Ask a Car Nut - Part Deux

[Cutlass]

Just as an example, here's a 2011 Ford Focus 4door. With 30k miles for $14,000.

http://seligford.com/Hartford-Springfield/For-Sale/Used/Ford/Focus/2011-SEL-Silver-Car/28236607/

The prices you're looking at are either out of like for the ages of the cars, or you're looking at much fancier cars than you probably should be.

 

[Zelig]

I like the Focus but the hatchback is so much more practical.

 

[Bamspeedy]

We've started looking at cars here in town, mostly at dealerships. I had planned on buying any car $10k and under outright but I'd be willing to finance up to $5k. My wife's co-workers (at least two of them) told her it was a crazy-bad idea to buy a used car outright. They claim it's a bad decision to just give them a wad of cash because they claim you should just get a bank loan and make payments and that the $10k in the bank can continue building interest.

I think that's insane because I am quite certain our bank will not pay us higher interest on ~$10k in interest than they will charge on in interest on a $10k to $12k loan. Plus, with a loan, we'd have to pay higher insurance for full coverage. We'd have to do that if we took out a $5k loan, but we'd be able to pay that off in a matter of months, not over the course of a year.

Am I insane? I really don't understand where her coworkers are coming from....


Also, what do you think of a 2008 Pontiac G8 with 92k miles at $16k? It's very well equipped, but I'm really not interested in any car with 92k miles at $16k.

There was also a 2005 Cadillac (can't remember what kind, but it was a big car) with 100k miles at $10k. It is just as well equipped as the G8, with an additional 8K miles but it costs $6k less. I'm not thrilled with the gas mileage, but we could buy it outright. Is it a good deal?

Your coworkers are insane. A regular savings account the last I checked gets you 0.02% interest. But even if you do get 1 or 2%......A used car loan can be anywhere from 3% (if lucky) to 13% or more depending on your credit rating.

There are two cases where I would side with them.

1. Buying a new car and you have such good credit rating you qualify for a 0% interest loan.

2. Depleting too much of your savings to make that down payment. If someone only has 10k total in their savings they shouldn't use the entire 10k to make that down payment even if it would be cheaper than putting down 3-5k. You want some sort of savings and not have as little as one week of lost income make you unable to pay your bills.

 

[peter grimes]

One thing to consider about fuel efficiency: do you really expect the cost of gas to go down? I don't. For one thing, on a policy level we should be working to include externalities in the pump price. For another thing, by choosing a less efficient car now, you're going to pay more over the lifetime in operating costs.

To do a simple calculation:

10,000 miles driven in a year (this is a low estimate)
price of gas at $4/gal

avg. 20mpg = 500 gallons = $2,000/yr
avg. 28mpg = 357 gallons = $1430/yr

And I'll be willing to be the cadillac won't get 20mpg.

I've mentioned this before, but the best car all around that I ever owned - considering efficiency, cost of maintenance, reliability, operating costs, usefulness - 1993 Subaru Legacy wagon. 1.8L 4cyl engine, manual transmission, nothing fancy.

And it's the nothing fancy that really helps keep the costs down. Not much can go wrong because there's not much that *can* go wrong.

We got rid of it because it didn't have air bags and we were going to have a kid.

Here's an ebay search you might find useful for comparing to the Pontiac you were looking at. Ford's quality has been excellent since the turn of the century.
http://www.ebay.com/sch/Cars-Trucks...00&_sadis=200&_fspt=1&_nkw=Ford+Fusion&_sop=2

 

[hobbsyoyo]

Just as an example, here's a 2011 Ford Focus 4door. With 30k miles for $14,000.

http://seligford.com/Hartford-Springfield/For-Sale/Used/Ford/Focus/2011-SEL-Silver-Car/28236607/

The prices you're looking at are either out of like for the ages of the cars, or you're looking at much fancier cars than you probably should be.

At this point, we are only asking the dealers what is available (as none of them have accurate inventories on their websites). We are then taking notes and will narrow the list down to the ones we want to test drive. So the G8 and the Caddy were just 2 that they happened to have on the lot and I'm not really considering the G8. I've done some checking and it is over priced even when accounting for all the features it has. Features we don't particularly care about, but are still nice.

I like the Focus but the hatchback is so much more practical.

In the US, the Focus comes in a hatchback configuration, unless that changed in the last couple of years.

Your coworkers are insane. A regular savings account the last I checked gets you 0.02% interest. But even if you do get 1 or 2%......A used car loan can be anywhere from 3% (if lucky) to 13% or more depending on your credit rating.

There are two cases where I would side with them.

1. Buying a new car and you have such good credit rating you qualify for a 0% interest loan.

2. Depleting too much of your savings to make that down payment. If someone only has 10k total in their savings they shouldn't use the entire 10k to make that down payment even if it would be cheaper than putting down 3-5k. You want some sort of savings and not have as little as one week of lost income make you unable to pay your bills.

