Skip to comments.Advice for an enlisted kid buying a first car
Posted on 04/01/2014 7:14:21 AM PDT by TurboZamboni
I'm trying to steer him away from financing a new car.(Trying to get him to buy used and pay cash)
I know my chances are weak, but maybe reading advice from people other than dad my have better odds. He banks at USAA, FWIW.
FWIW, I set out to buy a used car (50-60K miles) 18 months ago. Between the low inventory of used cars coupled with the the higher finance rates, I ended up with a new car for the same monthly payments. Weird, but true. Don’t know if the situation has changed since, but it is worth looking into. USAA will probably give better finance rates than any dealer.
Interest rates for a new automobile are sometimes 0%. It’s time to find out how well you’ve raised him/her. ;)
USAA has car insurance also so he could call the insurance company and get some advice on the cost of insurance. I got a car in Kentucky in 1069 when I was in the service and the insurance for 6 months was enough to buy a car. Consumer reports has lots of information on maintenance costs of different brands.
If you’re buying used, do NOT buy a Chrysler product. And whatever you’re looking at, do your homework. There is plenty of info to be found on just about any car here on the interwebs.
Debt in general makes one a wage slave to the bank in addition to being a tax slave working for the gov't.
Have him look at the price of the car new, versus the Blue Book value of the car slightly used in excellent condition. That’s the cost of driving a new car off the lot.
Cash for Clunkers ruined the used car market. I looked & looked & looked for used. CarMax, Autotrader, Craigslist, you name it. And for daughter driving back and forth to college 250 miles each way . . . while yes even a new car can break down.
I’d say go for something ZERO or very near zero, 0.9% financing. If his credit can get those rates. Go new. Go basic model. Upgrades are expensive.
Otherwise in today’s market you can’t touch much of anything for 10K with less than 100,000 miles on it.
We bought daughter a Honda CR-V last August, about 21K, 0.9%.
Almost got an Escape . . . but in the end got the CR-V. Either one by time up go up a level or two you wind up with a 30K car . . . basic is good enough . . .JMO
And for us, NO GM or Chrysler products. And living in the Southeast, this is our first non-Ford product, but with all the production going on in TN, SC, AL & GA . . . I don’t feel guilty at all. :)
Yeah. I keep trying to explain that.
Finances/money are not his strong point.
Neither did I.
I don't remember who said this (could've been Twain or Will Rogers) but some wise person said, "the older I get, the smarter my parents were."
So you got that going for you.
That said, ask him what he would do if he had an extra 10,000 dollars in his pocket.
Then show him how financing a car is like throwing away 10,000 dollars over the life of the loan.
Show him that even though the list price on the car is X (say 20,000 dollars), by the time he's done paying for it, he will have spent Y (30,000 dollars at least).
A 10,000 dollar difference. At least. Obviously it depends on the "price" of the car.
My advice was to get him a 65 mustang but if you want it drivable it will cost you more than the $1500 I paid in 1976.
My daughter who was in the marines 2005-2009 finally listened to me and got USAA. Now she wonders why she didn’t for all of those years I was harping on her.
I’m trying to point him to a 5 year old or more Toyota or Honda.(that’s what I drive)
Of course, he wants a 300 Chrysler.(like ‘Walt’ had in Breaking Bad)
Yes, I know he’s an idiot.
It’s definitely fun to have a new vehicle. Better yet when bought with ca$h.
p.s. on insurance . . . my 19 yr old daughter, now 20 since then . . . was on a 2001 Ford Escape with 195,000 miles on it for driving when she was in high school and sat here her first year at college . . . lived on campus and transit and foot . .. was about 45.00 a month . . . fast forward to last August and a brand new Honda CR-V with a loan 0.9%, and insurance with full coverage only 55.00 per month. I was pleasantly surprised!!!
What model cars were available in 1069?
The one-year-old vehicle I bought in early 2008 was a one-owner (leasing company). I have never had a problem with it.
Recently, the dealer sent a broadcast email wanting trade-ins.
I checked the pricing at Bluebook.com. The vehicle is worth almost as much today as the price I paid in 2008.
If he is on base, there should be tons of decent used cars.
When I was in the service, we frequently had to deal with young enlisted not being able to pay their bill.
Invariably it was new car payments, child support payments or both.
His car will get beat up, tell him to buy a car that is already ugly, that way he doesn’t have to get mad when his buddy pukes in the back seat or he walks out and sees a new crease in the door.
Also warn him of the town honeys, they know that the military will ensure they get every dollar of child support awarded. Frequently they will have a whole brood with a different enlisted man as the father of each.
I was on my own and enlisted at 17.
