Need advice about buying a car

[mama_b]

I will try not to make this too long.  6 years ago our car died and my husband insisted on buying a new car.   I have always hated having a car payment.  It ate up a huge chunk of our income, and now that we homeschool, only having one car has been hell because it means we are stuck in the house unless I want to get everyone up at the butt crack of dawn to take dh to work so we can have the car.  And it doesn't always work out because our activities are during times that he has to be picked up.  So we have missed out on a lot.

The car is finally paid off and I need to get a second car so I can get the kids to their activities.  We have a baby due in August and so this second car needs to be a van in order to fit everyone comfortably.  $150 per month is the max I'm willing to pay per month for a car payment.  That means that I can get something for $7000 maximum.

My dilemma is this.  We just got our tax refund back, so we could pay cash for a car up to $3000.  I need advice on weather to buy a cheap car for cash, or buy a more expensive car and have the payment.

We can easily afford the $150, but I would so much rather not have a payment at all.  My concern is that I will end up breaking down (which I especially dread with a newborn) and have to dump a bunch of money into the car.  On the other hand, there really isn't a huge variance in mileage between the vans that cost $2-3000 and the ones that cost $6-7000.  So there is no guarantee that I wouldn't end up dumping a bunch of money into it anyway, and then I would be stuck with debt and a payment on top of that.  The only thing about the more expensive ones is that they will likely have some kind of warranty, and maybe (?) a better chance of not breaking down.

So what would you do?  I have been agonizing over this.  Any advice would be greatly appreciated.

---

[SunRise]

I think with kids, reliability is a huge factor. Room is a consideration too. Not sure how many kids / car seats etc you have, this will definitely be a factor. Also check the age requirement for kids in front seat - if you are mostly using car to boot around to activities during the day having one in front and three in back may work.  I just checked out the honda fit - 15000 dollars, new. W/ a down payment, your monthly would be under 150.  If you are doing short distances to get to activities, I dont think a van is necessary. I would go small and efficient. (again, depends how many kids you have).

Personally, I wouldn't spend 10,000 on an older used when I can spend 15000 for a brand new / more reliable (hopefully). Id rather get a 3000 dollar used car.   My 10 year old car runs well and its book value was around 6000+, but I would be hesitant about buying someone elses 10 year old car for 7000 dollars.  If money was a huge factor, then research the best kind of cars / (toyota used to be know for long lasting engines, etc).

[mama_b]

Thanks for your response   I didn't mention that this van will become our primary vehicle because our current one won't fit everyone.  So even for long drives this will be the vehicle we will use.  Our current car is tiny and will become dh's transportation for work.
 

[Escaping]

Which country are you in? In Canada it typically costs more to finance a used car than a new one because of the insanely high interest rates for a used vehicle (new is usually 0% if you buy at the right time)

If you only want to spend $150/m and have $3,000 down, it might be a smarter option to lease. You have a brand new reliable vehicle that will probably last you just as long as a $6-7,000 one.

[mama_b]

I'm in the US. Any new van would be way moe than $150 even if leased. Thanks for the suggestion though.

[TiredX2]

Is baby going to make 3 or 4?  If three, there are a lot of sedans that could fit three kids--- that may be a more cost efficient option.  You may need to get different carseats, but the majority of sedans can fit three in the back.

I think the trade-off between cheaper car/no payment and more expensive car/payment is one you'll have to decide on your own.  Each person has a different tolerance for risk/ debt that they have to determine on their own.  If I were you, I would "pretend" to make a decision--- flip a coin, one side more expensive car, one side less expensive car.  THEN, see how the coin toss makes you feel.  It's actually a pretty good way to determine how you *really* feel about a situation--- if you feel relief, then great.  If you fee depressed/ disappointed, then reevaluate your choice.

[mama_b]

Baby will make 3 but we take road trips every month or 2 to visit family and we take our dog so a sedan is not an option. We are already extremely squished and uncomfortable with 2 kids and the dog.

[Escaping]

Quote:

Originally Posted by mama_b 

I'm in the US. Any new van would be way moe than $150 even if leased. Thanks for the suggestion though. 

 

You'd be surprised... they'd be over $150 but less than $200 

My family owns a dealership and I've learned I'd never buy a used minivan in that price range, especially if it's to be used as a primary vehicle. No one lets go of a good minivan at that price. On a van that's going for $3,000-$7,000, they paid $1,000-$4,000 at auction (which means the family who sold it got even less). At that price it usually means it needs a repair worth more than what it's worth. If you find a deal that's too good to be true, it is. 

