How to OWN a car purchase.
In 2014 I needed a car. I’d been driving a resurrected 1989 Ford Rustbucket since I left my last company in 2013. The Rustbucket was getting me around, but I was working on it constantly. It simply was not reliable enough to be an everyday driver.
So began the car buying process. But this time I had a plan, learned through great expense (-$20,050.05 to be exact).
How to Buy a Car
- Never borrow money for a vehicle.
- Paying cash sets a hard budget – you get a car you can afford.
- Buy used.
- Used cars don’t depreciate as fast as new cars.
- Answer these questions:
- How many miles will you put on it?
- How long will you own it?
- Look at models that age with that many miles on KBB and NADA to get an idea of what your car will be worth when you sell it.
- Subtract your expected selling price from the total cash it will cost you. This is your true cost of ownership. Is it a number you can live with? If not, KEEP LOOKING.
I had a list of wants I was working from.
- Good gas mileage
- Snow / ice / mud / off road capable (I like to get outdoors.)
I wanted a truck. BAD. But the money just wasn’t going to work.
I set my budget at $7000. Why that? Because it’s how much cash we could scrape together in a few months without tapping into emergency funds.
I read countless reviews, blogs, forums, and talked with a lot of friends about what I should be looking for. The Subaru Outback gradually rose to the top of my list.
Why? It’s reliable. It’s well built, fairly easy to work on, and with all wheel drive and good ground clearance it could handle access roads on backpacking trips, or fishing access to the river through muddy field edges.
Stalking craigslist like a hungry panther is kind of fun in a weird way. I looked for weeks for just the right deal. I finally found the exact car I wanted.
A 2005 Subie Outback 2.5i with 144,000 miles priced at $7000. I contacted the guy to get the backstory and the VIN. Using the VIN I ran a carfax report and got service records.
I had concerns about the deal to be honest. You should have concerns with any major purchase.
- This dude was the second owner.
- The first owner had service done at the dealership. Second dude didn’t (no service history.)
- Timing belt wasn’t done till 131K miles (supposed to be done at 105K). Not huge, but could be a predictor of other maintenance trends.
- Guy didn’t know if just the timing belt was changed, or if the whole kit plus idler pulley had been done.
Through email I talked him down to $6850, which was above KBB value….but so were ALL the Outbacks I was seeing for sale both on Craigslist and on dealer lots. They were trading at a premium.
The True Cost of a Car
Having learned my lesson on depreciation, there were some things I liked about this deal.
- In 2005 Subaru redesigned the motor, and this generation change gets high marks for reliability.
- I decided that I would probably drive this car for 4-6 years, which would put it around 200-225K miles when I sold it.
- Craigslist and Autotempest searches found 2005 to 2007 Outbacks with 200-225K miles selling for $3000-$3500. (Also over book value per KBB and NADA.)
My expected cost of ownership – $6850 (purchase price) – $3000 (selling price) = $3850.
I bought it. The seller was five hours away, so I had him meet me halfway in a town 3 hours from my house, we test drove it, and I paid him cash.
Two years later I don’t regret it. I’ve had to do some repairs, but that comes with the territory of used cars, and is one of the reasons that turning a wrench is a life skill that all young people should learn.
Vehicles are an asset, and this has been a good one. It averages 28 mpg, it is crazy good on mud / ice / snow / bad roads, and it’s got lots of space. Plus my dog likes riding in the back.
The plan now is to save cash for the next vehicle, hopefully an upgrade to something that is more in line with what I want. But it’ll be a smart purchase first, and a nice purchase second.