Buying a car

Poststructural Pub
1

I hate buying cars.

With that preface, here’s my problem. I’m confused enough about it that you guys may have to not only try to answer the question, but try to help me formulate my own question.

My daughter Sarah lives in Boston and is finishing her first year of a 2-year graduate program. She’s been able to function without a car, but is going to need one as early as June. She’s a poor graduate student and I can’t write her a check. We want to try to figure out a way to get her a car for under $5000. I know, I know, but that’s the reality.

The problem is…what’s the problem? Ok, the problem is, we can’t figure out how to proceed. Here are some issues.

Ok, well, nevermind. The problems are numerous. Let me just throw out one for now.

Sarah just sent a bunch of links from the Boston craiglist.org … people selling used cars. We’re both kind of shocked and confused at the prices, which are LOWER…much lower…than we would expect. Like, NICE cars, relatively low mileage, for, say, HALF of what I would expect to pay here in Birmingham. Now, we’re both aware there is some added risk involved in buying from craigslist. But, I don’t know what to make of why so many of these ads have prices that are so much lower than we’d expect.

Any idea what this is all about?

More problems later.

2

Dale, I feel your pain.
My last car (actually a red pickup truck) was still running fine when I replaced it after 14 years of dependable service.
I replaced it only so I could drive on streets designated as a boulevard without getting a ticket.

What kind of car do I drive now?
A red one.

3

I don’t have any insight into the craiglist conundrum… but one step that occurs to me is that if you haven’t already, you could try comparing several of the car prices there to, say, listings in the NADA used auto guide…
http://www.nadaguides.com/default.aspx?LI=1-21-0-5002-546-532-50099&l=1&w=21&p=36&f=5004

The NADA values aren’t writ in stone or anything, but at least they’re a starting point, kind of a national benchmark, to help compare. You could compare 2 or 3 of them, say, and get some sense of whether the craiglist prices are off the wall, or not.

4

Dale, I would suggest that Sarah purchase a used car from a reputable dealer in Boston. Rather than buying the car outright, get a bank loan for the vehicle (less than 5 years old), and make monthly payments. You may need to help her do this. It also would be a good way for Sarah to establish credit, which may soon come in handy. My opinion is that you need to be car savy to buy a used car from a seller on Craigslist.com or in the classified ads. Sarah needs to inlist the help of a car knowledgeable friend when she visits the used car lots.

5

Serial number filed off to ensure carefree motoring?

We always buy program cars – used cars that come in to dealers as fleet returns (usually rentals). They’re usually only a year old, at the most two, and they have only 15 to 20 thousand miles, so lots of warranty is left. And they are way cheaper than new because the 1st year depreciation is already taken (and sometimes the second). They usually come with pretty good factory financing. too.

6

You might as Sara if Boston salts the streets in the winter. The salt might be a large part of the lower pricefor good reasons!

7

I’m thinking body in the trunk.

Dale

8

That’s good advice.

9

I’m thinking toxic cars from New Orleans/Katrina.

10

http://www.edmunds.com/

Edmunds has good info and uses zip codes. Boston cars have a lot more wear and tear from winter use and rust, vs. Birmingham cars. There are also widely different prices, wholesale, private sale, dealer pricing.

For example Edmunds gives this range for one car, one zip code:
1996 Toyota Camry 4 Dr LE Sedan
Trade-In 2,810
Private Party 3,641
Dealer Retail 4,788
Options, extras, and condition will widen the price range even more, in additional to geographic factors.

I suggest your daughter make a project out of it. She can do some research, enlist her friends and see what she can turn up. If she is good at haggling she may be able to talk a private party seller down 20% or more from fair market value. Do a search “must sell moving” on Craigslist to find motivated sellers. This works well if she has some time and doesn’t have her heart set on a certain make or model of car.

By doing it herself she will appreciate the car more. If it turns out to be a mistake she will learn so many lessons it will be well worth any financial loss (easy for me to say). $5000 is maybe two months of tuition these days, and this kind of financial education can not be bought at a university.

Buying from a dealer guarantees a little bit more, but not that much when looking at the sub $5000 range. Dealers don’t make much on these low end cars unless they also do the financing. If she gets financing from a dealer, she may end up paying $7000 after factoring in the interest for a car that she might have been able to buy from a motivated seller at half that price.

11

I’ve always bought used cars, and always with the assistance of a trusted mechanic.

I would be inclined to look for a car in Alabama because of the rust issues with a car that’s wintered in Boston. You can replace almost anything on a car (including the engine) except for the framework. With the unibody chassis/frame most cars have, in places where there’s snow/salt, eventually the underneath will rust through somewhere that affects the structural integrity. At that point, the car is done regardless of how well it runs or how new the engine, etc. are.

I wouldn’t hesitate to purchase from an individual who’s listed in the classifieds as long as that individual would let me have the car checked over by a mechanic before I commit to the purchase. Whether the car comes from a dealer or from a private individual, I would still have the independent mechanic check it over.

