Car-buying time?
Posted on January 9th, 2009 – 2:01 PMBy Kara McGuire
Kablog reader Suzanne wants your advice. If you have a question to pose to me or to readers, send it to kmcguire@startribune.com.
“We’re in the market for a new car and thinking that this may not be the best time to be taking on such an investment. But sometimes you just have to bite the bullet and do it. …especially when your current car is on its way out.”
Without more information from Suzanne (how secure is your job, will you need to take out a loan, do you have good credit, for example), it’s hard to give her a definite answer. But give it a whirl with all the caveats you’d like. And share your own experience if you’re in the market for a new auto.
7 Responses to "Car-buying time?"
I’m a member of Affinity Plus Credit Union, and they have agreements with some car dealers to help the car buying process. Things like preferred pricing, the ability to fill out bank loan paperwork at the dealership, etc. Other credit unions and banks may have similar deals that would be worth looking in to.
My husband and I had been planning for some time to buy a new car this summer. By the time we reached a decision on what we wanted, we were unable to find the desired options on any existing 2008 models. That meant waiting and ordering a 2009, which arrived at the end of October (when everyone was still in shock over the economic meltdown).
We asked ourselves if it was stupid to go through with this purchase, or if we should just forfeit the $500 deposit. But we really wanted to retire our 1994 car (over 150,000 miles), and loved this new car. Our conclusion was that we have enough savings and investments (even with the stock market in the tank) to pay off all of our debts and still feed ourselves if we somehow both lost our jobs in the short term. We had already been pre-approved for the loan by our bank, and then were able to get an even better rate from the dealer. That enabled us to reduce the term of the loan from 4 years to 3 years and still make a reasonable down payment.
We certainly got the best customer service we’ve ever had from our sales rep and the entire dealership. And so far, we have not regretted our decision.
My advice to Suzanne is to go through the what-if’s and be realistic about her personal financial health. Weigh the cost of car repairs against the cost of a car payment. Know what you would do if you lost your job. Shop around for a good deal, and maybe consider a nearly-new used car. Be conservative, because cars only lose value.
If you really need a car, you really need one, no way around it. One thing I will suggest, especially if you are concerned about job security and that type of stuff, is to buy used, and don’t go overboard. Just because you can afford to spend $400 a month on a payment, don’t necessarily do it.
I’m also an Affinity Plus member and I had a really great experience with two car loans through them. They also have a new “points” program, that as you use their other services, pay bills, etc, you earn points that you can use to lower your rates. I shopped at about 4-5 different banks and credit unions, and I was totally happy with my experience and their rates were the lowest I found anywhere. They were very honest with us about what we could afford and how much car we could buy, and worked with us to make sure we were comfortable with the whole thing. I HIGHLY reccommend them!
If you can pay cash for a late model used car with some warrantee left, now is a great time to do so. You will get a better deal on a used American car than a Toyota or Honda.
I think the sweet spot in used cars is 2 years old with 5,000 to 10,000 left on the 3yr/36,000 mile warrantee.
The Ford Focus is a well regarded smaller car. Check Consumer Reports for other good quality reliable new and used cars.
If you can pay cash for the car do so. You will get the most car for your money.
“We’re in the market for a new car and thinking that this may not be the best time to be taking on such an investment.”
I had a good laugh reading new car and investment in the same sentence… Good one!
I also had two car loans with Affinity Plus. They have great customer service.
