To keep new or go used.

[Tiberius Jim]

I have a bit of a dilemma. I bought a new car less than a year ago, an '09 Honda Accord. I needed something with better gas mileage than my 15mpg beast of a Chevy truck. The Honda saves me on gas, but my monthly payment stayed roughly the same.

That has been fine...until now. See, I bought the car thinking I would be working in the design industry making a good 40-45k a year, and that my student loan payments would be a walk in the park. Well, sadly, I'm only making about 20k a year which in combination with my car payment and student loans...not so easy.

I am lucky enough to live at home, but I'll be 24 in a couple of weeks and I'm itching to get out of the nest. I can survive with my current job and the burden of the student and car loans...but I won't be able to save much. Sure, I am still looking for better work in my field but it is no guarantee.

I could ease it all a bit by deferring my loans, or at least requesting a payment reduction, but that only hurts me in the long run.

So my only other option is finding a cheaper car. I am resigning myself to the fact that this may be the time in my life that I need to find something that does what a car needs to do, and that is it gets me places without killing my at the pump. My current car does that just fine, but I'm paying a premium for it being brand new with only 11k miles on it. Could I perhaps find something I like just as much but that is a few years old and thusly costs say...half as much?

I've only been looking for the past few hours but have found a few promising leads, this being one of them: 2003 Acura CL Type-S I'd be staying with Honda and it is actually more upscale than my current car, has more power and room, too.

Anyway, just wanted some more feedback and points of view. I've asked some friends and my girlfriend and everyone has different views. Some think I'll be fine with my current car and the reliability and warranty that comes with it being new is preferred while others (my girlfriend included) think going with something cheaper now will help me in the future and I can always get something new and what I really want down the line.

 

[scottydog]

It sounds like you are doing a good job considering the decision from many possible angles. As with any decision, there are pros and cons of selling your current car.

How much equity do you have in your current car? Remember, because cars depreciate in value, it's worth less now compared to when you bought it. Are you willing to take that hit?

If you do buy that 2003 Acura, remember to have a mechanic check the engine thoroughly before the purchase. I once got burned when I bought a used car that had a crap engine.

 

[Tiberius Jim]

It sounds like you are doing a good job considering the decision from many possible angles. As with any decision, there are pros and cons of selling your current car.

How much equity do you have in your current car? Remember, because cars depreciate in value, it's worth less now compared to when you bought it. Are you willing to take that hit?

If you do buy that 2003 Acura, remember to have a mechanic check the engine thoroughly before the purchase. I once got burned when I bought a used car that had a crap engine.

I've had my car for less than a year now, so I've only made about 11 payments on it...so its probably worth more now than it ever will. Hondas do keep their value longer than most, but it still will continue to depreciate.

 

[Haggis and tatties]

Well if you can get rid of your new car and that wipes the slate clean debt wise then your at a good starting point, but if your still left with debt to pay on the car after its gone i don't think that's a good idea, what you end up with there is money for the debt that's left on a car you no longer own and money for the second hand car and all the expenses that comes with it.

Of course if you get rid of your new car and make enough to clear the debt on it and buy that second hand car then its all good.

 

[Yoda]

Wait a second, why in the hell would you buy a new Honda Accord... without a real job!??! And your fallback plan is now to buy a $14k used car?

I think a little realism is called for. If you don't make any money, and are in debt... you can't afford a nice car. Sorry. Get a crappy car. Not a $14k Acura. More like... a $5k Toyota.

I can't even vote on your two options, your 'situation' has left me so dumbfounded

 

[cultcross]

I have to say $14k seems expensive for "something that does what a car needs to do, and that is it gets me places without killing my at the pump." Doing some very rough currency conversion in my head, my car cost about $4500, 6 years old, average mileage, no maintenance problems of note (except the bloody electric windows, whoever invented those is the bane of my existence), passed its MOT (roadworthiness test by a government tester) first try.
Maybe cars are more expensive there (I always imagined them being cheaper though...) but I think you could shop around for a better deal than $14k if what you want is a turnaround that works and has decent gas mileage.

