Cars allow us to get around and in many countries, they’re a rite of passage. Experiences like cross country road trips and first mechanical lessons can make us develop irrational relationship with them and if we’re not careful, sometimes the relationship can turn out for the worse.
I’ve loved cars ever since I was a young child. Feeling the miniature wheels, the metallic and plastic chassis made me happy. I would glide them along the many surfaces in the house, putting imaginary miles on them as I made engine noises with my mouth. I even got into fights with my younger cousins because I thought they stole my toy cars. I was that attached. Fast forward to my teen years, my father was the only one with a car in the house so going anywhere came with extended planning.
When it came time for me to start driving, I was in high school and got to whip around a new to me Saturn SL2. All the nostalgic feelings with cards from my younger years followed me all the way through my post college days. I’ve owned 8 cars since I started driving and that averages to about 1 car per year. It’s taken me a while, but I now realize, I was trying to make cars fill a void and I went broke trying to make it happen. I bought all these used cars from Craigslist, eBay and dealers and they all had the same problem. I approached them all the wrong way so the experience was doomed to fail. Not having enough money to get financing on a newer car, I thought I was being thrifty and smart by going after used cars, but after all these years I now know my mindset set me up to get into debt.
Buying a used car can be a good financial decision to take advantage of savings and build good decision making skills through delayed gratification. Alternatively, it can be a very negative experience. After having owned all those 8 cars, I now know my formula was off. I’ve bought more car than my needs, over paid, and didn’t plan for an exit. I didn’t need the trucks, but I just have to have them. The lifted SUV with the big tires looked cool but was always in the shop for repairs due to not being structurally sound, and an older Sentra is really hard to sell back to the market.
Picking the right car is subjective. Are the priorities cargo space, fuel efficiency or luxurious featured? There’s something to fit each category but the first place to start is to finalize a budget of how much total to spend on a used car. To me, this includes taxes, initial registration, warranties and average repairs. I don’t include recurring cost like fuel or insurance as these can vary. It’s been my experience that used cars need up to $2000 in maintenance repairs within the first year of purchase. I’ve needed to replace tires, brakes, starters, tie rod ends and beyond. I’m not handsy, so making the trips to the shops had averaged $2000 but this can be lower if repairs are personally done. The most important part of the equation has been the exit strategy. Essentially, how fast can you get rid of the car if needed and still recoup the majority of the money spent or even make a profit. It’s possible to do with some brands that have higher resale values. In some cases, if the car ends up being a lemon, it can be returned to a dealer.
So you’ve decided to save money and are in need to a new to you car. Maybe the winter months have caused havoc on your car and it's time to replace it with a used one. If the total budget to spend is $5,000 on the brand and mark of your choosing, negotiate for a maximum of $3,000 sales price, understanding that $2,000 is to be reserved for repairs. A budget of $10,000 should have sales price of up to $8,000, $15,000 to have sales price of no more than $13,000 and so on. The higher the budget get, a better deal can be found on a new car so it’s always good to do the due diligence and research. Once the budget is determined, where to get the car is not very important as they all have the same functionality for the most part. Craigslist is my go to and I make sure I transact in public places and only have funds to close deals in a safer environment such as titling office or banks. If eBay is the source, make sure to have full and open lines of communication with the buyer and shipper. Having done this once, I would also never buy a car online again sights unseen. Always make sure it’s is visually inspected by a trusted third party if you cannot do it yourself. Search all the regular problems that brand is known to have and be prepared for the worse. I ignored all the red flags I found before I bought a third generation Dodge Ram truck and it ended up having all the symptoms. If the car is well desired and you want to get rid of it, that can be done with high resale value ones. Currently, those are Wranglers, Honda Fits and some Toyota makes. The beauty here is the list changes often and can be location specific. For example, cars with 4 wheel drive will have higher resale value in more northern states. The goal here is to leverage the car’s features to get rid of it if needed.
Cars are fun and exciting and they make us feel some type of way. I’ve spent many years having unhealthy relationships with them before I broke the cycle. I was spending money I didn’t have to keep them around. Now I have a 4 door car I got from word of mouth that I plan to keep as long as possible. It fits my needs, has needed repairs, as all cars do, and I have an exit planned when the time comes. There are many ways to make sure the buy used experience goes well, and this is a the one that has resonated well with me. This formula can also be applied to new cars, so as the budget grows, we can have a complete positive experience with cars. Do not be scared of used cars. Use them to be in a better financial standing and win.
Have you been interested in buying used cars? How did your experience go?