Help! I Need to Buy a Car.

I have a guest post up today at My Money Design, which you can check out here. I think you’ll enjoy it. But now, back to your regularly scheduled programming.

For my 17th birthday, my grandparents gave me their 1998 Honda Civic that had only 14,000 miles on it. Little did I know how lucky I was. Since that time, it’s gotten me through high school, college, those crazy post-grad years, a marriage, and the first 15 months of fatherhood. It’s been good to me. I love it.

But over the last few years it’s been slowly dying. It’s needed between $500 and $1,200 in repairs each year, and I think I’ve finally hit the end point. I don’t know for sure yet, but I had to take it in to the shop again last week and was told by my mechanic that it likely needs a new engine. That’s a $2,500 part on the low end, $4,000-5,000 on the high end. If that’s indeed what we’re looking at, then we’re going to replace it.

So today I’m asking you, my readers, for some help. I’ve never bought a car before so I’ve been looking far and wide for good information. The comments here are always insightful and many of you are much wiser than I in the ways of the world, so I couldn’t think of a better place to get some good advice.

What car to buy

We have two big criteria in terms of what we’re looking for:
1. Long term cost. We’re willing to spend more up front if it means we can save money over the life of the car. We plan on driving this thing into the ground and want long-term reliability.
2. Space. We’re planning on a second baby in the very near future, so we’re looking at two car seats in the back. We won’t have a third person back there on any regular basis, but we’d like the option to do so on rare occasions, even if it’s a little tight. Trunk space is also important what with strollers, groceries and the crazy amount of stuff you need to take for babies on family vacations.

Other information that affects what we’re looking for:

My wife has a Scion XA, which is a great car but incredibly tiny. It’s likely that we’ll want to replace it within the next 3-5 years, simply because it won’t be practical as our family grows. (We’re going for 3-4 kids. Wish us luck!). Our thinking is that we’ll probably be going the mini-van route at that point, so we’re not looking for a mini-van now. We want something big enough to fit our immediate needs, but it doesn’t need to be big enough to fit our bigger plans for expansion.

We don’t put a lot of mileage on our cars. This car won’t get more than 15,000 miles per year and it will likely be closer to the 10,000 range.

Neither of us care about a superior driving experience. My Civic has like 90 horsepower, so whatever we get will automatically be a HUGE upgrade. As long as the car can stop, go and turn with relative ease, we’ll be happy. Long-term reliability is the big draw for us (we’re so exciting!).

We have the cash on hand to pay for a new car, so we won’t need financing. We don’t have a particular preference new or used as, like I said above, our biggest factor is long-term cost. If it costs more now for a better long-term return, we can handle it. But any opportunity to save money would certainly be attractive.

How to buy

John at Frugal Rules wrote an incredibly helpful article on his buying process just a few weeks ago:Β 5 Great Ways to Save Money When Buying a New Car. It has a lot of really good information and it’s serving as my starting point for advice. I particularly like the tip about emailing multiple dealers and asking what they can offer. Doesn’t the internet make negotiating so much easier!

If any of you have any other tips on navigating the purchase process, I’d love to hear them. Particularly if you have any good advice on finding a deal on a used car. Again, this isn’t something I’ve done before, so anything you’ve got would be welcome.

My research so far

The cream of the crop in terms of what we’re looking for seem to be the Honda CR-V and the Toyota RAV-4. Both cars are spacious and incredibly reliable. Unfortunately, that also means that it’s incredibly difficult to find a good deal on a used one. They just don’t lose value, which has me thinking that if we’re going that route, buying new is the way to go. You get the warranty, you aren’t dealing with any wear and tear, and you aren’t facing the immediate depreciation of a lot of other cars. I’d love to hear other opinions though.

Beyond that, some popular choices seem to be the Subaru Forester and the Hyundai Santa Fe. I have a list with about 15 more options as well that I’m trying to narrow down. I haven’t done enough research on these yet to determine what the new vs. used tradeoff looks like.

Call for help!

So that’s where we’re at right now. If I have to go through with this, it’s going to be the biggest financial commitment of my life to this point, so any and all advice is much appreciated. Thanks in advance for anything you have to offer. I already know you guys are going to come through with some awesome stuff.

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49 Comments... Read them below or add one of your own
  • Holly Johnson June 17, 2013

    One of our cars is a Toyota Prius and we love it. Although they don’t lose their value very quickly, it’s still cheaper to buy a newer used car. We bought ours with 20,000 miles and still under warranty for an awesome deal.