We're not wiping out our savings, $10k leaves us with a nice nest egg left over.


I think I figured out why her friend was so insane - her husband is a banker and so he can easily park his money in higher-interest bearing accounts/bonds/stocks. We don't really have that option. So that would explain why her and her husband finance their cars, because he's a banker and that means he has access to a lot of financial tools and services that take more time (or money in fees, etc) than what he have available at the moment.

 

[Formaldehyde]

We've started looking at cars here in town, mostly at dealerships. I had planned on buying any car $10k and under outright but I'd be willing to finance up to $5k. My wife's co-workers (at least two of them) told her it was a crazy-bad idea to buy a used car outright. They claim it's a bad decision to just give them a wad of cash because they claim you should just get a bank loan and make payments and that the $10k in the bank can continue building interest.

I think that's insane because I am quite certain our bank will not pay us higher interest on ~$10k in interest than they will charge on in interest on a $10k to $12k loan. Plus, with a loan, we'd have to pay higher insurance for full coverage. We'd have to do that if we took out a $5k loan, but we'd be able to pay that off in a matter of months, not over the course of a year.

Am I insane? I really don't understand where her coworkers are coming from....

Also, what do you think of a 2008 Pontiac G8 with 92k miles at $16k? It's very well equipped, but I'm really not interested in any car with 92k miles at $16k.

There was also a 2005 Cadillac (can't remember what kind, but it was a big car) with 100k miles at $10k. It is just as well equipped as the G8, with an additional 8K miles but it costs $6k less. I'm not thrilled with the gas mileage, but we could buy it outright. Is it a good deal?

The only time when buying something on credit is better than paying cash is when you are trying to establish or improve your credit rating.

I would steer clear of any car with over 10-12K miles per year on the odometer. If you look around you can find one with less miles. To me this is one of the most important criteria in purchasing a used car. Find a garage queen that was only driven on sunny days in the summer time if you can. It will probably be priced a bit higher than a car that has been used for long commutes every day. But it is typically not all that much more. There is a reason why car leases typically start charging extra when you drive the car more than 12K per year.

I have a bad impression about the quality of General Motors cars in the 2000s. Not at all sure if my impression reflects reality, though.

They aren't as bad as some try to make them out to be. It wasn't the quality of GM cars that got them in trouble. It was the banks which no longer had the funds for car loans after the great mortgage fiasco. But their near demise did make them start caring a bit more about the quality of their products than before, and it is starting to favorably show with their latest products.

 

[Zelig]

I would steer clear of any car with over 10-12K miles per year on the odometer.

That's kind of a weird rule of thumb; for a similar price there's no reason to prefer a five year-old car with 60 Mm over a year-old car with 60 Mm.

 

[Loppan Torkel]

I'd stay clear of old Cadillacs and Pontiacs. The mentioned Ford Focus or Subaru seem like smarter deals. From personal experience, I can recommend VW Golf.

 

[Zelig]

I'd stay clear of old Cadillacs and Pontiacs. The mentioned Ford Focus or Subaru seem like smarter deals. From personal experience, I can recommend VW Golf.

Depends on the specific model - the Pontiac Vibe is the same car as the Toyota Matrix (except for the exterior trim), but turns into a solid used deal because everyone is staying clear of used Pontiacs.

 

[Formaldehyde]

That's kind of a weird rule of thumb; for a similar price there's no reason to prefer a five year-old car with 60 Mm over a year-old car with 60 Mm.

First, they obviously aren't the same car. One was manufactured five years ago while the other was manufactured last year. You would be much better off getting a year-old car with 10-12K miles instead, which is what the majority of people drive per year.

Second, a car which has been driven 60K miles in a year was likely a rental car or used for business where the person drove a heck of a lot. I'd never buy one of those.

Buying a used car with the lowest miles possible isn't "weird" in the least. It is basic common sense.

 

[Zelig]

First, they obviously aren't the same car. One was manufactured five years ago while the other was manufactured last year. You would be much better off getting a year-old car with 10-12K miles instead, which is what the majority of people drive per year.

Second, a car which has been driven 60K miles in a year was likely a rental car or used for business where the person drove a heck of a lot. I'd never buy one of those.

Buying a used car with the lowest miles possible isn't "weird" in the least. It is basic common sense.

I was specifically addressing your "distance per year" claim.

Why would distance per year matter at all compared to simply looking at "total distance"?

 

[Formaldehyde]

It is just a common rule of thumb. If you divide the mileage by the age of the car, you shouldn't get more than 10-12K miles per year. You will hopefully get even less.

But if someone owns a car that was driven 60-80K miles in the first year and then drives it extremely infrequently for the next 4 years, the car was likely a fleet or rental car which was probably abused by those who don't really care. It should show up in the service records, which is something else that should be closely examined when you purchase a used car.

 

[Zelig]

It is just a common rule of thumb. If you divide the mileage by the age of the car, you shouldn't get more than 10-12K miles per year. You will hopefully get even less.

