Looking to buy a car -- advice?

[fire&ice]

Since you are financing the car, consider that many used cars will carry a premium interest rate over a new car.

 

[sumbride]

Date: 4/13/2007 9:09:31 AM
Author: fire&ice
Since you are financing the car, consider that many used cars will carry a premium interest rate over a new car.

This is exactly the reason I bought a new Toyota over a used one. The interest rate on the new one was about 6% lower than on a used one, and the prices weren''t different enough to make up for it.

 

[larussel03]

Yeah that''s true...I''m trying to keep a few things in mind while trying to decide between new and used

1) it''s for work and work pays for it, but I can''t go crazy b/c if I lost my job somehow I would still have to make car payments

2) I''ll be driving it a TON, bascially working out of the car, so I need one with minimal miles on it (I''m thinking under 40K or 30K)

3) If I end up getting another job a couple years down the road at a larger company, they may give me a car, so I have to make sure the resale value is also good

4) If I got a used one payments would prob be around 250-280 a month for 5 years...I could get that same payment if I did a 6 year loan with a new one, but it''d have a much higher interest rate, I''m sure

5) A new one would be about 330/month

There''s so much to consider when buying a car...at least negotiating was fun and I know I''ll get a decent price on a new one if I go that route.

 

[Gypsy]

Just a suggestion. No matter what your payments are. Since your car allowance is 450 (ish) a month... pay that amount. If you pay more than the payments, you are going to pay it off much faster... as you will be paying down a nice amount of principal. That way if, God forbid, something happens you will be in a better position whether you decide to keep or sell the car.

 

[FireGoddess]

Date: 4/13/2007 9:52:13 AM
Author: *~Sweetpea~*

4) If I got a used one payments would prob be around 250-280 a month for 5 years...I could get that same payment if I did a 6 year loan with a new one, but it''d have a much higher interest rate, I''m sure

Higher interest rate on the new car? Not usually. A few years ago I was looking to buy a car and thought I''d go for a used car...they wanted something crazy like 10% interest. I walked out and bought a new car with 0% interest.

 

[larussel03]

Date: 4/13/2007 4:43:47 PM
Author: FireGoddess

Date: 4/13/2007 9:52:13 AM
Author: *~Sweetpea~*

4) If I got a used one payments would prob be around 250-280 a month for 5 years...I could get that same payment if I did a 6 year loan with a new one, but it''d have a much higher interest rate, I''m sure

Higher interest rate on the new car? Not usually. A few years ago I was looking to buy a car and thought I''d go for a used car...they wanted something crazy like 10% interest. I walked out and bought a new car with 0% interest.

Oh oops--I meant the 6 year interest rate is higher...so for the new it''d be like maybe 6% for 5 years or 8% for 6 years but for the used it is 8% for 5 years...I think I may take a day off car shopping since my head''s starting to swim with figures!!

 

[Skippy123]

Sweet pea, used cars have about 1% higher interest rate. If you want a used car I would shop around for the lowest interest rate. Good luck. Best wishes

 

[diamondsrock]

To be honest, I had first considered a used Civic as well, but we decided not to get one because they weren''t that much cheaper. Hondas hold their value really well!

 

[crown1]

i''m definately not the expert here but i do think that the cash allowance you receive for the car will be taxed as income. it is not my business and you probably already know more about it than me. i just thought i would throw that out there since you are considering the financial aspects. sorry if it is not correct or you already know. i was just thinking that you would not receive the whole amount if it was being taxed at a pretty good rate.

 

[larussel03]

Date: 4/13/2007 9:24:42 PM
Author: crown1
i''m definately not the expert here but i do think that the cash allowance you receive for the car will be taxed as income. it is not my business and you probably already know more about it than me. i just thought i would throw that out there since you are considering the financial aspects. sorry if it is not correct or you already know. i was just thinking that you would not receive the whole amount if it was being taxed at a pretty good rate.

Wow, Crown1, thank you for pointing that out -- I didn''t even THINK of it! That would make a pretty decent difference too!

Wish me luck everyone, I have an appointment at 4:30 to see one used car that fits my criteria as well as new and to plot out the costs for each and maybe make a decision today if I am comfortable...if not I''ll just wait another few days or so...eek!

 

[jcrow]

good luck!!

don''t forget to carfax the used car!


also, don''t know if this is useful or not, but when we were getting approved for our home, the banks said that the car allowance had to be in effect for 1 year for it to be counted as income. not sure if the same holds true for taxes or if it''s just for credit purposes. just thought i''d throw that out there.