On a new vehicle, dealerships only make a few hundred dollars (despite popular belief lol)... a $20,000 vehicle typically only yields $100-$500. 

The biggest markups are on used cars, usually a few thousand dollars, add one or two repairs and you've already spent more than you would with a lease and you end up with no car either way after 3 years (with a lease you still get the option to buy at the end of the term if it's a good vehicle... it won't be a good deal compared to financing, but for some people it's the only option).

Sometimes you can get a good deal on a fleet vehicle or when rental companies unload they offer really good prices but those cars have been beaten to death and shouldn't be expected to last very long either. 

If I were in your situation I'd either go for a newer one which is more money or not spend money at all. A van in that price range may very likely be more costly in repairs. The most likely suspect is brakes... someone probably didn't want to pay $1,000 on an old van to have the old brakes replaced, dumped it for a new one and got more as a trade in than what it's actually worth, someone snatched it up, put some garbage brakes on just to be able to certify it, which will last a few months and the last person's problem becomes your problem. 

[htcmom]

What if you paid cash for a van and saved the $150 a month for any possible repairs? You wouldn't be throwing money away on interest charged then. Really with any used car you could have to do repairs wether you spend $3k or $7k. At least if you don't have a payment you can then afford the repairs.

[Escaping]

Sorry, one other thing I forgot to add is consider insurance. For certain less safe vehicles, the insurance could be way higher so anything you save on the cost of the van, you're losing to insurance. SUVs have the overall cheapest rates so you might even find you can better afford an SUV or crossover. I'm not a kia dealer, but I've noticed a lot of people with your search criteria seem to go with kia sorento's in the end... maybe there is something to them... lower resale value or cheaper insurance maybe?

[mama_b]

Originally Posted by Escaping 

You'd be surprised... they'd be over $150 but less than $200 
My family owns a dealership and I've learned I'd never buy a used minivan in that price range, especially if it's to be used as a primary vehicle. No one lets go of a good minivan at that price. On a van that's going for $3,000-$7,000, they paid $1,000-$4,000 at auction (which means the family who sold it got even less). At that price it usually means it needs a repair worth more than what it's worth. If you find a deal that's too good to be true, it is. 
On a new vehicle, dealerships only make a few hundred dollars (despite popular belief lol)... a $20,000 vehicle typically only yields $100-$500. 
The biggest markups are on used cars, usually a few thousand dollars, add one or two repairs and you've already spent more than you would with a lease and you end up with no car either way after 3 years (with a lease you still get the option to buy at the end of the term if it's a good vehicle... it won't be a good deal compared to financing, but for some people it's the only option).
Sometimes you can get a good deal on a fleet vehicle or when rental companies unload they offer really good prices but those cars have been beaten to death and shouldn't be expected to last very long either. 
If I were in your situation I'd either go for a newer one which is more money or not spend money at all. A van in that price range may very likely be more costly in repairs. The most likely suspect is brakes... someone probably didn't want to pay $1,000 on an old van to have the old brakes replaced, dumped it for a new one and got more as a trade in than what it's actually worth, someone snatched it up, put some garbage brakes on just to be able to certify it, which will last a few months and the last person's problem becomes your problem. 

I would love to lease one at that price but where I am they are all in the $400 range. I have checked. Maybe because you are in Canada?
Also we put too many miles on our cars to lease them. We started out leasing our current one and ended up buying it because we were way over our mileage limit.
Still not sure what to do

[Escaping]

Cars are much cheaper in the US than Canada. Dealers in Canada often buy cars from across the border for customers looking for a specific car and still make money on them. Unfortunately for the average person, the duties, taxes and shipping make it cost about the same once everything is said and done. 

You could also ask the dealer if they do "balloon car loans", which is a lot like a mortgage, you make small payments for up to 7 years and at the end of the term you owe a lump sum. Those are only good if you don't plan to sell the vehicle because you'll most likely be "upside down" in your payments all along (the vehicle is worth less than what you owe on it still).

If you do end up buying a used older van, be sure to check if they still supply parts for it.

[emilyfaith]

Originally Posted by htcmom 

What if you paid cash for a van and saved the $150 a month for any possible repairs? You wouldn't be throwing money away on interest charged then. Really with any used car you could have to do repairs wether you spend $3k or $7k. At least if you don't have a payment you can then afford the repairs.

