Frugal Car Buying Guide:
Plenty of people buy brand new cars, make $500+ per month in payments and pay for comprehensive auto insurance(usually about 2x the price of liability only). They buy a 40k pickup truck that is never used for hauling things or a sports car/toy at the cost of imperiling their financial future. I have come up with an alternative method to get you reliable transport for a rock bottom price and reduce the total cost of ownership as low as possible. This will not work for everyone, but for a lot of people what I recommend should work very well. I see plenty of escalades, yukons and suburbans carry only 1 person around. People generally do not need to buy such large, expensive to maintain vehicles. A small, cheap, simple to maintain vehicle would really improve their financial situation vs financing $750 per month for 7 years!
Selecting and Buying:
- You want to look at cars that are 4-6 years old. The depreciation in value is most rapid in the first 4 years of the cars life.
Example car depreciation curve: https://retireby40.org/wp-content/uploads/2012/04/car_depreciation.jpg
Cars that are 10+ years means maintenance costs rise as components start to wear our(shocks/struts, rust damage to body, etc). I would recommend looking for a car that has less than 100k miles on it, and preferably as low as you can find. I don't want to deal with dealerships(aka stealerships) so I have purchased all of my cars private party. You get a better deal for sure and keep the money out of the hands of unscrupulous dealers. When you test drive make sure to do it on the highway, in all gears, etc. Check for shaking or shuttering at high speeds(alignment/wheel balance issues).
- Buy a 4 cylinder economy hatchback. Economy cars have significantly lower parts costs. A 4 cylinder engine is going to have a much roomier engine bay, ceteris paribus than a sports car and be much easier to work on. Many sports cars have unbelievably crowded engine bays where you have to take off many parts just to do routine maintenance. The simpler a machine is, the less maintenance it is going to require and the easier problem diagnosis is going to be, all things being equal. The hatchback is a great option and offers basically free space to put your stuff. Mr Money Mustache agrees, and the following list is a great starting point for your frugal car buying experience.
http://www.mrmoneymustache.com/2012/03/19/top-10-cars-for-smart-people/
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Be aware if your car has a timing belt vs timing chain. This is a major maintenance item($700+ in a shop). The timing chain is a great option if available(Honda Fit has a chain for example). If you are buying a car with a belt look up the interval and verify that the service has been done. If the timing belt snaps you are looking at a major repair bill if you have an interference engine. it is important to always change the belt at the required interval for this reason. If the maintenance is coming up in a few k miles, use that to bargain the price down.
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Buy a car with a manual transmission. With many automatic cars the transmission goes at 150k-200k. A this point you are faced with a repair bill(2-4k) that is most likely higher than the value of the car itself. A manual transmission on the other hand requires a clutch replacement which may cost $600 in a shop or $100 in parts if you do it yourself. You can baby the clutch and you may never have to change it. This is not really an option with an automatic. The purchase price of manual trans cars is also much lower. I got my 09 manual Accent for 2.5k when bluebook was 4k. This is because few people drive stick and few stick drivers want an economy car. Exploit the hole in the market and get a great deal.
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Buy a car that is late in the production cycle. A particular model of car might be produced for 3-5 years. You can check wikipedia and they will give you the details concerning models and years. By year 3-4 all the bugs have been worked out and your car is going to be much more reliable. Cars that are the first year in a production cycle have many more problems. I use these websites:
https://www.carcomplaints.com/
To look up vehicle history I used:
https://www.vehiclehistory.com/
For my last car. It seemed to have all the info I needed although I can not vouch for it 100%.
- Do some, if not all, of the maintenance yourself. I save about $100 per hour of my time spent doing car maintenance. That is better than 95% of the population makes and you don't have to pay taxes. I do the work at my friends house so I get to hang out with him at the same time. Win-Win.
Putting it into practice: I searched craigslist and found a 2009 Hyundai accent hatchback with a manual trans at 52k miles. The guy wanted 3300 for it. I did my research and found out that the maintenance interval on the timing belt was 60k and used that to negotiate a price of 2700. I then inspected the car, test drove it and took it to a shop for an inspection on the lift. They came back with some items and I negotiated the price down to 2500 based on that info. I bought the car for that price and did the timing belt a few months later for $100 in parts and a few hours of my time hanging out with my buddy and drinking beer.
I estimate that the total cost of ownership per mile(including purchase price, gas, insurance, maintenance) at about 14c per mile. I drive for work and I am reimbursed at the IRS rate(53.5c per mile) so eventually the car will be free and I will be turning a nice profit every time I drive. I plan to keep this car for at least a decade and should be able to put 100k miles on it no problem.
Since I purchased the car I have been rear ended twice and the car was hit while parked once. There is no major damage, only cosmetic so I just pocked the $1600 total I received from insurance payouts and private settlements.
Maintaining:
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The most cost efficient way to is to follow the maintenance schedule and perform the maintenance yourself. This should be doable if you have purchased the correct car(manual trans, 4 cylinder economy car) and are mechanically inclined. It really helps to have a knowledgeable friend with the tools and know how. Changing the fluids according the maintenance schedule is easy and will definitely save you money. When exposed to heat the fluids are chemically changed and become ineffective at inhibiting rust. Just regular change of fluids prevents your car from corroding from the inside out.
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You definitely want to know how to do some basic detailing yourself. You want to preserve the paint and therefore the resale value of the car. The days of applying wax are long over. Wax generally lasts about 6 weeks. Sealants were introduced in the 1970-1980s and are supposed to last between 6 months and 1 year. Ceramic paint coatings are a new product which claim to last up to 5 years. I can't vouch for the ceramic coatings but the sealant I use is pretty amazing. I may apply a ceramic coating next time and see how it goes. Only having to worry about it once every 5 years is extremely attractive to me and may save time. As always make sure to do your research before purchasing. You generally have to thoroughly wash(double bucket method) and clay the vehicle before applying the sealant. For the ceramic coating you need to make sure the surface is absolutely pristine. See youtube for videos and products related to these two processes. Applying sealant/ceramic paint coating is a really smart financial move.
The sealant I use, it seems to work as advertised:
Klasse High Gloss Sealant Glaze 16.9 oz.
Ceramic paint coating example:
Color N Drive 9H Car Ceramic Coating Paint Sealant Protection 50 ml. Kit Deep Gloss
Applying these products will keep your car looking great for years. Most of the people who use them are owners of sports or luxury cars but I apply them to my economy vehicle to preserve resale value and protect the paint.
- Use high quality fluids. I personally use Mobile 1 Extended Performance and change it once a year. It is a fully synthetic and calls for being changed once every year or 15k miles, whichever comes first.
Mobil 1 (120765) Extended Performance 5W-20 Motor Oil - 5 Quart
For the transmission I use Redline, the stuff is extremely well reviewed and makes it shift as smooth as butter.
Red Line 57905 75W90 GL-5 Gear Oil - 1 Gallon
A little bit of research on Amazon can lead you to buy a superior product that will give great performance and extend the life of your parts. Make sure to check compatibility for your vehicle, of course. I plan to keep this car for at least another decades so I take the time to treat it as well as I possibly can.
- Be proactive in maintenance. Parts are generally pretty cheap and most of the expense comes from labor. When I changed the timing belt I knew I would have to take the serpentine belt and power steering belt off too. Since it was only a $30 part I changed it as well rather than risk it decaying sometime over the next 6 years(10k miles per year driven, 60k timing belt maintenance interval). Doing stuff like that is smart and saves your car being stuck somewhere that is worth at least $30 of my time for the peace of mind.
June 14, 2018 at 08:43AM
