For some context, I am 25 and I currently drive a 2007 Nissan Maxima which has been giving me some problems. I don't really do that many miles, I bought the car when it had 116k in 2019 and now it is at about 142k. I can feel the transmission acting weird which makes sense because when I changed the fluid a while back it was very dark and obviously never changed. I've also had the brake master cylinder go out on me twice in the past 2 years. Other than that I had some spark plugs fail recently and also have had an oil leak and some other fluids but those have been pretty manageable.
Anyway, I am generally a very anxious person so whenever anything happens I assume the worst and now it's hard to drive the car without feeling some anxiety. I am currently looking at a 2023 Mazda3 hatchback with 27k miles for 22k. I have about 63k saved from living at home and working full time for 1.5 years, but I also plan to go to grad school for an MPA at Rutgers Newark this Fall, which may cost $40k+. I'm hoping I can get some scholarships for this as I graduated with my undergrad with a 3.9 GPA and also currently work at a non-profit which might be compelling for the admissions office. Still, that's not a guarantee.
I know financially it might be wiser to buy an older car in cash with more miles, but if I plan to keep the car for as long as possible, what do you think? I like the features and the premium trim on the car, which is something I'm used to in my Maxima, but I'm not sure if I'm being irresponsible with my finances. My hope is to finish grad school with 20k in savings still, which I think I can do if I find a good part time job.. but I'm also not sure how easy it will be to find a job after graduating and to be honest I'm mostly doing the MPA because it's at least in line with what I'm doing now, though I'm not that great at it, and because I agreed with my parents that the money I am savings by living with them is to further my education.
Any advice would be great! Thank you.
Is it responsible to buy a newish car for 22k if I plan to keep it for 10+ years?
byu/mezzo111 inpersonalfinance
Posted by mezzo111
14 Comments
I think there’s a middle ground behind buying and older car with cash and a new one. What about buying a newly off-lease vehicle? Maybe three years old, 36K miles? We do that with used Toyotas, even though we can afford to buy new woth cash, because it means buying an incredibly reliable car that we plan to hold for 10+ years, still has nice trim options, but someone else ate the initial depreciation?
Get an electric car, it is so much less maintenance and cheaper all around
What about a 2 year old CPO that you’ll keep? That way you don’t get the “drive off the lot” depreciation hit, but are still driving a pretty new vehicle
In my opinion, if you can actually get that car OTD for $22K and plan to drive it into the ground, it’s a perfectly reasonable expense. A hatchback is a great vehicle format which you won’t likely need to change anytime soon, and 27K miles is not a lot for a modern car.
You also might be surprised how much your Maxima is worth, the used car market is still pretty wild. Sell it privately, don’t trade it in.
If you plan to keep it for 10 years, getting something new(ish) and reliable makes a lot of sense. The more important financial aspect to consider for you is cash or finance. Given you are thinking of going back to school, I would try to buy outright with cash so you don’t have a monthly payment to worry about while in school.
Like another said, many great deals on used EVs. Great for low mileage driving like you would have while in grad school. Just make sure you can charge where you live for low cost, because using DC fast chargers is going to quickly put you into the same costs as a gas vehicle would.
OK, as a former (broke) mechanic I would tell you to list out in a spreadsheet every item that you think the car needs fixed to bring it back to pristine condition. I’d take it to a good reputable shop and simply ask them to do a complete condition check. Include a compression test and/or leak-down test on the engine. If the compression is good, you could have another 100k-150k left on that engine.
Price out what a used transmission with warranty costs. It’s probably in the neighborhood of $1600, plus another $1200 for labor to install.
Spark plugs wear out, that’s normal at your miles. I’d want to get a full brake system flush and fill, sounds like your system is contaminated if you’ve had two master cylinders go out. That’s a couple hundred dollars, max.
So about $3000 up front vs. $22k to last you long enough to get out of grad school. Which makes better financial sense?
The problems you detail for a car that is 20 years old with 142K miles are totally fair and understandable. The more you drive this car, the more problems will crop up and the more you will spend on repairs. Due to the age of this car, you can make good case to replace it. If it’s still running OK now, then you can probably get some money for it.
I think a 2023 Mazda3 hatchback with 27k miles for 22k is generally fair, although I haven’t looked at specific prices. We all know the used car market is in a weird place right now, price-wise, and new cars are even more expensive.
Pay cash for this car, or get a loan if you can get a very competitive rate, but also put down a large cash down payment.
After you do that, you need to immediately start saving / keep saving money for both an emergency fund and a fund to cover car repairs. Hopefully you won’t have any major repairs early on, but at some point you will if you want to maximize the life of the Mazda. Save that money now and avoid buying a potentially expensive loan in 10 or 15 years.