 

[Scout101]

Wait a second, why in the hell would you buy a new Honda Accord... without a real job!??! And your fallback plan is now to buy a $14k used car?

I think a little realism is called for. If you don't make any money, and are in debt... you can't afford a nice car. Sorry. Get a crappy car. Not a $14k Acura. More like... a $5k Toyota.

I can't even vote on your two options, your 'situation' has left me so dumbfounded

Yeah, I'm with you. Buying new car with a ton of existing debt and no solid plan for how to actually pay for it? Dumb. "Downgrading" to a used car to save money, and then buying a $14k used car? Not any better. How much does that actually save you in payments, $50/month? Nice, but not significant, and not worth buying a car 6 years older, with someone else's problems.

Get a second job.

 

[John Picard]

Sell the Honda and get something used for $3,000 or so. Stop thinking the more you pay for a vehicle means the greater its reliability. I drive a 13 year old truck and will soon have my 40 year old VW back on the road. No car payment is nice.

Also, don't defer that student loan debt. Like others said, get another job and kill the debt monster.

 

[Robert Maxwell]

I've never bought a car for more than $1600. Right now I'm tooling around in a '92 Corsica with 122,000 miles on it. I have to get it worked on every couple months or so, but it's usually minor stuff, and it still beats shelling out hundreds of dollars a month in car payments. Plus, the insurance is much cheaper.

Go on Craigslist or hit up a Carmax, find yourself a car well below the $10K range. For someone with your income, a car is a conveyance, not a luxury item. If it has four wheels, starts reliably, and gets you where you're going, it's good enough.

 

[propita]

Gotta agree with those saying get the "crappy" car. Get something cheap and reliable. It doesn't have to look nice--it just has to be able to get you back and forth without breaking down on even a semi-regular basis. A car in the shop all the time is as big a waste of money as big payments.

Sell the Honda for as much as you can get, knowing that it may not be enough to pay it off. If it does, shiny.

Pay off those loans asap. I owed $16K for finishing school last year, and interest was accruing at 6.8%--and capitalizing!! We took money in savings that was making only 1% and paid the majority of the loans (leaving other money in savings). That interest is killing. Pay it off asap.

That said, congratulations on appearing to be a decent, responsible person.

 

[Scout101]

How do you congratulate him on being responsible in a thread where he's trying to figure out how to get around an irresponsible decision, and proposing compounding it with another one? Is just WANTING to do better all that counts, not actually making the smart decision at the end?

 

[John Picard]

I've never bought a car for more than $1600. Right now I'm tooling around in a '92 Corsica with 122,000 miles on it. I have to get it worked on every couple months or so, but it's usually minor stuff, and it still beats shelling out hundreds of dollars a month in car payments. Plus, the insurance is much cheaper.

Go on Craigslist or hit up a Carmax, find yourself a car well below the $10K range. For someone with your income, a car is a conveyance, not a luxury item. If it has four wheels, starts reliably, and gets you where you're going, it's good enough.

Does your Corsica have the 6-cylinder? Those engines are very reliable.

Heck, I'd recommend to the OP to get a 2002 or later Chevy Cavalier. I put 140K on mine before it was totaled. Bought it new (long story, and something I'll never do again), but it was reliable, easy to maintain, and was great on gas. They can be had for under $3,000.

 

[tharpdevenport]

Bicycle. Emergency replacement tire. Raincoat. Helmet.

Gas = NONE NEEDED

LESSON LEARNED = well see...

 

[Robert Maxwell]

I've never bought a car for more than $1600. Right now I'm tooling around in a '92 Corsica with 122,000 miles on it. I have to get it worked on every couple months or so, but it's usually minor stuff, and it still beats shelling out hundreds of dollars a month in car payments. Plus, the insurance is much cheaper.

Go on Craigslist or hit up a Carmax, find yourself a car well below the $10K range. For someone with your income, a car is a conveyance, not a luxury item. If it has four wheels, starts reliably, and gets you where you're going, it's good enough.

Does your Corsica have the 6-cylinder? Those engines are very reliable.

