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strategies for buying/financing a new car

S

sciencewhiz

Diamond Member
I'm one month removed from college, making >60,000 per year. My current car is a 1981 Subaru that I hate. I'm currently borrowing my sister's Saturn until May. So, by May I need a new car.

I have my heart set on a Civic, either LX sedan or EX sedan, so we're talking $15,500 to $17,500 plus all the other fees. I currently have about $1500 saved to use for a down payment, and I can save for it at a rate of $1,000 per month.

I've been told that January/February are the best times to buy a new car. So, I could buy it now, but I don't have more then a month's history with my current employer. As time goes on, I'll have more history with the company and a bigger down payment.

As far as my current credit history goes, I have a AMEX blue that I've had for the last 3 years of college with a 3,800 credit limit and no balance (they don't know about the new job). I also have a VISA that is joint with my mom and has a 15,000 credit limit. I'm not sure what my credit score is, but there are no black marks on it (my company does a check as part of the application process). I've had a Verizon cell phone in my name for the last 6 months which may help.

Besides the dealer for financing, I'm a member of 2 credit unions and costco.

I live in LA, so I have plenty of dealers that I can comparison shop with.

Anybody have any tips on when to buy, how to finance, how to improve my credit to help the financing, and how to get the best deal?
 
Originally posted by: MercenaryForHire
You're making $60K and you're buying a Civic? Come on. 😛

- M4H
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Funny, I intended to argue for buying a decent used car.

There's no need to spend that kind of money on a car, especially right out of college.

Viper GTS
 
Originally posted by: Viper GTS
Originally posted by: MercenaryForHire
You're making $60K and you're buying a Civic? Come on. 😛

- M4H
Click to expand...

Funny, I intended to argue for buying a decent used car.

There's no need to spend that kind of money on a car, especially right out of college.

Viper GTS
Click to expand...

I don't know man, I can't resist. I got out of college in June and immediately started working. I'm trying to get my hands on a brand new 05 Magnum RT in March. I can't friggin wait. Hell, ya only live once, right?
 
Originally posted by: Viper GTS
Funny, I intended to argue for buying a decent used car.

There's no need to spend that kind of money on a car, especially right out of college.

Viper GTS
Click to expand...

DO THIS!

Viper GTS told me the same thing when I was getting my car. Sure a new car is great, but after a few months you get over it. I wish I didn't have the $300 payment. If I were to do it over I would have bought a $5k car.
 
Yeah, I wish I had never gotten a new car. I had to move back home with my parents b/c I couldn't afford to pay rent anymore. I'll probably end up selling it, and getting a used, cheaper car.
 
The date of the year that you buy isn't very meaningful. Sure you may save $100 here or there, but it isn't a major issue. Instead, look for a good sale going on. Honda is in their Honda days, so that may or may not mean any savings on a Civic.

The Civic LX is nice. I have a 2002. You'll love it compared to a 1981 junker. Then in 7 years or so you can upgrade again to a dream car and love the difference. This is a lot more fun than going once to the dream car and never getting the fun of upgrading again in your life. But few people look at life the way I do.

I don't know California sales tax laws. But what does it cost for tax, title, license, and registration? In Nebraska my 2002 Civic LX was about $1400 for all of that (mostly sales tax of course). If you only have $1500 now, you don't have much. So unless you can get a great deal with Honda days, then I'd suggest waiting at least one month so you have a downpayment AND tax, title, license, and registration funds. Plus as you wait, your credit score will probably keep going up (it often doesn't matter much for car loans though unless it is in the crapper).

Go to your creidit unions and ask. It won't hurt you and you'll really know the answer. Get a 3 year loan - no longer unless there is a fantastic special in interest rates. Credit unions would probably be better than any dealer suggested banks.
 
Originally posted by: Jumpem
Originally posted by: Viper GTS
Funny, I intended to argue for buying a decent used car.

There's no need to spend that kind of money on a car, especially right out of college.

Viper GTS
Click to expand...

DO THIS!