You need to look at car ownership as a long-term expense, not just paying on a loan or paying cash. The expense can be look at as a continual cost as long as you’re owning and operating a car. That requires cash.
I drive a mazda3, it’s a great little car and you’re going to love it. There’s also a significant enthusiast community built around it.
I think buying a 3 year old car with 27k miles on it sounds great, assuming the price is right. What trim mazda3 is it? That’s a fair price for a higher trim, but if it is a base model you’re likely overpaying by a couple thousand. I got my mazda3 (select sport sedan, 2024) new for 24k out the door, so I would expect to get a little bit more than 2k off for a similar trim which is now 3 years old with 27k miles on it.
the cost/use of your money is basically a coin toss. —the irony being the cost of education these days is much more dubious in terms of investment.
IF you buy the newer car, the only smart thing is to drive it into the ground ….keep it for 10 yrs.
I love my mazda. I bought a 2021 mazda 3 hatchback (manual) i’ts a great car. the hatchback has surprisingly good space (i basically moved in a couple trips using my hatchback)
mazda also has fairly good reliability metrics. As they now “partner” with toyota for engine/components. So of car brands it’s a decent choice. It’s entirely possible to get 100k+ even upwards of 200k miles out of a mazda.
so for what it’s worth. this random internet person thinks you’re at least making a decent choice of brands/types of vehicle.
just understand a car is a depreciating asset. it is always trading cash, for something that decays. IF you can buy the car outright, it’s basically a cost/opportunity question. ie… what is the cost vs loss if you kept that money to invest at 8-10% a year.
There’s not really a black/white answer if it’s a good idea. If you’re likely to be attending school and commuting back and forth from school, a job, home, and need that to be reliable, especially in a colder climate area. a reliable car is a “decent” investment. just take care of it as best as possible. do the routine maintenance. etc.
There’s a lot of If’s in your plans. With school being so expensive, my vote would be to keep it under $20k after taxes. A few years ago, I got Mazda CX-5 with 98k miles on it and it was about 5 years old at the time. It’s been super dependable. IMO mileage doesn’t matter as long as the last owner took good care of the car and there’s no lingering signs of it being wrecked.
Don’t forget to budget all the resulting expenses from getting a more expensive car. Insurance will absolutely go up. If there’s a chance you’ll move states, you may have to pay ad valorem taxes on it when you register your tag.
I’d be far more concerned with future income/payback from that MPA than the current car dilemma. But on the car thing – a used car is going to be a better plan, if you buy carefully. Anyone in your family looking to trade soon? Often they’ll sell to you for what a dealer would offer them on trade, which generally sucks. Dealers only take trades at a significant expected profit.
i think those small Mazda 3’s are a good & reliable.
however depending on that used vehicles trim package level, you can buy a brand new one for just a few thousand more.
seriously, why buy a used car for $22k, when you can get the same one but brand new for $4k more at $26k.
unless the used car has the AWD or is the Turbo Premium package with the 250 HP, better to spend a few k more & buy brand new. take great care of it & it could last you 20 years.
once you buy the car keep saving money and build your savings back up.
agree on getting a different car. I’ve had transmissions replaced and rebuilt 2 times now on my own cars and once on my parents, never seen a vehicle recover. if you’re gonna go to $22k you can probably get a new corolla for close to that
You can get a new Mazda3 for like $24K or less (I just did my car shopping last month). New car incentives are so crazy that I buying a slightly used car doesn’t make much sense anymore. You may have to “finance” to get a grand off (and thus pay off the loan right away), but new Mazda3s are cheap. They aren’t selling as well as the market is about SUVs and it’s an old, outdated design, and they are trying to unload last years inventory. So, $22K for 27K miles is an overpay IMO because you have to worry about the possibility of it being a lemon that the current owner is trying to dump.
Anyway, I faced a similar situation – 26 years ago.
in 2000, the literal year I graduated, my old 87′ Nissan died. I had a choice. I decided I would get a new car and drive it as much as possible. So, bought a Toyota Corolla for $13.5K, brand new with the vow that I would drive it till it died. Never actually lived up to that promise because I sold it, still running in 2015 with 260,000 miles on it. The last few years was getting annoying with repairs, but the first 10 years was nearly hassle free and it never broke down on me or left me stranded. Outside of fuel, it was like $1500 a year in cost to own when amortized.
Great decision.
While people in my age groups were getting BMWs and spending thousands more a year, I just put that money in the S&P.
By going to cheap, driving for so long, and investing the money in the stock market, I figure I’m about $150K richer now.