I was going to suggest the same thing! Also the 150 in repairs a month that doesn't get spent can be the upgrade fund for a newer vehicle. My husband and I both own older (13 plus years) vehicles and rarely have to repair them. No car payment is awesome! You would be suprised what you can get with a wad of cash buying from a private party. I also realize that I am lucky to be married to a mechanic/technician so he knows what he is getting into. If you can find a reliable mechanic to look at vehicle before you buy that can help alot. My husband does this frequently for friends (for free) and has saved them lots of money and headaches (even from "trusted" dealerships). Good luck car shopping!

[mama_b]

Originally Posted by htcmom 

What if you paid cash for a van and saved the $150 a month for any possible repairs? You wouldn't be throwing money away on interest charged then. Really with any used car you could have to do repairs wether you spend $3k or $7k. At least if you don't have a payment you can then afford the repairs.

Originally Posted by emilyfaith 

I was going to suggest the same thing! Also the 150 in repairs a month that doesn't get spent can be the upgrade fund for a newer vehicle. My husband and I both own older (13 plus years) vehicles and rarely have to repair them. No car payment is awesome! You would be suprised what you can get with a wad of cash buying from a private party. I also realize that I am lucky to be married to a mechanic/technician so he knows what he is getting into. If you can find a reliable mechanic to look at vehicle before you buy that can help alot. My husband does this frequently for friends (for free) and has saved them lots of money and headaches (even from "trusted" dealerships). Good luck car shopping!

Dh and I had a long talk today and this is what we are most likely going to do.  We will buy an inexpensive van, put away the money we would be putting into a car payment, and get AAA just in case something would happen.  We've been paying over 300 per month on our car that we bought new and we had to put a significant amount of money into it this past year in repairs (the first year that has happened).  So I figure that even if this car would only last a year we would still pay less for it than we paid in car payments for one year on our other car.  Thanks everyone for the suggestions. :)

[34me]

I know you've already looked at responces but have you looked at Subaru Wagons?  I have one that is 14 yrs old, over 200,000 miles and hasn't been the primary car for 5 years and it's still an awesome car.  It was our main car until my three were 9,11 and 14 and 2 good sized dogs in the back.  We regularly took it on 1000 mile road trips and too many hockey trips to count.

[mama_b]

Originally Posted by 34me 

I know you've already looked at responces but have you looked at Subaru Wagons?  I have one that is 14 yrs old, over 200,000 miles and hasn't been the primary car for 5 years and it's still an awesome car.  It was our main car until my three were 9,11 and 14 and 2 good sized dogs in the back.  We regularly took it on 1000 mile road trips and too many hockey trips to count.

I haven't, but I will look into it.  Thanks!

[emilyfaith]

Originally Posted by mama_b 

I haven't, but I will look into it.  Thanks!

I have a subaru and love it. My husband says its easy to work on and parts are inexpensive. Not the greatest for gas mileage but the all wheel drive is awesome in our cold Montana winters.

[CelloMomCars]

A wagon is a great idea. Would you consider something like a Jetta TDI? Modern diesel engines are turbocharged, fuel efficient, and much cleaner than the old Mack trucks. The Jetta TDI Sportwagon does 30/42 mpg (cty/hwy), so if you plan to drive a lot you may end up saving on fuel in the long run. My personal guess is that $4 a gallon gas will seem cheap soon.

That or a Mazda 5, which seats 6 (in the US). But only 28 mpg. Both around $20k.

A new car will tend to be more fuel efficient than an older one, and repair costs are less.

Use Edmund's "True Cost to Own" calculator to estimate your real costs of ownership, including insurance and stuff like that.

A family hatchback is another option, since your dog could be in the way-back. A luggage rack can take a lot of stuff, and may just be the cheapest option if you don't take long trips too often. My dad used to take our family of four, plus an uncle, out camping for 4-5 weeks, in a Fiat 128 (not a large sedan).

[Mama Amie]

If you don't need tons of space, I recommend the Subaru impreza wagon. If you need hauling room, their fortester is good. Most of the new cars by other makers are big crossovers with bad mpg or tiny little things with no trunk space. Subaru seems to get better mpg and if you buy new from dealer, you get great warranty and lifetime oil changes free at dealership. We are loving our new impreza wagon. Can you tell?