 

[fire&ice]

Regarding the car allowance, in many cases the car allowance is considered income in the eyes of the IRS. But, often it can be erased (figuratively not actually) via unreimbursed employee expenses. So, keep ALL mileage records, license fees, title fees, oil change, etc.

It would be prudent to consult an accountant on how to handle i & what records to keep.

 

[Skippy123]

Date: 4/16/2007 12:37:28 PM
Author: fire&ice
Regarding the car allowance, in many cases the car allowance is considered income in the eyes of the IRS. But, often it can be erased (figuratively not actually) via unreimbursed employee expenses. So, keep ALL mileage records, license fees, title fees, oil change, etc.

It would be prudent to consult an accountant on how to handle i & what records to keep.

Excellent advice; also a publication 17 would be helpful too. In the Pub 17 there are usually examples see page 178 of the publication. http://www.irs.gov/pub/irs-pdf/p17.pdf Best wishes.

 

[jcrow]

Date: 4/16/2007 12:42:30 PM
Author: Skippy123

Date: 4/16/2007 12:37:28 PM
Author: fire&ice
Regarding the car allowance, in many cases the car allowance is considered income in the eyes of the IRS. But, often it can be erased (figuratively not actually) via unreimbursed employee expenses. So, keep ALL mileage records, license fees, title fees, oil change, etc.

It would be prudent to consult an accountant on how to handle i & what records to keep.

Excellent advice; also a publication 17 would be helpful too. In the Pub 17 there are usually examples see page 178 of the publication. http://www.irs.gov/pub/irs-pdf/p17.pdf Best wishes.

thanks for the heads up / reminder. i''ve forwarded this to dh.

 

[crown1]

good luck sweetpea! i hope this afternoon goes well.

 

[larussel03]

Hmmm...regarding car allowance, my offer letter says: you will receive a car allowance of 450/month, less all manditory deductions. The car allowance is paid out in your bi-weekly paycheck.

I''d assume that means that appropriate taxes will be taken out since it will be paid in the paycheck?

 

[crown1]

that is the way i thought it was going to happen from my experience. so whatever tax bracket you are in you will be taxed. there may be provisions to counter that in your case. i agree with the advise you got to ask someone in the know. it is always nice to know where you stand.

 

[fire&ice]

We received my husband''s car allowance in total. I''d flat out ask them "what deductions". I seem to recall that FICA has been a bit picky about wanting their money these days.

 

[codex57]

Cars! My favorite topic. Can''t believe I didn''t see this thread til now.

I didn''t see what you wanted other than price was a concern (in case you had to make payments on your own).

You really need to throw out more "wants" to get better suggestions. I LOVE the new Civic, altho it''s still a hot car and a little hard to get a great deal on it. However, I dunno if you want AWD, reliability, resale, 4 doors, more than 5 passengers, etc. This is a great opportunity. Have fun with your wants.

Whatever car you decide, I like e-mailing all the dealers around you. Play them off each other like you''ve been doing. If you''re in CA, I can help you out. When asking for quotes, you want how much they want for the car AND how much out the door. Different dealers try and add profit by taking on unnecessary fees and you won''t know unless you can compare "out the door" prices as well.

One thing that wasn''t mentioned was leasing. How many miles do you drive a year? You can get a lot more car if you lease, and then you don''t have to worry about resale. Friends who got cars through their jobs all leased. Less commitment that way.

One last thing. Before you buy, compare insurance quotes on the cars you''re considering. While Hondas and Toyotas are great cars, they sometimes have higher insurance rates than competitors b/c they''re so popular, they have more claims and/or are targets of theft/vandalism more often.

 

[FireGoddess]

Good luck this afternoon - I hope it goes well!

 

[cutes814]

Date: 4/11/2007 6:09:04 PM
Author: fire&ice

Also, as mentioned, never get caught up in the monthly 'payment'. Focus on the COST of the car. I can remember the first car we bought. I had the final price of the car & went to our bank to get a loan. It was X amount. Our banker said that the car companies often give a better rate. We went into the financing 'guy' (what a waste of time - more on that later). He quoted an interest rate lower than our bank. The payment amount per month was significantly higher. I asked why. To his disgust, he said 'of course you want to buy the extended warranty AND undercoating'.

Without even asking us, he put that in the payment schedule.