Viper GTS told me the same thing when I was getting my car. Sure a new car is great, but after a few months you get over it. I wish I didn't have the $300 payment. If I were to do it over I would have bought a $5k car.
Click to expand...

Unless I had ridiculous amounts of cash to burn (any maybe not even then), I'd much prefer having a nice used car that's paid off. :thumbsup:
 
The new civic is the compromise between my gut that tells me to get a used car and my heart that says to get a new 325i or a Vette like my coworkers.

I've looked at the $5k to 6k used car market in LA, and it's not that great. I'm looking at more like $7k to 8k for a decent to nice one.
 
1) End of year is the best time to get CLEARANCE DEALS on the same model year. For instance in November you would buy a 2004 Honda Civic for near or below dealer invoice.

2) Consider upgrading to a Honda Accord LX automatic, you could probably score one for around $18,500

3) Profit?
 
Originally posted by: sciencewhiz
The new civic is the compromise between my gut that tells me to get a used car and my heart that says to get a new 325i or a Vette like my coworkers.

I've looked at the $5k to 6k used car market in LA, and it's not that great. I'm looking at more like $7k to 8k for a decent to nice one.
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If you're going to spend $15K anyway, get a used car. You could get a nice 03-04 Impreza, or if you go a little older a Legacy (I'm a bit of a Subaru zealot, but you get the idea).

Let someone else take the depreciation, & thank them as you drive away with a much nicer vehicle at the same price.

Viper GTS
 
Originally posted by: Viper GTS
If you're going to spend $15K anyway, get a used car. You could get a nice 03-04 Impreza, or if you go a little older a Legacy (I'm a bit of a Subaru zealot, but you get the idea).

Let someone else take the depreciation, & thank them as you drive away with a much nicer vehicle at the same price.
Click to expand...
That advice really isn't applicable for new Hondas. Depreciation really isn't a factor. Lets try math with 12,000 miles a year on a car in good condition.

Lets say he can talk a dealer on a 2005 Civic LX down to $14,500 (probably about typical). That is about the same price they were in 2000. What is a 2000 Civic LX worth now? About $9500 in good condition with typical mileage. So that is $1000 a year lost in depreciation. Not bad at all.

Now lets look at a 2003 Subaru Impreza 4D RS: $16k. 2000 Subaru Impreza 4D RS: $12k. He'd lose $1333 a year in depreciation!

Your advice is to get him to have greater depreciation. This is the opposite of what you intended. Yes many new vehicles may have $2k or $3k a year in depreciation (even more for unreliable luxuary vehicles). But it isn't true with Honda Civics. Many times you can drive a Civic for 1 year and sell it for about the same price that you bought it.
 
Buy used, and plunk your $ into a 401K @ new job. At your age, you'll save a crapload of $ for retirement.

Or buy new, start bad spending habits that haunt you for the rest of your life, the choice is yours grasshopper...

autotrader

You can find something classy, classic, cheap, $20K is an awful lot of cash... Especially when you start to add up the interest.
 
Originally posted by: dullard
Originally posted by: Viper GTS
If you're going to spend $15K anyway, get a used car. You could get a nice 03-04 Impreza, or if you go a little older a Legacy (I'm a bit of a Subaru zealot, but you get the idea).

Let someone else take the depreciation, & thank them as you drive away with a much nicer vehicle at the same price.
Click to expand...
That advice really isn't applicable for new Hondas. Depreciation really isn't a factor. Lets try math with 12,000 miles a year on a car in good condition.

Lets say he can talk a dealer on a 2005 Civic LX down to $14,500 (probably about typical). That is about the same price they were in 2000. What is a 2000 Civic LX worth now? About $9500 in good condition with typical mileage. So that is $1000 a year lost in depreciation. Not bad at all.

Now lets look at a 2003 Subaru Impreza 4D RS: $16k. 2000 Subaru Impreza 4D RS: $12k. He'd lose $1333 a year in depreciation!