    • Matt @ momanddadmoney June 17, 2013

      I’ve heard great things about the Prius. I’m not sure we drive enough miles to make it worth the extra cost though. I’m glad you guys were able to find a great deal. If we could do something like that we would definitely pounce on it.

  • DC @ Young Adult Money June 17, 2013

    I think purchasing a Honda CR-V or Toyota RAV-4 would suit you well for years to come. My wife and I are not (planning on) having kids in the near future, but we would like to get a large dog and have a somewhat larger vehicle that can transport things easier. We are looking at Ford Escapes, which seem to hold their value quite well (based on the used car prices, at least). I’m a big fan of Ford, though, but I think you’d do well with any small SUV.

    • Matt @ momanddadmoney June 17, 2013

      I definitely looked at the Ford Escape. It’s got some great reviews. The only negative is that it’s got lower reliability ratings than the Toyotas and Hondas. I’ll definitely try to look at it a little closer though. Good luck with the dog? Do you guys have a specific breed in mind?

  • Greg June 17, 2013

    We actually went through the car buying process in November. It was between a CRV and a Mazda CX5. We want with the Mazda because of the gas mileage, safety, and overall ride. We plan to keep the car for a long time so although depreciation was a consideration, by the time we get rid of it, there likely won’t be a big difference. Actually, the 2014 CX5 has really shot up in the category as a good pick.

    As for tips, I would add to emailing dealers and say don’t stay local either. All dealers will do what is needed to make it happen and will get the car to you in order to make the sale. It sounds like you are pretty set on cash, but if you find a good financing deal that you want to do, make sure to tell the dealer you are only interested in hearing the “out the door price” rather than monthly payments. It should make any other fees more transparent. And finally, see if you can negotiate in a service package like oil changes and tune ups. Good luck on the search!

    • Matt @ momanddadmoney June 17, 2013

      Good idea about the service package. And I’m definitely open to purchasing from somewhere non-local. Depending on the deal, it could definitely be worth the price of travel.

      I’ve heard other people mention the CX5 as well. My brother also has a Mazda 3 hatchback that he loves. Not quite as much space, but might be an option. It does seem like with some of the better cars, depreciation is much less of an issue.

  • Andrew June 17, 2013

    I’m a big fan of Hyundai and Kia cars. I think they provide great value…I have a Hyundai Sonata. I bought it used at Enterprise (yes they sell cars too). It was a no haggle place, but I think I got a good deal. Good luck.

    • Matt @ momanddadmoney June 17, 2013

      I’ve been looking at the Hyundai Santa Fe, which a lot of people seem to like. And you’re actually the second person who’s recommended Enterprise, which I hadn’t thought of before. Definitely an interesting option. I wonder how having a lot of different short-term drivers typically affects the car’s condition. Sounds like it’s work out for you at least.

  • Your Daily Finance June 17, 2013

    For safety since we have kids we went with the Volvo. We needed something with rear seating for 7 and didn’t want to break the bank so we got the Xc90 used. I still have my car with no payments and the wifey drives the SUV. I think eventually we will end up with a mini van. I say a RAV-4 works but they are a bit expensive the last I checked.

    • Matt @ momanddadmoney June 17, 2013

      Lots of people love Volvos. The RAV-4 does seem to be a little more expensive than the CR-V, but they’re both pretty competitive. It’s just hard to find a good deal on a used one, because they’re so good. I hadn’t looked at the XC90 yet though. Thanks for the tip.

  • Kim@Eyesonthedollar June 17, 2013

    When we bought our Toyota Tacoma, which are incredibly popular in our area, there were almost no almost new, but used ones at the price we wanted to pay in our area. We went to the local dealer, but the price was too high. We told the salesman what we were willing to spend and that we had found one about four hours away that we had made plans to go see. He wished us luck. Said things like these pretty much sell themselves. We can’t keep them in stock, etc. We were headed out that weekend to see the other truck, and the dealer called us right before we left with a demo that had only a few thousand miles at the price we wanted. I would always see what they offer, then walk away or tell them you are looking at some other deals. Odds are if you have spent some time with them, they have your contact information and you might be surprised at the deals they come up with if they think you’re going elsewhere.

    • Matt @ momanddadmoney June 17, 2013

      Wow, good work! We’ll definitely negotiate and won’t be afraid to do a little traveling to get a better deal. It definitely seems like the only people who get deals are the ones willing to walk away. It’s encouraging to hear that from real people. Thanks.