This was in the early 1980's - not sure if they can use that tactic still.

OMG, that's just bad business tatics! I don't think dealerships can do that anymore with all the new rules and regulations with the law. At least in CA anyway.

And, on the business end - when you see the finance/business guy - prior to going in to sign that papers tell them up front that you just want to sign the papers (make sure you read them!) and do not want ANY sales talk about warranty, undercoating, life insurance, blah blah blah!

I wouldn't advise Sweetpea to not buy something because I don't know what she needs. But warranty is definitely good if you plan to keep you car. The newer model cars have so much technology, that you don't want to worry about paying to have something fixed. The vehicle service contract, otherwise known as an extended warranty is a good thing to have if you plan to keep the car for a long period of time and plus if you decide to sell the car in the future, it'll help since it's transferable.

Oh, and for a civic, I would recommend some sort of anti-theft protection, such as LoJack. That car is hot on the stolen vehicle market. and plus LoJack will probably give you a discounted insurance premium. In case you didn't know what it is, it's a recovery system directly linked with the police so if you car is stolen, you just notify them and they can track the location of your vehicle, usually in a few hours. There are different types of LoJack. The XRW is a good version since after it's installed, it's in the car for the life of the vehicle, and no renewal or membership fees either.

I have both the above items for my Acura TL. The vehicle service contract saves me money on the repairs since I've had my TL for 5 years now, and the LoJack gives me peace of mind, since my last car was stolen. I even had a fancy alarm system on it, but they still got it.

 

[larussel03]

Hi Everyone! Thanks again for the advice!

So, Fi and I went to the dealership today (did not sign anything yet, mainly because I do not yet have insurance, and the guy said that he''d schedule me to come in in a few days to sign the official paperwork, but we did get the credit stuff started) and I think I''m going to get the car!

It''s a 2004 Civic, Value Package (so basically the DX which itself has no bells and whistles, but the Value Package adds the AC and CD player, which were my 2 must haves, but no power locks or windows, which I really don''t mind) and FI hard core negotiated them down--it was amazing since the price was already really reasonable compared to its kelly blue book and edmunds values--which will mean only 250/month without putting ANYTHING down at all, which is a plus since my company pays for the car, and will save the rest of my car allowance for insurance and some gas (the rest of the gas I''ll get reimbursed for).

I looked at the new civics and I LOVED them, soooooooooooo cute, but the fact of the matter is as much as I want one, if something were to go wrong and I lost this job, or I got another job in the future that did not pay for the car, I''d have some trouble making those car payments, and this one will not be a hard monthly payment to make, and this car is in excellent condition, no accidents, excellent milage, taken care of super well and such a great deal so I''m going to go for it.

Thanks everyone for all the help! I''m really excited about purchasing my first car, and while it''s not my "dream" car, it''s pretty darn close!

Milly--I''ll keep the LoJack in mind, that sounds like a good idea. I do need to get a GPS (portable) system though otherwise I''ll always be lost.

 

[Skippy123]

Sweet Pea,
Great news; it sounds like you thought this threw and you are well on your way to making a great decision! You should post pics of your cute new car

 

[larussel03]

Date: 4/16/2007 11:35:47 PM
Author: Skippy123
Sweet Pea,
Great news; it sounds like you thought this threw and you are well on your way to making a great decision! You should post pics of your cute new car

Thanks Skippy! I''m excited that we found one that is in great condition and below what I was expecting to pay...I won''t like, I do like the bells and whistles features, but that would add 2-3K to the price, and that makes for a higher monthly payment and larger loan than I want to take right now (I did compare overall prices as well, but the monthly was the deal cincher for me). Carfax came back perfect also!

 

[jcrow]

awesome! your hardwork sounds to be paying off!

another thing to negotiate since you''re buying a used car - warrenty. sometimes when they can''t/won''t go down any further on the price, you can negotiate for their best warrenty. i''ve heard of them throwing it in for free. don''t know if it''s too late for you to ask or not, but i wanted to add that. DH looked into it, but his credit union offered a MUCH better warrenty plan so he went with that.

i''m so excited for you and your cute civic to be!

 

[cutes814]

congrats on your new car sweetpea!

and for used vehicles, i really do recommend an extended warranty. get one that is from honda, not an aftermarket company.

 

[FireGoddess]

Congrats on the car!!!

 

[larussel03]

Here she is!!!

 

[larussel03]

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[larussel03]

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