Your advice is to get him to have greater depreciation. This is the opposite of what you intended. Yes many new vehicles may have $2k or $3k a year in depreciation (even more for unreliable luxuary vehicles). But it isn't true with Honda Civics. Many times you can drive a Civic for 1 year and sell it for about the same price that you bought it.
Click to expand...

Actually my point was not so much depreciation (though it is tied to that), IMO a $15K 03-04 Impreza is a nicer vehicle than a brand new $15K Civic. It certainly cost a lot more new, & if you let someone else take that hit you can pick up a nicer vehicle (albeit a year or two old) for a comparable price.

If long term depreciation is more important to you, then obviously the Honda makes more sense.

What would be more valuable would be the depreciation curve from 2-7 years on the Impreza vs 0-5 on the Honda. The Subaru's depreciation curve has likely flattened enough that it's not so much worse than the Honda (any idea where to get long term depreciation expectations for a vehicle?).

Viper GTS
 
Originally posted by: Viper GTS
What would be more valuable would be the depreciation curve from 2-7 years on the Impreza vs 0-5 on the Honda. The Subaru's depreciation curve has likely flattened enough that it's not so much worse than the Honda (any idea where to get long term depreciation expectations for a vehicle?).
Click to expand...
I couldn't find the same exact model in the Impreza for years 2-7. So I had to shorten the time frame a bit for the comparison. The best result is just to look in your used car ads and compare the actual going prices. You could use KBB or any other price guides as well.

Consumer Reports rates the Impreza as average depreciation and the Civic as above average (but not the highest rating).

I won't go into opinions about one car vs another. I think satisfaction for Impreza owners is about as high as it gets, so it is a good vehicle. But there are other factors to consider. (1) Full warranty vs none or minimal. (2) Full history knowledge vs minimal knowledge. (3) The new car feeling vs the used car feeling. (4) Civic is rated the highest of the tested small cars in accident avoidance and in protection in an accident (I don't think the Impreza was fully tested). (5) Civic is rated the most reliable of small cars vs average for the Impreza. Will these factors outweigh the "nicer" vehicle? Depends on the person I guess.

I personally bought the 2002 Civic LX new just over 3 years ago and just a couple weeks ago bought a 1999 Acura TL for my wife. I like new and I like used. If Sciencewhiz wants new, the Civic is certainly a great buy.



Aside: Sciencewhiz, are you going to hold me to my word about posting the horrible football rating program? I never did do anything to it. I'll be ashamed to post it but I will this week if you want.
 
When I graduated (May 2003), Honda was giving recent college graduates 1.9% financing. Look into that.
 
You can get a good deal on a Civic EX, Auto. I personally think that the car is a good value, my friend got one last October for around 16 before tax and registration.
Just go to carsdirect.com and find the car that you want. Their price is usually at or below invoice. Print out the page and get your local dealer to match it, and there you go.

If you go through a dealer's internet department or talk to the fleet manager, they usually figure you're internet savvy and don't give you much hassle anyway.

Buying a new car is a financial mistake, since you should never finance a depreciating asset. However if it makes you happy and you feel like you deserve it then go for it.
 
Originally posted by: Slvrtg277
Just keep in mind that when you buy a new car, you own a used car the second you drive it off the lot.
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Ditto - Having that car with 100 miles on the odometer sure is nice and maybe everybody should do it sometime before they die but if you're looking for a best strategy, buying brand new ain't it. Saving $1000 a month until May would give you around $6500 to put down on a nice, low mileage Honda driven by a little old lady. You can stick with your Civic, or now because your saving some money, get yourself into the more comfortable Accord...
 
Originally posted by: ElFenix
Originally posted by: MercenaryForHire
You're making $60K and you're buying a Civic? Come on. 😛

- M4H
Click to expand...

what do you have against civics?
Click to expand...

*taps sarcasm detector*

Surely you didn't think I have something against Civics, or Honda in general.

re: Used - Some people just like the "new car comfort" of having the full warranty coverage, the smell, and the knowledge that it's "their car" and they can baby it how they like.

And it's actually not a bad selection for $60K/yr. What's the adage, 1/3 of your income or less?

- M4H
 
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