  • thriftydad June 17, 2013

    We’re in the same situation. We got a 2-yr old and another one on the way in a few months. Both of our cars our over 12 years old and this week, yet another window got stuck, all my dashboard, stick and now even radio lights went off. It’s annoying to have to wait for the DJ to announce what station I’m on. I still have fear of the minivan haha, although looking at a mini-mini-van in the Mazda 5, right now. Has the extra seating in the back, plus sliding doors (easy access to the baby seats). And seems pretty reasonably priced, although don’t know about reliability – only know of one friend who has it (she loves it). But waiting till we have enough in our account to buy something outright, so we can hopefully get a better deal on it as well.

    • Matt @ momanddadmoney June 17, 2013

      I hate feeling like I’m just waiting for the next thing to break. Not a fun way to go through life. I’m actually more pro-minivan than my wife, haha. She hates the idea. We’ve already agreed that if we get one, it will be “my car” even though she’ll be the one driving it all the time. Our only hesitance right now is that while we definitely plan on more kids, we don’t know for sure that we’ll get there, and if we do we’ll need another new car soon anyways.

      Having the cash to buy outright is definitely a good feeling. I might look into financing just to see what options we have, but unless it’s basically 0% I really don’t see us doing it.

  • Shannon Ryan June 17, 2013

    Cars aren’t really my arena, so I’m not sure if I’ll be much help. I think John was spot-on when he had dealers negotiate for his business – make them work for it! We did buy our vehicles new (with cash, so no financing which sounds like the route you’re planning to go too) and we’ve had them for 8 or 9 years. I forget. πŸ™‚ I believe that most cars see the biggest depreciation in their first year (could be wrong, so verify, please) so it may be a smart option to a look for a year-old car that is still under warranty to get the most bang for you buck, if you prefer avoiding the new car price.

    • Matt @ momanddadmoney June 17, 2013

      I’d love to avoid the new car price, but based on what I’ve seen so far there just really isn’t any depreciation for the CR-V’s and RAV-4’s of the world. I’m not sure if I’d like to go to a less reliable model simply for a lower initial price point. But that’s one of the complicated things I’m trying to reconcile. It does seem like the people who have bought good cars new have rarely regretted it.

  • John S @ Frugal Rules June 17, 2013

    Thanks for the shout out Matt, I really appreciate it. Once you do get closer to making a decision, I would definitely play dealers off each other to get a better deal. I have heard great things about both the RAV-4 and CRV. We almost bought a CRV, but wanted better gas mileage. That said, if you stay to late model cars, you should be able to get good value.

    • Matt @ momanddadmoney June 17, 2013

      Thanks John. Your article was really helpful, and timely! Hopefully it can save us a few thousand dollars.

  • Matt @ momanddadmoney June 17, 2013

    Nice! I love the idea of multiple deals competing for my business. Edmunds has been a great resource so far, as has consumer reports. It’s so nice to be able to do all of this research online, rather than having to travel all over the place. Hopefully we can do some test drives soon, and then let the bidding begin!

  • Ree Klein June 17, 2013

    Hi Matt,

    I gather from your post and comment responses that you don’t like work on cars. While I believe driving a new car off the lot is a belly punch to growing your wealth, there are times when it might make sense:

    – you keep your car forever. I still have my 1998 Camry with over 225k miles (in the spirit of full disclosure I also bought a used luxury vehicle last year for cash that I drive, too).

    – you have children who need to be in a reliable vehicle.

    – you don’t give a rip about working on cars (like replacing brake pads, figuring out what’s making that rattle–do you hear the rattles? I don’t!)

    Give your situation, the fact that you’re considering a Toyota or Honda and you have the cash saved to pay for it, I say buy new.

    Good luck, can’t wait to hear what you decide πŸ™‚

    • Matt @ momanddadmoney June 17, 2013

      You are definitely correct. I do not know anything about working on cars, nor do I really have much interest in it. I’ve always assumed I would buy used, but looking at the price points it just seems like new is the way to go for certain models, unless I can get luck and find a real steal. My hope is definitely that it could last 15 years or even more if we take good care of it.

  • Rachel@Mobilligy June 17, 2013

    Hi there! I’m new to your site, but I purchased a car not too long ago so I thought I’d chime in!

    First of all, I bought a Toyota RAV-4 and I LOVE it! I’ve been driving it for almost a year now, and I don’t have a single complaint. It’s been a wonderful vehicle.

    I went the used route because I was able to find a RAV that was only a year old and had less than 10,000 miles on it. It was a company car and wasn’t used very much. I was also offered a seven year bumper-to-bumper warranty at a great price, which I jumped on. If I would have purchased the exact same model new, it would have cost me $3,000 more with only a five year bumper-to-bumper warranty.
    Hope this helps. Good luck in finding the perfect car at the right price!

