Hello all, my wonderful Cadillac 2009 that I got essentially for free from a family friend is on death's door. I'm now in the hell of trying to actually buy a car for the first time, and while I've been doing a lot of research, I wanted some second opinions.
I'm 24, I make about $60k a year and have about $20k in savings. I've calculated that my monthly car payments should be around $275 (based on the idea that car costs should be about 15-20% of your monthly income). My credit score is 732.
I'm not really vain about cars so I mostly just want something reliable that hopefully won't need excessive maintenance. Especially considering my partner is going to law school soon, which will be about 3 hours away. I anticipate needing to make that drive often. And I want to have this car for at least 5+ years. Oh, and I live in the Northeast, so I need something that won't cringe at salt and snow.
With that in mind, I'm stuck on what my upper budget for a car should be. I've decided I'm mostly going to look at dealerships rather than on Facebook or something to keep things as simple as possible. But quite honestly these big numbers terrify me. So a budget of $10k seems reasonable – but obviously for something as important as this, I don't want to just go on vibes. I'm wondering if true quality will only be found with a budget of $15k. On the other hand, I don't want to spend more than I need to of course.
I'm looking at older models of sedans and SUVs; Toyota, Honda, Ford, and Suburu.
If additional info would be helpful, let me know. And please be nice! I'm doing my best out here o7
Buying a used car – $10k budget reasonable?
byu/corviknightly inpersonalfinance
Posted by corviknightly
11 Comments
I am going to post this for the benefit of you and others. Some will apply to you, some won’t.
Monthly payment is the worst way to look at a car purchase. As soon as you do that, you have given control to the dealership and will probably be taken to the cleaners.
The only number that you should be concerned with is the final, out-the-door price. Once that is firmly established, then it’s time to move on to trade ins and financing.
I am the son of a career car salesman. Here’s some of what he taught me.
1. Just because you can afford the car payments doesn’t mean that you can afford the car. Any salesperson can give you a “low monthly payment” by stretching out the loan term to a ridiculous length and then jacking up the interest rate. This costs you money.
2. The less money you put down and the longer the loan term, the longer you will be upside-down on the loan, meaning that you owe more on the car than it is worth. (Lenders sometimes use the terms “under water” and “negative equity”, which mean the same thing.) This is a very unwise financial situation to be in.
3. The dealership is a hothouse atmosphere with loads of pressure and dealerships take advantage of that at every opportunity. It’s easy to get sidetracked and to lose your objectivity. Then, you wind up paying too much for a car you cannot afford.
4. As hard a pill as this is to swallow, you need to fully understand this: If you cannot put down at least 20 percent (and more if possible) and you cannot pay the loan off in 36 months, you cannot afford the car, no matter how low the payment is.
5. The salesperson is not your friend. Everything they do is designed to separate you from as much of your money as possible.
6. Dealerships will add on ridiculous items like LoJack, extended warranties, paint and fabric protection, and whatever else they can think of to pad their profits. None of these items will help the customer. Refuse to pay for them. If they won’t remove them, walk away from the deal.
7. Walking away is the biggest power you have.
8. Buying a car is usually the second-biggest purchase you’ll make. It’s a huge financial commitment and needs to be looked at in a cold-eyed, rational way.
9. Before you ever set foot in the dealership, go to your bank or, better yet, your credit union, and see what terms they will give you. If you don’t have a relationship with a credit union, this is the perfect time to start one. They may be able to beat the rates you get from the dealer.
10. You’ll need to purchase full coverage insurance for the duration of the loan. Make sure you know what that costs before you buy the car.
11. Reddit is full of posts from people moaning that they want to get rid of their car for one reason or another, but they can’t because they owe $17,000 on it and it’s only worth $10,500. These are the same people who bought a car with little or nothing down and a loan term of 4-8 years. Don’t be one of those people.
A subaru from before 2015 (looking for one without a CVT transmission) that has had the headgaskets, water pump, and timing belt done. It’s a fairly solid choice for AWD and dealing with those winters, while also economical on the fuel.
