and we still have that Civic. It has been a great car.
Car, Truck, SUV, Crossoever:
Wow! There’s so much to choose from! I live in Texas which is clearly truck/SUV country! Our Civic feels like a go-cart next to all the trucks and SUVs. But, I would be willing to be that we spend less on gas than truck and SUV owners do.
One nice alternative that has come along lately is the crossover. We have a 2002 Buick Rendezvous and have been very happy with it. No, it doesn’t get the best gas mileage in the world, but it isn’t too bad. Because it is a Buick, it has a lot of really nice features and the interior is awesome. My only complaint is that there isn’t enough room behind the third row. And, although American cars are perceived to be of lower quality than Toyota or Honda, I would put our Rendezvous up against any of the competition. It has been a great vehicle over the last four years.
My advice is that before you decide which vehicle is best for you, think about where you are in life. Do you have a family? Will you have a family? How many miles will you be driving? Will you need to haul a lot of stuff? Questions like that will help you in deciding which vehicle is best for you.
Domestic or Foreign
In the past, foreign was always a better choice for the quality conscious. I don’t think that is true anymore.
Gas, Hybrid or Diesel
A thorough analysis of gas vs. hybrid vs. diesel is out of the scope of this post. However, I do have a few observations.
The price of gas probably isn’t going to come down any time soon. Therefore, hybrid vehicles will most likely become more popular. My problem with hybrids is that they are more expensive to purchase ($3,000 – $5,000 more than a regular model) and the improved mileage doesn’t seem to be that great. Also, hybrids have really expensive batteries that will need to be replaced at some point in the future. Granted, there is a tax break for hybrids, but I’m not sure that it brings the cost down enough to justify the extra expense.
I compared some popular hybrid vehicles with their traditional counterparts in this post. Naturally, as the price of gas increases, the hybrid becomes more competitive.
Diesel may be a good alternative for some. Mercedes looks like they have hit a potential gold mine with their new Bluetec technology, which produces a cleaner diesel engine. I saw the 2007 Mercedes-Benz E320 Bluetec on some show this week. It is amazingly quiet. I just wonder how much the required urea fluid (read about it here) will cost.
Lease or Buy
Personally, I’m not a fan of leasing. That’s not to say that you can’t find a good lease deal. I’m just not a fan of the mileage restrictions on leases and it also seems that the purchase price of the vehicle after the lease is up seems too high. When faced with this decision, you would be wise to do your homework. In my opinion, if you can’t afford to purchase the car, then you really have no business leasing it. Perhaps you should look at a less expensive car.
Buying a car is a pretty popular topic among bloggers. For more on what other bloggers have to say, check out these posts.
It’s Your Money:
Experiglot:
How to get the best price on a new car: use FightingChance.org
Single Mom & Money:
The Art of Negotiating…When Buying a New(er) Car
FreeMoneyFinance:
Money Saving Tip: When to Buy a Car
Saving on a Car Purchase, Buy Used
Good, Better, Best Money-Saving Ideas: Car Buying
How to Save $10,000 on Your Next Car
Money and Investing:
FiveCentNickel:
Buying a New Car: True Cost to Own
Buying a New Car: This Year or Next?
Accuracy of EPA Gas Mileage Estimates
CanadianFinancialStuff:
When to Dispose of Your Old Car
Peter Jennings Drove a Used Car
PoliticalCalculations:
Comparing Standard and Hybrid Cars
I Will Teach You to be Rich:
Cost vs. Value: Why I Bought a New Car
Topics: Cars, Hybrids | 7 Comments »
April 14th, 2006 at 4:00 pm
You have a typo in your article – I don’t think the year is currently 1996, especially if you did buy your car in 1998.
April 14th, 2006 at 4:50 pm
Oops! I must have been thinking about something else.
April 15th, 2006 at 4:28 pm
Thank you for writing this excellent article. I was able to convince my wife to buy a used Civic 2004 with low mileage, rather than going ahead and paying thousands of dollars more for a brand new Hybrid. After doing some research we found that most leases end after two years and have restrictions on the mileage they can go. Thanks again
June 19th, 2006 at 9:01 pm
very nice blog, congratulations…
July 25th, 2006 at 1:53 pm
For peace of mind, safety and hassle-free driving, there’s nothing like buying a new car. When you buy new, you have more control over optional features than if you buy a pre-owned vehicle. You will also get a new warranty that lasts much longer than the extended warranty you can buy for used cars.
The danger in buying new is getting “upside down” on the bad credit car loan. One way to avoid this is to have a decent down payment—20% or better. Another way is to choose a vehicle with high resale value. This will help slow down depreciation.
Buying a used vehicle makes sense if you want to keep your monthly payments affordable. Since used cars depreciate slower than new cars, they make better short-term collateral for lenders.
When you buy used, you have the chance to get a more expensive model than you could afford if you bought it new. For about the same amount, you could own a new Hyundai, a two-year-old Taurus, or a six-year-old BMW.
January 2nd, 2009 at 4:14 am
Take time away from your children. Single parenting wears you down, so go to dinner or see a movie with friends once a week and look for roses and take time to enjoy them.
———-
Jack
New Cars
May 19th, 2010 at 7:18 pm
i already upgraded my family car to Hybrid to help the environment.~”