    • Matt @ momanddadmoney June 17, 2013

      Welcome! And thanks for the input. I’ve definitely heard a lot of good things about the RAV-4. And my wife and I rented one on our honeymoon and loved it. It drove really well. I’m definitely on the lookout for a deal like the one you got. There are definitely enough people who have described getting something similar that it definitely feels possible. Just have to stay on the lookout. Thanks again for the help!

  • Budget & the Beach June 17, 2013

    I really wish I could offer some advice but I’m close to being in the same boat since I literally spent 5k on my car in the last year…except now I really need it to run for a couple more years hopefully. Fingers crossed. When I do buy a car though, I really think I’m going for a new (used) car. I like Honda and Toyota too for their reliability and how long they seem to last.

    • Matt @ momanddadmoney June 17, 2013

      Honda and Toyota are definitely the gold standard. I hope for your sake your car lasts a long time. But I’ll be happy to share any tips if you need to go this route sooner rather than later.

  • E.M. June 17, 2013

    Good luck with the car search! I don’t have much advice to offer other than agreeing with the general consensus. I have a civic as well, and it’s been great. My mom has also always loved Honda, so I would be inclined to go with the CR-V as well. However I have heard good things about the RAV-4 and Santa Fe. All three are very popular here.
    I hope that you’ll get lucky and can snag a deal on a slightly used one. At least it will give you experience when you go to replace your wife’s car.

    • Matt @ momanddadmoney June 17, 2013

      I’m still hopeful for a deal as well. And you’re right, getting experience now will definitely help for later. Thanks for the encouragement.

  • If I was going to get something that I needed to transport kids in, I’d get a station wagon. I can’t stand SUV’s.

    • Matt @ momanddadmoney June 17, 2013

      I think the bigger SUVs are really tough to drive, but I’ve enjoyed my limited experience with the CRV and RAV-4. A station wagon is definitely an option though.

  • Good luck – I hate car shopping! The best car shopping experience I ever had was when I happened to find two identical cars (except for the color) 20 miles apart. The color I didn’t like was cheaper and at a sleazy lot where they wouldn’t let me have it properly inspected… but we were able to use their price as leverage when we went to the reputable dealer with the car in its used lot. They were amazing and even let us drive the car 100 miles home to have inspected by our local mechanic before closing the sale. And we got it for the cheaper price that the sleazy dealer had.

    • Matt @ momanddadmoney June 18, 2013

      Wow, sounds like you found yourself a great dealer to work with. We’ll definitely work with a few to try and get the best deal.

  • Grayson @ Debt Roundup June 17, 2013

    First, you are getting ripped off on the engine. That price is crazy high for the type of engine. I have seen rebuilt ones for less than $1,000. You shouldn’t need a new one. Either way, I would go with the cr-v or something similar. My wife has a Hyundai Tucson and loves it. Perfect size.

    • Matt @ momanddadmoney June 18, 2013

      I’ve gotten the same feedback from a few people in another forum. I can find the less expensive prices online, but I have to be honest that I have no idea how to evaluate quality here. Is there a quality difference? If so, how would I evaluate it? I would love to save money but not if I’m buying a piece of junk.

      • Grayson @ Debt Roundup June 18, 2013

        Yeah, that could be difficult if you don’t know about engines. It is usually based on how many miles are on the engine, what has been done to rebuild it and many places will grade them. Do you know anyone that knows about engines?

  • Laurie @thefrugalfarmer June 18, 2013

    We’re big believers in buying new and then keeping the car forever. I’ve got several friends with Cr-V’s, and they all love them. That being said, check several different dealerships. They really do have different prices on new cars.

    • Matt @ momanddadmoney June 18, 2013

      We’ll definitely be shopping around. No dealer loyalty from us. I’ve already seen price differences of as much as $6,000 on the same car, which is crazy!

  • Michelle June 18, 2013

    Luckily W works at a dealership so I know all of the secrets πŸ™‚

  • Funancials June 18, 2013

    I have never purchased a car either (I was given a 2001 Jeep Cherokee in high school and have driven it ever since). I hope I never have to buy a new car, but I know the time will come soon enough.

    Since I’ve never purchased a car, I can’t add much value. The only tip I would provide is to make your decision based on the total purchase price rather than the monthly payment. Too many people focus on the small monthly payment and don’t realize the significant long-term cost. Best of luck to you!

    • Matt @ momanddadmoney June 18, 2013

      Definitely good advice about looking at total price. I sincerely doubt we’ll be going the financing route though, so probably not a concern for us.