Heck, I'd recommend to the OP to get a 2002 or later Chevy Cavalier. I put 140K on mine before it was totaled. Bought it new (long story, and something I'll never do again), but it was reliable, easy to maintain, and was great on gas. They can be had for under $3,000.

Yup. 3.1L V6. Solid as a rock. Never had any engine problems. The automatic transmission has never given me any grief, either. I've had an alternator fail, and a fair number of front suspension problems, but other than that it's been a very solid car. I can probably blame the front suspension problems on the shitty roads, anyway. New Jersey is really hard on a car.

 

[Mr. B]

If you buy an older car and it develops maintenance issues, wouldn't that eliminate the financial benefit in short order?

 

[Robert Maxwell]

Depends on how expensive the maintenance issues are. It's also cheaper--sometimes much cheaper--to insure an older car than a newer one.

 

[Tiberius Jim]

How do you congratulate him on being responsible in a thread where he's trying to figure out how to get around an irresponsible decision, and proposing compounding it with another one? Is just WANTING to do better all that counts, not actually making the smart decision at the end?

Okay, for one thing, I never said this $14k car was the one I'm going to run out and get tomorrow...it's an idea, nothing more.

For another, the Honda was a replacement for a truck I had purchased when I was making a hell of a lot more money. I stopped making that money when my employer went bankrupt.

Yeah, buying that truck was a shortsighted decision, and I could have replaced it with something used and dirt cheap, but I wanted something reliable.

I don't see how trading it in for something used is another "irresponsible" decision. When I traded my truck, I was upside-down on the loan, but the dealership absorbed the extra cost so I wound up owing nothing more on it. I plan on driving a hard bargain with any dealer, as I'm sure they'd love to replace some older model n their used lot with a barely-driven '09.

And by the way, downgrading to a $14k car would cut my payments in half...I estimate a difference of $200 a month. The book on that Acura ranges from $10-$12 so you can bet I'd be talking the guy down on it...if I even decide that's the one I want.

Also keep in mind that it isn't like keeping my car means I go broke and end up sleeping in the streets. It just makes saving for the future a little more difficult.

Bicycle. Emergency replacement tire. Raincoat. Helmet.

Gas = NONE NEEDED

LESSON LEARNED = well see...

Uh...no. You simply cannot get around around here on a bike alone. My job is about 25 miles away, and if I were to get a design job in Oakland or San Francisco...we're talking 45-50 miles. So...just...no.

 

[John Picard]

If you buy an older car and it develops maintenance issues, wouldn't that eliminate the financial benefit in short order?

Not always. Check out the reliability issue of some newer cars and you'll see some that have spent more time in the shop than on the road. A great example is the Volkswagen New Beetle/Jetta from 1998 - 2003(?) that were built in Mexico.

One problem with vehicles is that a majority of people only perform maintenance when something breaks and overlook routine *preventative* maintenance. Change the oil every 7K miles; change the filters at prescribed intervals; transmission flush and filter change ~25K miles, etc are small expenses that save money in the long run. The money saved buying used and spent on annual maintenance greatly outweigh a monthly car payment on a depreciating asset that will also entail regular maintenance.

 

[Scout101]

Okay, for one thing, I never said this $14k car was the one I'm going to run out and get tomorrow...it's an idea, nothing more.

You brought it up as an example, I used your example to make my point. My fault, or yours?

For another, the Honda was a replacement for a truck I had purchased when I was making a hell of a lot more money. I stopped making that money when my employer went bankrupt.

Yeah, buying that truck was a shortsighted decision, and I could have replaced it with something used and dirt cheap, but I wanted something reliable.

