BUYING A CAR IN 2019
(WITHOUT HAVING HEADACHES IN 2020)
WHEN IS THE RIGHT TIME?
The first question to ask is: When should you change vehicles? It a fairly easy question to answer when you have the money and want or need something other than what you have.
Suppose you have the type of vehicle that you need (and want), but it is starting to cost you in abnormal maintenance. When do you say that the cost of maintenance has passed the point where buying a new car would be cheaper than maintaining your current car? That question is a little more complicated. First decision point is how critical is reliability? If you depend on your vehicle for your livelihood, or you are not able to get around at all if your vehicle breaks down, you change cars before they even cause a question. Emergency vehicles, doctors on call, residents living far from town, etc, fall into this category. The rest of us can decide based on a formula. Within a few months’ time, has the cost of maintenance started an upward trend (or will it start an upwards trend based on things that are going wrong) that, when added to the car’s depreciation rate, the monthly interest that you pay on it, and the insurance rate, exceeds the total of those four items for the car that you would replace it with? If yes, make the change.
CURRENT CAR REPLACEMENT CAR
Monthly maintenance cost Monthly maintenance cost
+ Monthly insurance cost + Monthly insurance cost
+ Monthly loan interest + Monthly loan interest
+ Monthly depreciation rate + Monthly depreciation rate (average)
If replacement car total is equal or less than current car total, make the change.
Before going too far here, it will be important to talk about maintenance. How do you know when maintenance costs on your current vehicle are becoming too high? In the current business thinking, many maintenance shops are actively selling maintenance. That means that when you take your car in for maintenance of any sort, the mechanic goes over the vehicle and finds as many things as possible to fix. The service manager or service writer then presents the vehicle owner with a list of “problems” that, according to him, need to be fixed. The way that he gets the customer to actually authorize the repairs is to present the “problems” as either life threatening or ready to break, ie, he might say, “You may not even make it home.” Although there may be a time when this is true, most statements such as this are a sign of selling maintenance that is probably not needed at all. A second opinion from a different maintenance shop might be in order. You should be wary when you take your vehicle in for an oil change or some other simple maintenance, and the service writer comes back with a list of “problems” from a completely different area of your vehicle. If you want your oil changed, there is no reason for the mechanic to be snooping around other parts of your car other than to find anything he can. The list of problems is presented to you “as a courtesy”, but that is far from what it actually is.
If you are going to operate a vehicle that is getting old enough to where it is going to need frequent repairs, it is imperative that you find a reliable mechanic if you are not familiar with the inner workings of vehicles. Dealers can be just as irreputable as independent maintenance shops in this regard. In many cases, if you are not sure of your maintenance shop, it might be better to replace your vehicle with a higher reliability vehicle so that the only maintenance you have to do is required by the factory. Along that line, many new vehicle dealers issue a maintenance schedule to new vehicle owners that suggests additional items on top of the factory required maintenance. This is nothing but another way that the dealers get more money for their service departments. The factory required maintenance is the only maintenance that the vehicle maker believes is necessary to keep their new vehicles in top condition.
Major untruth: “If I fix this, the car will be good for another 100,000 miles.” This statement will always be proven false. In the 1950s, vehicles had maybe twenty systems. Vehicles now have on the order of a hundred different systems, many with computers, and at 80,000 miles, most of those hundred systems have 80,000 miles and some number of years on them. Even though the reliability of the newer vehicles is far better than those from the 1950s, the probability of failure in a hundred systems is higher than that in twenty systems. Also, failure in any of the newer systems can be very expensive. Something as small as an air conditioning compressor can cost $1000. A new vehicle has a new engine, new tires, a new battery, new brakes, etc, etc, etc, as well as probably getting better gas mileage, putting out less pollution, and having better safety equipment.
There are usually three things in conflict when buying a vehicle:
1. What you want.
2. What you need.
3. What you can afford.
Balancing these three concepts is critical to actually being happy with what you finally drive home. Depending on your life, one of these may overwhelm the others, making your selection less complicated, but this website will assume that all are of equal importance.
What do you want? This importance of this question is probably the most obscure of the three. The goal is to be happy with your purchase, and sometimes, you can put up with low gas mileage, too much time in the shop, and too little carrying capacity if you are driving what you want, so please, listen to your heart. If you do not consider what you want, you will hate to shell out the money each month to pay for it, and therefore, very soon, you will find yourself shopping for your next vehicle rather than getting on with your life. Most of us have dream cars, which are usually impractical and very expensive, so let us get past that and tone it down to something at least close to being within financial reach. Once there, ask yourself how important is it to have what you want. Can you be happy enough to make the payments while driving merely what you need and can afford? If you cannot, then reconsider the purchase. Hard.
What do you need? Look back at your lifestyle for the recent past and then for the foreseeable future. What do you do with a vehicle? How many people do you carry around, and how often do you do it? How much do you put in a trunk, and how often do you do that? Do you tow anything, and how often, and how heavy? Is your vehicle important to your business or lifestyle? Do you do enough driving that fuel mileage is a factor in your purchase? Are you mainly a short trip or a long trip driver? How long must the vehicle last? Be very careful with the answers to these questions. Carrying gravel or seven people once or twice a year is not financial justification for purchasing a van or pickup truck. Vehicles or trailers for specific purposes can be rented a few times per year much less expensively than their gas consumption can be tolerated for the rest of the year. Even motor homes can be rented for vacations.
What can you afford? Be careful here, also. Most of us decide on a price, and then end up paying more when the dealer parades a heavily optioned monster in front of us, proclaiming how our neighbors will envy us when we drive it home. We end up buying a vehicle that we can almost afford only to let sit in the driveway. It is not wise to buy a vehicle with money that you think you will have in the coming years. Assuming the money comes, you will probably need another vehicle by that time anyway.
Some of these questions may sound trivial or obvious, but if you answer them as honestly as possible, you will help yourself select a vehicle that will be more easy to pay for as well as to use.