Right now I have a leased car, but the lease will be running out next May. That means I have 12 months to figure out what I’m doing regarding my next car.
What are my options?
1. Buy the car I’m currently driving (at that point it will be a 3 year old Honda Accord, at around $13k? Gotta double check that number. Maybe its $18k)
2. Get another lease with for a smaller, less expensive car.
3. Buy a used car (I’d also need a downpayment, I don’t have enough to pay cash)
4. Buy a new car. (Same as above)
To be honest, I don’t like any of these options.
While I don’t like the idea of getting stuck in a lease for another 2-3 years, I also don’t like the idea of financing a car and having to pay higher monthly payments than what I’m currently paying. To be honest, what I wanted to do was get another lease for a Civic (which have been running for the past year at $200 a month) and take those $60 I’d be saving on the payment each month and putting it in the car fund. I’d also be saving a little bit on gas.
If I did that though, the result would be that after 3 years I would have spent at least $7,200 on payments and would have nothing to show for it. However, if I buy a car my payments will be well over $350 for a $18k car (depending on several things, but thats the general number I get from various calculators). That’s almost $100 more than I pay now!! The good part about it is that I’ll actually own part of my car at the end of 3 years, as opposed to having nothing.
So far, its looking as though I should buy.
However, what is better, used or new? I’ve kind of done some research about what cars I think would be a good fit for me. I’ve pretty much narrowed it down to a Honda Civic, or a Hyundai Elantra. Both are pretty good with gas mileage, they’ve gotten good reviews, and they’re fairly inexpensive. (I didn’t do very extensive research, so if you know of any cars I should be considering let me know!)
But being inexperienced when it comes to cars…this is where it gets tricky for me. If I decide to go used, how old do I want a used car to be? I think this is the key decision if I go that route.
Casually searching on Edmunds.com, I’ve compared the price of a new 2008 Civic ($17,800) with that of a 2007 model. The price difference? Not much. I saw plenty for $16,999 and many others for even more (but they were probably higher models so I shouldn’t really be counting those). So for a 1 year old car, I don’t think the difference would be worth it. However, when you start looking at 3-4 year old cars you get more of a savings due to more depreciation. Now, if you take care of your car it could last you many years, much more than 3 or 4…but how do I know how much care the previous owners took for their car? Plus, I’m a girl, and clueless when it comes to cars. How many years will the car last me before it starts giving me problems? And when I start factoring in repair and/or maintenance costs, is it worth the tradeoff of paying more money to delay those costs?
This is when I start to believe that I’d rather get a new car as opposed to buying new.
[I realize there are probably dozens of places I can look at for more info, so keep in mind that I’m mostly laying out my options here. As the time gets closer, I’ll definitely be doing a more in depth research than my 2 minute search at Edmunds, lol.]
Regardless of which option I go with, one thing is for certain…. I need to start saving! I currently have a $0 car fund, and I’m going to need it at least at $2,000 if I was to lease (but I don’t really think I’ll go that route), and I’ll be needing around $4,000 if I buy (20% downpayment on $20,000…even though I’m aiming to spend less than that).
My plan: once the gift fund is complete, I’m going to send the contributions to my new car fund, and any extra income will go towards that. Doing so should give me around $4k by next May.
Got any tips or info for me on cars? Please share!