I think your advice is the soundest that Jeff could ever receive on the topic of buying a new or used car. You made a very good analysis of the matter. I am about to buy a car, too. Although I am totally debt-free, I still find your advice pertinent. I hope Jeff took the right decision.

Dude, my car is 18 years old and going strong. I’ve never been stranded by it except the one time I let the battery run down. You need to buy a Honda, a Toyota, or a Geo. Then you’re golden. You can easily get a car for $1000 that will run fine and get you to and from your job.

What’s wrong with your car anyways that $1200 can’t fix?

You could also ask them to take down your name and number to contact you should a vehicle become available.
Don’t forget to follow up with them every week or two so they don’t forget about you. We are all very busy people and do not always remember things like this.

The conventional wisdom seems to get misconstrued to the point where even some commentators here think buying used is ALWAYS better. The situations brought up usually show how buying used is better by comparing a $1,500 junker to a $20,000 brand new car.

I use Edmunds TCO (true cost to own) calculator because I think it gives pretty comprehensive results. The numbers factor in the depreciation, taxes and fees, fuel, maintenance, repairs, tax credits, financing, and insurance.

My situation: I got in a car accident and didn’t have a long time to shop before having to pay for a rental car (insurance company would only pay for 5 days after letting me know my car was totaled). They gave me $4,500. I fully intended to buy a used car circa 2006.

TCO for the first 5 years of ownership for:
2006 Honda Civic EX – $27,469
2006 Ford Focus ZX4 SES – $26,050
2006 Hyundai Sonata LX – $32,616
2006 Hyundai Elantra Limited – $28,739
2006 Mazda 3 s – $29,073
2006 Volkswagen Golf GL – $28,336
2006 Toyota Corolla LE – $28,065

Then I looked at some new cars to see what the rebates were like.

The 2010 Ford Focus SEL was actually $3,000 less than the price listed in Edmunds calculations because of all of the rebates I qualified for and the fact that I got the car for $600 under invoice. My 5 year TCO is **$28,590**

The new models of all of the other cars above were higher, especially when compared on a features-to-features basis.

Even comparing the New Focus to the 4 Year Old Focus… the features (safety AND comfort wise), the full warranty, the value of knowing the maintenance is getting done, etc is WELL worth the extra $2,500 over 5 years… That’s just $500/year.

In a bunch of cases above, the difference between a 4 year old (Corolla/Golf/etc) and new Focus is a few hundred bucks.

If you want to argue that people should purchase cars that are more than 4 years old, that is another argument entirely. I just wanted to show an example where a new car is financially a better decision than some 4 year old cars.

Jeff… what do you think man? Quit keeping us in suspense…

If he were to purchase a new Honda Civic for $19,000 (someone’s example), he’d have to run it nine and a half years trouble free to match that cost, and only if he paid cash up front. The larger new car insurance premium is also a factor. With $1,200 down, Jeff’s loan would be $17,800. According to Bankrate, the average new car loan rate is currently 6.83%. For a five year loan that comes to $351.04 a month.

Yes it its a hassle babying your older car. I sense that’s the real issue, and Jeff has my sympathy really, but if it’s a strictly monetary decision, dance with the one that brung ya.

Jeff… where are you at on all this man? Don’t leave us hanging!

Jeff, I want you to write out a list of 20 options. Don’t self filter your list yet. Just write it out to get your creative juices flowing. Here are some to get started.

Do you know someone with an extra car that would allow you to use it for several months to buy more time?
Do you belong to a church? Perhaps someone wants to donate a car?
Do you have flexiblity in your job? Can you work from home?
Anyone in your family willing to help?
Shop around – civics are still good cars, even when they cost $1200.
Anyone you work with live close? Can you ride share so that your new $1200 car isn’t driven that far everyday?

Best of luck!

I’d be more apt to buy that 04 that only has 13k miles…

I specifically say “low mileage for it’s age”, since this will reduce your search down to ‘little-old lady / gently driven cars’. Never buy a high-mileage (for it’s age) vehicle, as those tend to be rentals and other more abusive driven type of cars.

Have a trusted mechanic check out the used car you are thinking about, and also look for private seller deals since you might be able to find a bargain there. Good luck.

No matter what Jeff does he’ll have to pay. With a newer car it’ll be payments, with a bottom line car it’ll be repairs.

If he takes on car payments, the advantage will be that he’ll know what his expenses will be and can budget for them. With the beater, he may go some months without paying for repairs, but then get wacked with a big one that he’ll need to be prepared for. The fact that he was able to save up $1200 in a few months shows he has the ability and discipline to do this. If there are no major repair bills, he’ll come out ahead.

What ever he does it’ll be a gamble, there’s no perfect plan when you have limited resources. But that’s the world we live in.