Do You Really NEED A New Car?

Can you rely on a used car?

There’s no smell on earth quite like that ‘new car’ smell. I really think that everyone should own a new car at least once in their lives. The only two draw backs of a new car are the price and the depreciation.  New cars are EXPENSIVE! In most cases if you buy a new car, you will have to finance it, and depending upon your credit rating and the term length of the car loan, you can expect to  pay hundreds if not thousands of dollars in interest. Additionally,   when you finance a brand new car you are required by most lending institutions to have the vehicle FULLY insured. If you own a car outright in the USA you can get away with really inexpensive liability insurance that covers the damages to another vehicle should you be at fault. You can further reduce the cost of insurance by opting for limited tort insurance which places a limit on how much you can sue another driver for should they cause you bodily injury and financial loses. Of course, how much you pay for car insurance also depends on how safe a driver you are.

With the possible exceptions of the first year of a new model,  there’s usually nothing more reliable than owning a new car especially if you depend on the vehicle for transportation to and from your day job.  But there’s more to think about besides just the monthly loan payments before you  decide to buy that brand new car. You should examine your needs, motives, and current situation.

Do you even need a car at all?

I’ve owned eight cars so far in my life, all but three were used. My first car was a ’71 Bug.

Next I owned:

• ’80 Chevette
• ’89 VW Fox (New, but a remainder that sat on the lot until 1991)
• ’80 Pinto (I miss that car)
• ’97 Escort (New)
• ’91 Tracer
• ’96 Accent
• 2002 Accent (New, now 16 years old with over 475,000.)

I grew up in New York City. Specifically the town of Woodhaven in the borough of Queens. In NYC there’s really little reason to own a car because the public transportation system will get you almost anywhere in the city, by train or bus, round the clock, seven days a week, even on holidays. And there’s also taxis, private cabs, and now Ubers and Lyfts to get you where you need to go.   So I didn’t learn to drive until I moved to Pennsylvania for college. I got my driver training at the Wilson Driving School. In Lancaster PA, a car is really a necessity, and those early years living in this state prior to 1993 were a nightmare when I was without a car. Buses to when I lived didn’t even run after 6 p.m. and there was only so far I could travel on foot or by bicycle, weather permitting.

Now having lived in both places, one where a car is an optional luxury for convenience verses one where a car is an absolute necessity, let me tell you  I’d much rather have a car I don’t need than need a car I don’t have. Public transportation is great for some people, but I love to travel and I want to go where I want to go, whenever I want to go. If you live in a big city with an extensive public transportation system that suits your needs, and you don’t suffer from wanderlust then you really don’t need a car at all and you can save your money.

If a NEW car is a must have…

You have to decide what kind of car you need, and if it must be new or not.

My first NEW car was a 1989 VW FOX. The 71 Bug lasted only four months, I brought it used for $500, it needed rust repair, and I sold it for the same amount. I brought a used Chevette for $1000 which I drove around for a year before trading it in towards the VW FOX.  I COULD barely afford the car, and the insurance, UNTIL I damaged it, and couldn’t afford the repairs to the front axle and didn’t have enough to cover the deductable. So the car sat undriven in a friend’s driveway,  I cancelled my insurance, and I took the bus to work. UNTIL I GOT FIRED. When I was unemployed, the first thing I did was to surrender the car back to the dealership that financed it as a voluntary surrender.   I explained the situation, I was not going to play the ‘car, what car?’ game until the repo man found it, I just said here it is, here’s the keys, sorry.  Trust me, THAT was my BEST option. I ended up unemployed for almost the entirety of 1992.

So the above tale of woe covers the next set of considerations.

if you have a car loan:

• Will you be able to keep up the payments should you lose your job?
• Will you be able to pay for repairs and maintenance?
• Can you afford the insurance?
• Do you have GAP insurance should the car be totaled to cover the difference, or will you be making payments on a large crumpled paperweight for several years?  

Never buy a car that is more that you can afford. Don’t but a Jaguar if a Jetta will do. Don’t buy an SUV, a truck, or a van if all you need is an economy car to get to and from work. A car is for the most part, an A to B machine. If you’re not going off road, you don’t need an off road vehicle like a Jeep. Plus consider the cost of gas. Do you really want something that gets 18 miles to the gallon for a daily driver? My Hyundai Accent gets 40 Miles to the gallon, and is adequate for MOST of my adventures. I do plan to buy a Jeep Wangler in the  near future, as a SECOND vehicle for adventures.

If a USED car will suffice…

There’s a brand new shiny super stocked Dodge.

And ev’rybody’s sayin’ that there’s nobody meaner than

The Little Old Lady From Pasadena.

She drives real fast and she drives real hard,

She’s the terror of Colorado Boulevard. – The Beach Boys, The Little Old Lady From Pasadena

 

Bear in mind that whenever  you buy a used vehicle, you are buying every misdeed the previous owner subjected it to. Did they keep up the maintenance schedule? Was it involved in undocumented accidents? Did they punish the vehicle mercilessly or were they gentle? Highway miles, or city gridlock with potholes thrown in for good measure? Is there a warranty? Every used car dealer will swear that their cars were only driven by a little old lady, once a week to church. Of course that little old lady may have been from Pasadena…

Also, most lending institutions will ONLY finance a used vehicle up to so many years, and miles. Remember what I said earlier about making payments on a large paperweight.  If you finance a five year old car for five years, you’re bound to have something major occur. If you don’t have an emergency fund to cover the repair costs, including towing and renting a temporary replacement car, you could be in trouble and without a car for a long time.

Here are some possible repair costs:

Over the last sixteen years that I’ve owned my current 2002 Hyundai Accent, I’ve replaced EVERYTHING at least once, sometimes two or three times. I’ve probably been towed in for repairs at least a dozen times, and if you live in the USA as I do, I HIGHLY RECOMMEND signing up for AAA (American Automobile Association) or if you live in Canada they have CAA. Trust me, one tow cost will pay for the basic membership fee. I splurge for AAA Premier because of the long distances I drive, and even that is well worth the fee. An ounce of prevention always beats a pound of cure!    

In EVERY case, I still managed  to keep the repair costs for the year under what a year’s worth of car payments would be. It’s always been cheaper to keep my car than to replace it, and I look forward to hitting the 500,000 mile mark sometime within the next  twelve months. I haven’t had a car payment in fifteen years, and my insurance is less than $500 a year.  Hopefully you will be as fortunate with your next car as I’ve been, As always I wish you happiness and success!