I listened to my Dad and took his boring advice. At one point I wanted a Corvette . . . used from a friend, he said you don’t need a Corvette. Then I almost bought a Camaro Z-28 new . . . and beautiful . . . he said you don’t need that and instead I bought a “company car” from where he worked that came off lease for 1500.00 . . . low miles a Chevy Malibu . . . drove it for 3 years and sold it for 1200.00. So not bad. But I do wish I’d have bought either the Corvette or Camaro . . . this was in like 1980.
I figure he’ll get deployed and have to make payments(and full coverage insurance payments since it’s financed) to only have it city in a mud yard with no little to no security where it will be vandalized or stolen.
One word, used or new: Toyota
You’ll never regret it.
If he does buy new, make sure that he really reads the terms of the loan and understands them before signing it. I had a friend who bought his first new car and didn’t bother with that. After a few years, when he lost his job and couldn’t make the payments, he found out that he could not sell the car to pay off the loan, because they had applied all his payments to the interest, so he still owed 100% of the principal. His only choice was to let them repossess the car as a total loss.
Explain why and then let it go.
The lessons one learns well are from personal experience. After you've shared your experiences and your advice, you are done.
God didn't rest on the 7th day because he was tired. God rested because he was done.
First, he’s an enlisted MAN.
The military doesn’t take kindly to the “my car broke down” excuse, so a $1000 beater isn’t a good idea unless he lives on base.
The used car market right now is such that a car that’s a couple years old costs almost the same as a new one. I just bought a new car and was amazed at how a 2 year old Camry sells for the same as a new one. And they wanted more for low mileage 2 year old F-150’s than Ford is selling them new! (Are the auto manufacturers manipulating the used car market to steer people towards buying new?? Perhaps.)
If he gets a 3-5 year old car with low miles, it will still cost quite a bit and require a loan and then he owes money on a car with high mileage and that could mean payments PLUS repairs. If he has the $10k to pay cash, then that would make a good down payment on new or slightly used.
If he doesn’t fall into the “trade every two years” trap, then starting out with a quality new car or truck while he has a good dependable paycheck (a rare thing in today’s economy) and keeping it until its paid for is not a bad idea.
I was going to say the same thing. My son was lucky that I gave him my 2006 Sonata when I bought a new one. Now I wish I had kept the old one. (: Still going strong.
I have had good luck so far with USAA for car insurance.
He lives on base. Single/no dependents.
Tell him to invest in a good camera and save his car money. The pictures will be worth more to him in 10 years than any car he buys now.
I really regret how few pictures I took when I was in.
Chariots, of course.
Actually, the Wonder Cart was available. Power was only one horsepower, but it came with a nifty whip holder. Wooden spare wheel was optional.
>>Then show him how financing a car is like throwing away 10,000 dollars over the life of the loan.
Have you looked at interest rates lately? You can get new cars at 1.75%. That’s less than $1000 in interest over a 60 month loan.
It has been totally reliable, it is easy to work on, and parts are dirt cheap.
It really depends on what he is buying. I have bought and sold lots of autos, all used. I have never bought new but over the past 3 years have found that many Honda and Suburu cars with 30K or less have retained almost all of their value. A 2012 Civic LX goes for about $13,500 (wholesale) and about $16,500 (new with rebates from a good deal). There is a trick to buying used vehicles that will save you between $1,000 and $3,500 dollars pretty easily if you are comfortable negotiating and have some time and patience. You should not expect to get the wholesale price (per black book auction rates for your area) as the dealer has to make some money too. But you can get close if you know where to negotiate from.
When daughter got her license back when she was 16, she was driving our Old ‘98 Expedition . . .Blackie . . . she wasn’t too happy with it but it was what it was, had to leave home early so she could do a “pull-through” in her assigned spot at high school .. . . I watched and watched and searched for a reasonable priced car . . . as I knew her Dad would be perfectly happy with her driving the Expedition . . . finally after 6 months searching I found the little 2001 Ford Escape, looked great, with about 180K miles on it for 2995.00 so we got that . . . she only drove it to school and dance for two years . . . then sat for a year her first year away at college, too many miles for back & forth, so now son is driving it to high school and hopefully next year, so IF we get 5 years out of the little car and I hope to sell it for pretty much for what we paid for it.
Oh in my comments earlier . . .with buying her the CR-V, she earned tuition with her ACT score for 4 years . . . so she is a hard worker and I don’t feel bad for getting it for her . . .as a sophomore Spring semester her scores have already “paid” for the car.
Ask him if he would like to pay $250 a month for a 3 year old car with 50k miles on it. Then tell him that is what he will be doing I 3 years if he gets a 5 year loan.
True, true. In some cases, the evidence was destroyed ;)
Give him the present of Financial Peace University (FPU), the Ramsey program. It’s $120 or so and he is at PRECISELY the time of life when he needs it. My daughter and future SIL are taking it with us right now.