  • Tie the Money Knot June 18, 2013

    Like a commenter above, I drove a late 1990’s Camry to about 225,000 miles. It was awesome to extract as much as possible out of a car, without shelling out any car payments.
    I also sold it once I thought it was on the verge of dying. Getting out of a car at the right time is a good idea, and it can be tough for many who are used to a car for a long period of time. In your case, it looks like that gift has been great for your finances and you’ve stretched it as long as possible.
    My next car was a Honda Accord, and it’s worked well. I should tell you that it was used with less than 20k miles (like the car you got as a gift) and hasn’t had any problems. If you can get a good deal on a reliable used Honda or Toyota, those can be worthwhile from my own experience!

    • Matt @ momanddadmoney June 18, 2013

      I was extremely lucky to be given my Civic, and it’s sad to see it die. I think we’ll probably end up going the Honda or Toyota route, like you suggest, with the hope that it can last upwards of 15 years. We’ll definitely be on the lookout for a good deal on a barely used version.

  • JW_UmbrellaTreasury June 20, 2013

    I bought myself a new-to-me car in 2010 and chose a pre-owned Volvo. It was 8 years old at that point, but it only had 38,000 miles on it. I think the MSRP was around $40k, but I paid $13.5k.
    The things that I like about Volvo was that they offer free maintenance for the first 40,000 miles. Even though I wouldn’t get much use from that service, I knew that the previous owners had taken the car for every routine oil change/service. (There was a service log in the glove compartment that had been stamped every time the car was brought to the dealer). I’ve put about 80,000 miles on the car since then, and it’s still going strong!
    By the time we’re ready to have kids, I think my car will be on its last legs. At that point, I’ll probably buy another used Volvo — something really hip like a stationwagon, perhaps. : )

    • Matt @ momanddadmoney June 20, 2013

      Thanks JW! Great advice about checking up on the service history of the car. Sounds like you were able to find a great deal. Volvo is definitely a good brand. But are you saying station wagons aren’t hip? You clearly haven’t seen the drop-off lane at a pre-school, where the latest safety feature is basically equivalent to Kanye dropping a new album, haha!

  • Scott W July 23, 2013

    I realize I’m late in posting on this topic but wanted to share 2 things if people are still reading posts.

    I drive 40k miles a year and have had 8 cars in my 27 years of driving(some were company cars) and by far my favorite was my Honda Accord. Great car!

    Second thing is to be aware of the so called “free oil change for life of car offer” that some dealerships offer. It usually requires you pay for their scheduled maintenance every 15k miles which costs about $150 every time. This obviously wipes out any savings on the oil changes.
    Don’t pay extra at one dealership because of this program only to find out it isn’t the great deal that it sounds like.
    Good Luck.

    • Matt @ momanddadmoney July 24, 2013

      Never too late Scott. Thanks for the input! I’ve never driven an Accord but I love my Civic and would definitely strongly consider something similar. At this point we’re pretty sure we’re going the minivan route now, which will give us more flexibility when we need to replace my wife’s car. Something like an Accord could be a great option at that point.

      And thanks for the warning about the maintenance offers. I’m actually pretty set on learning how to do the basic maintenance stuff myself, so hopefully I won’t need any help with things like oil changes. But watching out for those kinds of “deals” is definitely good advice.

      • Whatsaquokka18 August 12, 2013

        Hi, I’m even later to seeing this. I bought a Corolla, new, at the end of 2009. I didn’t buy a maintenance package through Toyota corporate as those were a rip-off, however my local Toyota dealer offered a lifetime oil change package, where I paid $200ish up front, and for as long as my name is on the title I get a oil change, rotation, car wash, inspection and fluids filled up. I pay $0 now when I go to the dealer. Not all dealer packages are a waste of money.
        Also, I bought my corolla new because it was *less* than buying a used car with under 35k because the corolla holds it’s value well enough…. logically it doesn’t make sense but I saved thousands buying new and negotiating.

        • Matt @ momanddadmoney August 12, 2013

          Welcome! And thanks for the input. That’s good information about the oil change package. The main reason I would be hesitant about it is that we may not stay in this area for very long and therefore may not end up using it to its full value. But definitely worth considering.

          We’re going to be getting either an Odyssey or a Sienna. We’ll see where the dealers finally land on price, but I think we’re leaning more towards a low-mileage 2011/2012 over new. So far it looks like the price difference is worth it. But it’s definitely closer than you might think with those brands.

I’d love to hear from you, please leave a comment