I would also go to www.carfax.com and pay $25 for a history report on any car I was seriously considering buying. That should help avoid any car that’s been in an accident, flood, etc.

Nowadays, many cars go over 200,000 miles with not much trouble. I heard a physician who called in to Car Talk weekend before last complain that he’d outgrown his Toyota Camry, but the car hadn’t given him any trouble at all and he couldn’t justify replacing it for any reason escept that he can now afford a more expensive car. Tom or Ray asked him how many miles it had, and he said, “about 100,000.” They answered, “With a Camry, that’s nothin’. You’re just getting started with 100,000 miles.”

I don’t see any reason you shouldn’t be able to find her an excellent car for $5,000. Some maintenance will be normal. From time to time, it will need things like brakes, exhaust system parts, alternator rebuild/replacement, etc., since these components don’t last as long as the engine or chassis. However, it’s important to keep this in perspective. Once in awhile, there may be a spate of such repairs, at which time there’s a temptation to dump the car. If the engine and transmission are still good, the most economical thing to do if that happens is usually just to go through with the repairs and keep the car. I’ve even replaced engines and transmissions (with used, lower mileage ones) after doing the math and deciding it was less expensive than replacing a car I really liked.

Best wishes,
Jerry

12

I had to sell my 98 Ford Taurus wagon when I moved away. I think I got less than $3000 for it. It was probably worth more but I was pressed for time. That could account for some low priced vehicles. I was just lucky to manage to sell it, less than 48 hours before leaving the country.

I also got a Carfax report when I bought my car in 2000 but later discovered that some driver door damage had never been reported and thus wasn’t on the report. It was only found out when I tried to get some rust problems treated - the mechanic said the door had been structurally repaired and poorly repainted, leading to the persistant rust. He said that unless the damage is reported to the insurance company it won’t end up on the Carfax report.

13

I’ll second that advice.

BTW-- any plans to visit Sarah in Boston anytime soon? We’d be glad to meet you for dinner!
Even better: come via Troy and we’ll take you for some Mexican Irish food at Jose Malone’s!

14

I’ve always been lucky when it comes to getting cheap cars.

When I first moved out of my mom’s house, I had a guy give me a car…the inspection was expired, and his apartment complex had a policy of towing cars off the lot if they were out of inspection. He’d just gotten another car, and rather than repairing his (had a caurberator problem) or paying the inspection fee, he was just going to let them tow it. So I told him “hey, just give it to me!” and he did…

When I lost my job in 2000 due to the internet bubble burst/9-11 economy thing (and was out of work for the better part of a couple of years), I got a $5000 car for $885 with no mechanical defects, because the mom-and-pop used car dealer had just filled up his lot with repos from auction, and I was willing to pay cash up front. But that took 3 weeks of solid out every day for 8 hours a day looking. Worth it though.

After moving to dallas, I got rid of the $885 car, and traded it in on a new car for my wife (and made a profit on the trade-in! hah!), as I was carpooling to work. I eventually met someone whos husband worked for an auto dealership, and could get incredible deals on cars. He’d just bought a new one, but the dealership wouldn’t take trade-ins from the employees..something about potential for collusion/fraud or something. So I managed to get another used car with no real mechanical defects (other than a slight pull to the right) for $10.00 and TTL.

I think the key to all of these stories is: don’t be afraid to ask. Sometimes, people take you up on the outrageous offer.

15

Dale - I just “helped” Nate purchase a used truck (us in Ohio, him in Norfolk, VA).

As stated already, sites such as Edmunds and Kelly Blue Book can help you understand what the “average” going rate is for a particular car. I also looked at the mechanical ratings, etc. available. You’ll also want to check with your insurance company - things such as side air bags mean lower insurance costs.

Nate purchased the truck through “Auto-Nation”. They ran the CarFax report for him for free.

He got his loan through Navy Federal, but he also checked our local bank AND our insurance company (State Farm now offers car loans). He took out the loan with the sole purpose of establishing credit.

And as already stated above, be VERY careful about where the car came from. You do NOT want to purchase one that’s from the Gulf region now - it could have been a flooded car that was “reclaimed”.

16

Dale, didn’t you know that Bostonians are known for their effusive warmth and compassion? Why would we try to sell a car to a poor grad student for $10K when they can only afford $5K? That’s the kind of folk we are.

But seriously, I’d go with Doug’s advice and buy through a reputable dealer. I’m sure you can get great deals through Craig’s List, but buyer beware. Plus, you probably have a better chance enforcing the state’s “lemon law” with a dealer instead of an individual if there turns out to be something wrong with it.

17

There are lots fo drivable cars here for around $5k, both from dealers and private sales.

A couple of things to keep in mind. Insurance is mandatory and very expensive, especically for drives under 25 and for cars garaged in Boston and the close in suburbs. Can she register and insure in Birmingham?

Does she have parking? If not, she just needs to be aware of the rules in her town. Over-night, on-street parking in residential areas usually requires a permit. Parking bans are frequent in the winter.

18

Is there a Carmax in boston or near?
Also look at cars.com and autotrader.com for dealer ads, saves legwork.