Here's where the problem is. Bought a truck you couldn't really afford, and traded it in quickly enough that you were upside down on the loan. Not sure why it was ever a good idea, as you were still in school, had loans, and weren't sure about future job prospects, but it's done. Couldn't afford it, so took the loss and traded it in. Here's where you could have made a smart decision, but instead, made the SAME exact decision, bought a new car you couldn't afford, without solid job prospects/paychecks, and still had loans. Strike two. Now you're asking us if you should trade in another new car after 11 months, one you've gotta be upside down on again (or pretty close). Answer is probably still Yes, but instead of learning the lesson and buying a car that's cheaper and affordable (cheaper, not CHEAP), you're talking about spending 10-15k on a 6 year old used car. Not all that much better than just keeping the car youv'e got, at this point. This one is cheaper for now, but also 6 years older. Depending on length of loan you took, might make out better to keep what you've got, and when the loan runs out, KEEP it. Hondas run a long time, and you should easily be able to get 5-10 years without a car loan or significant issues. And you know the history of this car, having bought it new, so you aren't buying someone else's headaches, if they traded the Acura in because it was acting funny.

And by the way, downgrading to a $14k car would cut my payments in half...I estimate a difference of $200 a month. The book on that Acura ranges from $10-$12 so you can bet I'd be talking the guy down on it...if I even decide that's the one I want.

Saving $200/month, but adding a year back to the loan, yes? Plus paying all the tax/title/registration fees again. Plus, after owning it 11 months, you just took the biggest drop in value. Might not depreciate as much over the next year or two, so cashing out when you're at your lowest on that one. Just seems like you saw you made a mistake, then repeated it. Now you're asking us if you should repeat the same mistake a 3rd time.

My opinion is NO, you shouldn't. If you can afford to keep the Honda, keep it, but keep it past the loan datem, don't trade it in because the payments are over, or it has 80k miles. Drive it for 5 years after your loans end. Use that money to pay off other loans, or pretend you're still making payments and SAVE that money. Next car won't require any loans, or very small ones, if you do it that way.

Also keep in mind that it isn't like keeping my car means I go broke and end up sleeping in the streets. It just makes saving for the future a little more difficult.

If you're making $12/hour, living at home, and still barely making ends meet, you're not all that far from that. Clearly having trouble with the payments, or you wouldn't have brought it up. And every time you take a bath on another car, you're losing a couple grand that could have been better spent. Hell, if you make this mistake again, you might have almost been better off keep the truck, as it would be more than halfway paid off by now, so you'd have a brand new truck for the price of your used Acura...

Short version: even if it's shiny and pretty, if you can't afford it with the money you already have, don't buy it. Making a large purchase, assuming you'll be able to pay for it later, is dumb. Doing that several times, on a salary that couldn't afford to do it the first time, is just BEGGING to take the bus to work...

Uh...no. You simply cannot get around around here on a bike alone. My job is about 25 miles away, and if I were to get a design job in Oakland or San Francisco...we're talking 45-50 miles. So...just...no.

Here's more of the problem, which I missed earlier. Isn't there a FedEx/Kinkos any closer to your house? Driving 25 miles each way, every day, for $12/hour is dumb. Wasting lots of time, gas money, and wear and tear on the car. Driving that for a higher paying job? Sure. For something that doesn't pay well? Not really. And if you get a better job, and move to San Francisco? Might be time to move out of your parents house and get an apartment, even if it means roommates. Driving 100 miles a day is tough to justify no matter what they're paying you. Might wanna think ahead on this car purchase, as if you don't get a new job, you need to cut back more. If you DO get a new job, might need to factor rent/utilities/food into the equation, plus depending on the apartment and public transportation options, having a car at all might not be needed, so you'd be making big payments on a car you don't really want/need at that point, so you'd have to sell it and take a loss AGAIN...

 

[Kirby]

Wait a second, why in the hell would you buy a new Honda Accord... without a real job!??! And your fallback plan is now to buy a $14k used car?

The younger ones sometimes do things without thinking it through. I'm a more concerned about how he thought that he would immediately earn $45k per year right out of college, especially in this economy.
Wait'll he gets out on his own paying rent and all the other associated expenses that come with it.

I think a little realism is called for. If you don't make any money, and are in debt... you can't afford a nice car. Sorry. Get a crappy car. Not a $14k Acura. More like... a $5k Toyota.

Good advice, and learn how to turn a wrench too, that'll save repair costs.