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I’m Buying a Car… Help!

So…I’ve officially relocated [1] to Texas! I’ve mentioned several times that I didn’t own a car in DC. It was a great way to reduce my expenses, contribute to environmental conservation efforts and get in a bit of daily exercise. On the east coast, public transportation is a way of life…in Texas, we drive. And like so many other things in this great state, when it comes to vehicles bigger is apparently better! I’m lucky to be able to carpool with my dad for a few days (weeks?), but it is just a matter of time until I have to make the biggest purchase of my young life: a car. I’ve made sure to peruse some of the car [2] buying [3] tips [4] around the web, but I’m always willing to seek more personalized feedback – so I’m turning to you!

5 Questions I Have Before Buying a Car

  1. What kind of car? As I said earlier, many people here drive big cars. When I’m in a little car on the highway, it can be hard to see what’s going on in front of me. I’m contemplating a small SUV – something with 5 seats is small enough to still get relatively good gas mileage. But with the cost of gas, “relatively good” might not be good enough. And in addition to the cost of gas, I have to consider the indirect costs of car ownership [5], including insurance [6] and parking – all things I didn’t have to worry about while living in DC. So I’m trying to be smart while also getting something that will work for me. My current front runner is the Hyundai Tucson, though I’m also really interested in the (more expensive) Volkswagen Tiguan. My more sensible side is still looking into sedans though – a Jetta or Honda Civic is at the top of this list.
  2. How much to spend? This is the first really big purchase I’ve ever made. I hope to have this car for at least 5-7 years, if not longer. I’m willing to pay a little extra to make sure I get something that I like, is safe, gets good gas mileage, will retain value, and will last for many years and thousands of miles with relatively few repairs. At the same time, there is obviously a limit to both what I can afford [7] and what I am willing to spend [8]. And again, when thinking about the added costs to my overall transportation budget, the amount I can spend on a car definitely has an upper limit.
  3. New or used? This is the big outstanding question [9]. If I do used, I want something with no more than about 30,000 miles. The problem is that cars with 30,000 miles are not much cheaper than brand new cars – and if I’m going to buy used I want a big discount! New cars obviously come with hefty price tags – but they also hopefully will have fewer maintenance costs in the short-term. Some people swear by used cars, while others [10] will only buy new. Since I’ve never owned a car of any kind, I’m not sure yet how I feel for sure. I’ve been looking at mostly new, but keeping my eye out for the right deal on a used vehicle.
  4. Cash or finance? Again, this is something that people have varying opinions on. The cheaper the vehicle is, obviously the more likely I would choose to (and be able to) pay cash. But I do want to make sure I don’t completely wipe out my liquid savings. I know that at the very least I want to put down a fairly sizable percentage as a down payment – but if I get 0% or even 2.49% financing [11], that money could probably be better used elsewhere. If I do finance, I don’t want to make payments for more than 36 months – but I also don’t want my payment to be too high. I definitely have the most conflicting feelings surrounding this category – I don’t want to incur more debt than necessary, but I don’t want to use all my cash either. I’m most curious to hear what people have to say on this question!
  5. Where to get it? Of course many of these questions are interdependent. If I buy new, I’ll obviously buy from a dealership [12]. But if I buy used, I could do a dealership, a used car seller like Carmax, or a private seller through Craigslist or even the newspaper. Private sellers come with more risks – but also often with lower prices.

I have five main questions, and not enough (or too many!) answers…what do you recommend?