I’m a JAG and have had more legal assistance sessions than I can count with E-3s through E-6s and O-1s through O-3s that have the same refrain: “I bought this car cuz I could afford the payments. Then I got a credit card cuz I could afford the minimum monthly payment. Then I missed a payment. Now they’ve repossessed the car and the credit card company is hounding me. What do I do?”
Unfortunately, younger people who are for the first time getting a regular paycheck seem to thing they’re rich and/or financially bulletproof. I hope your son sees the light before becoming car poor.
Did I mention FPU?
Bought a 2008 equinox for a daughter away at school. We bought the extended warranty—something I do for my business truck, but not for my cars. She has more than paid for that with a couple of dealers.
Depending on how good he is with repairs and if he has that much of a down payment, buying new is going to be better. We looked for both of our girls—and the best we could do for either of them was recently used, 50,000 miles, and about $18k.
Out there now, there are $20k decent used, and $2000 beaters. Nothing in between.
People are not buying new cars these days because they want to. They buy them because they have to.
This I learned from my son while he was in the Army. There are always cars for sale by other enlisted personnel. My son bought one and paid for it in two payments. He drove it for 7 years. He saved his money and bought a dream car for cash - no car payment. The thing about buying a car on base is you can ask around. People will know whether the car has been troublesome.
“The used car market right now is such that a car thats a couple years old costs almost the same as a new one. I just bought a new car and was amazed at how a 2 year old Camry sells for the same as a new one. And they wanted more for low mileage 2 year old F-150s than Ford is selling them new! (Are the auto manufacturers manipulating the used car market to steer people towards buying new?? Perhaps.”
Working in the car business for 22 years now. Used toyota’s have always been high. Hondas too. It’s a pain in the ass to wait on someone on the used car lot looking for a “late model, low mile Camry or Corolla” or most especially a Tacoma. They always want to save $10,000 bucks on a two year old vehicle. When you tell them the price it’s “you’re crazy!” Or, “I can buy a new one for that” Well, almost.
When GM and Dodge closed all those stores many didn’t go out of business. They kept the doors open and sell used cars. There’s a lot more competition for the vehicles wholesale and consequently prices go up. Supply and demand.
So anyway, please go easy on the poor salesmen. It ain’t my fault!
BTW the new Corolla is a great car. Thinking about leasing a new Corolla S myself.
He’s still a kid. Feel free to sweeten his deal. If he buys a used honda, you will help him with X. Not a bribe, a guide. He’s still learning. Even: you’d pay cash for it and he can pay you x per month, etc.
Also, show him how he can find the right year used honda, and sell it in three years for basically what he bought. And show him how once he drives his new car off the lot, its worth has dropped by $x. And keeps dropping.
If he is trying to look cool for his friends, ask him if there are other ways for him to achieve that without the Walter white car.
Good luck.... At least he is in the service; he will mature faster than most.
Some quick points:
- Don’t fall for the 0% interest on new cars. Ask what the price would be if you paid cash and I guarantee it will be lower - they’re in the business to make money, not give it away.
- Don’t lease - again, they’re in business to make money.
- New cars lose part of their value the minute you drive them off the lot.
- If you borrow the money to buy a car, you’ll pay up to 30% more by the time it’s paid off.
- As my Dad taught me, you can’t make money trading cars.
My advice to my son and daughter (and they followed it) was to buy something dependable, that you can afford initially (and it might not be much to look at), drive it until it won’t go, and save the amount you would have paid to borrow the money to be able to pay cash for your next car, which, hopefully, will be a step up.
My advice would be to buy a dependable car or pickup truck.Forget sporty coups.if your Stateside for awhile like I was fortunate to be you’ll need it to transport your property between stations.
I would purchase a Subaru outback Station wagon or F150 pickup.
With either one you can’t go wrong.
With the Subaru you even get great acceleration with it.
Thanks for that.
What model cars were available in 1069?=
Well, the iron chariot of course. I corrected that twice, I thought.
That's actually quite common these days. My wife gets a new vehicle when hers flips 100,000 miles. She's the one hauling the kids all over the place so I want something reliable for her.
Me, I find something 2-4 years old that's relatively low mileage for its year and pay CASH for it. Last time I did that, I purchased a three year old GMC Envoy Denali that originally sold for just over $38,000 in 2003 for $17,000 in June of 2006. It had 31,000 miles on it.
Best advice is to find a 2-4 year old vehicle and pay CASH. Never Ever pay interest. Period.
I would recommend a Toyota or Honda, they may be boring, but when you turn the key they start. In addition they get you from A to B and back. I would also suggest something that got good mileage, when Dear Leader took over he said he did not mind higher gas prices and we have been there ever since. Going forward I can’t see it getting much cheaper anytime soon.
Lastly, some have spoken of USAA, I would encourage him to check out Navy Federal Credit Union(NFCU), I have been associated with both of these organizations for a long time and have nothing but good things to say about them.
A three year old Norman Conquest is a good choice.
True- teach , don’t preach.