Assuming that work has been done, and it’s under 150k miles, it should last 5 years with basic maintenance no problem.
Edit: non-turbo models more reliable
I recently was car shopping on a 10k budget. Ended up with a 2018 fusion hybrid with 49k miles, which will hopefully last me some time.
I know you said you’re looking mostly at dealerships, but if you have time to wait, being patient on marketplace can find you great deals.
I will warn though that while $10k gives you options on vehicles, finding a good and reliable one will be difficult even if it is a Toyota or Honda. And wanting a vehicle that’s good in snowy conditions limits your options even further. $10k is the new $5k of 7-8 years ago on what that money can buy in the car market.
A Toyota Avalon with 100k or lower miles. I bought one with 95k and it rides nicer than my wife’s 2023 Escape. Probably out live it as well. Bonus is mostly old people bought them so they usually have all maintenance records and sat in the garage.
There are lots of possibilities out there, but you’ll probably want to check out aggregation sites for listings and I’m not sure how far that budget will go at a dealer.
I like carcomplaints.com as a quick check to see general reliability for a year/model and to identify common pain points for those individual model years. Some Subies have gasket issues, some CRVs have VTC actuator grinding, Mazda MX5 of a certain year can have crazy expensive headlights that are prone to fail, etc.
I’m also in the NE and while Subies have the BEST AWD system going across an entire line of cars (even though they differ somewhat), modern ones use CVT transmissions and they’ve long been prone to engine issues of some sort whether it’s oil leaks, head gaskets, or whatever. They definitely require attention and take a mpg hit, but symmetric AWD is no joke. Torque vectoring AWD (Honda SH-AWD and different names for other mfrs) is also quite impressive.
Having said that, most vehicles with snow tires (especially sedans), can be very capable in the snow and snow tires allow you to stop more quickly, which is something AWD on its own does not necessarily help with.
Avoid a car payment altogether. Buy a Honda, or Toyota for 5,000 and drive it until the wheels fall off. Then do it again.
There’s never a time where you’ll wish you had a car payment
Low ball everything that you can on Facebook marketplace. I just bought a 2016 egolf in spectacular condition with 90k miles for $2500. This is a $4-5k car all day.
2006+ v6 4runner (dont get 05 and under, head gasket issues) or 2003+ v8 4runner should be under 10k if you are willing to accept some paint/interior wear. Just be sure to check for rust and maintenance history, v8 needs a timing belt every 10 years. AFAIK most banks wont give out loans to cars this old/value though. Good luck!
One more thing: Never buy any used car without paying a private mechanic or garage for a pre-purchase inspection. Ask them to look it over as if they were thinking of buying it for themselves.
You’ll want them to tell you what needs immediate attention, what will need work in the next year or so, and if this particular model is known for specific issues, like early transmission failure or problems with blown gaskets. Once you know that information, proceed.
I once thought I was getting a great deal on a used car from a dealership, but I told the salesman I wouldn’t buy the car until my longtime mechanic inspected it. The salesman agreed and accompanied me to the garage.
My mechanic, Steve, put the car on the lift and invited us into the service bay. Then, he showed us streaks of bright yellow paint across the underside of the car … the same color yellow that is used on tire stops in parking lots.
Then, he shone a flashlight on a discolored spot on the engine and said that this was evidence of a blown head gasket. The salesman was standing next to me when Steve said, “—, don’t buy this car”.
The drive back to the dealership was … awkward.
That inspection saved me from a mistake that would have cost me thousands of dollars.
The truth is that in this car market, a $10k car probably will still have issues that you will have to deal with. The idea of getting a beater car for cheap is largely out the window, unless you are comfortable DIYing your own repairs. And everyone will tell you all day to get a Honda or Toyota (and thats decent advice in general) but the premium that these cars can command is a real thing.
As others have said dont focus on payments, focus on the total price. AND don’t forget about the cost of car insurance.