But if someone owns a car that was driven 60-80K miles in the first year and then drives it extremely infrequently for the next 4 years, the car was likely a fleet or rental car which was probably abused by those who don't really care. It should show up in the service records, which is something else that should be closely examined when you purchase a used car.

This is just argument for only getting cars with full service records that you can verify wasn't a fleet or rental car.

I still don't see any reason to prefer a car with less distance per year.

Car 1: 2006 E140 Toyota Corolla, 80 Mm, single owner.
Car 2: 2011 E140 Toyota Corolla, 80 Mm, single owner.

Why would you prefer car 1?

 

[Samson]

It is a matter of opinion, and I am not at all an expert, but I think the young high mileage cars are a good deal, here in the UK at least. A 3 - 5 year old boring car (eg. diesel ford mondeo), with 120 - 150K on the clock would be around 3,000 GBP. This is likely to have been a rep's car, yeah it will not be very well treated, but it will have been serviced, most of the miles will be motorway and it is unlikely to have been driven by a young bloke. This means to me that there is a good chance that if you are doing say 50,000 in 5 years it is likely to be relatively trouble free for this time. The calculation is different if you are doing high miles, them you may be better off getting an older lower mileage car.

 

[Formaldehyde]

This is just argument for only getting cars with full service records that you can verify wasn't a fleet or rental car.

I still don't see any reason to prefer a car with less distance per year.

Car 1: 2006 E140 Toyota Corolla, 80 Mm, single owner.
Car 2: 2011 E140 Toyota Corolla, 80 Mm, single owner.

Why would you prefer car 1?

You are still absurdly trying to compare apples to oranges, because car 2 has a far higher blue book value despite having the same number of miles.

 

[cramstpuee757]

What car do you recommend for a family guy that uses car daily to work and uses it in long vacations too? 5 seats would be enough. I just have to know what to look for and what to avoid. (Sorry for the vague question)

 

[Zelig]

You are still absurdly trying to compare apples to oranges, because car 2 has a far higher blue book value despite having the same number of miles.

Yes, that's my entire point, there's no reason to prefer an older car with lower distance/year, the blue book value reflects that.

You can't give an example of when comparing distance per year gives you any extra information or decision-making ability that isn't already present when simply looking at only the separate distance and year values.

What car do you recommend for a family guy that uses car daily to work and uses it in long vacations too? 5 seats would be enough. I just have to know what to look for and what to avoid. (Sorry for the vague question)

A minivan.

 

[Formaldehyde]

What car do you recommend for a family guy that uses car daily to work and uses it in long vacations too? 5 seats would be enough. I just have to know what to look for and what to avoid. (Sorry for the vague question)

Yeah. That's really too vague to properly answer.

But if you need to hold 5 people with car seats, etc., your options are fairly limited. It sounds like a minivan or an SUV would be the best way to go. But there are some larger cars and even pickup trucks that are supposed to be able to hold 5 people comfortably. But I'd certainly try it with all 5 first while factoring in their growth over the time you think you will own it.

Yes, that's my entire point, there's no reason to prefer an older car with lower distance/year, the blue book value reflects that.

Glad to see you are still completely missing mine.

Suffice to say it is a quite standard way of determining whether or not a particular used car is all that desirable compared to other cars of the same year. Of course, YMMV as it apparently so frequently does.

 

[Samson]

Suffice to say it is a quite standard way of determining whether or not a particular used car is all that desirable compared to other cars of the same year. Of course, YMMV as it apparently so frequently does.

Is that what people do though? I would expect people to look at cars of the same value, and make a decision on where to compromise. Do you want a higher mileage or a younger car? Do you want an older Mercedes or a newer Ford?

But if you need to hold 5 people with car seats, etc., your options are fairly limited. It sounds like a minivan or an SUV would be the best way to go. But there are some larger cars and even pickup trucks that are supposed to be able to hold 5 people comfortably. But I'd certainly try it with all 5 first while factoring in their growth over the time you think you will own it.

It is up to you, but you do not have to get a minivan. I grew up in a family of 6, and we managed for most of my childhood in a Peugeot 305 very like this.

 

[Formaldehyde]

Is that what people do though? I would expect people to look at cars of the same value, and make a decision on where to compromise. Do you want a higher mileage or a younger car? Do you want an older Mercedes or a newer Ford?

When comparing two cars made by the same vendor and the same age, it is worthwhile to consider the mileage. It is also worthwhile to examine the service records to try to determine the amount the car was driven in a single year to help identify rentals and fleet cars. It's really that simple.

This is basic common sense. It pertains to just about any used item you might care to purchase. The one with less wear is typically the one you want if you have a choice. That is assuming they were both maintained in a similar manner, of course.

It is up to you, but you do not have to get a minivan. I grew up in a family of 6, and we managed for most of my childhood in a Peugeot 305 very like this.

Seat belt and car seat laws have likely changed considerably depending on where you live. They certainly have here.