Thoughts on Car Loans

Did you guys see this?

More Americans Opt for Risky Long-Term Car Loans (NPR)

It really got me thinking (and remembering)….

When I was in my early 20s, my mom told me that my cousin and her husband had bought a new car. I remember being astounded. Our family never bought new cars. I thought it was a luxury only for the rich. I talked to her on the phone and must have sounded starstruck… I remember that she laughed and said, “It’s just a Saturn!” Obviously, she and I differed on what a “luxe lifestyle” was….

Fast forward a few years, and we bought a new car ourselves! It was a 2007 Honda Accord. We bought it in the fall of 2007, so it was marked down some (they had the 2008s on the lot), but it was still a new freaking car.

We had been looking for a used Honda because my husband’s Oldsmobile was in need of a lot of work and was expensive to maintain in its old age. We ended up not being able to find a reasonably-priced used Honda (they’re about as expensive as new ones, or that was the case at that time of year, in our area and a one-hour radius away from us). So we traded in the Olds and got ourselves a car loan. It was maybe $350 or $400 a month.

Thinking about that now, I shudder. Mistake #1: Buying a car when we were desperate for another vehicle. I do love the car (well, I don’t love it like I loved my 1993 Honda Accord, the car I got used when I was in college…. that car was my baby!), because I feel safe in it, it’s easy to drive, and I think it’s comfortable (though H disagrees with me on that). We didn’t get all the bells and whistles on the 2007 Accord, but it was certainly fancier than the one we had. At that time, we were driving my 1993 Accord and the Olds, so we felt like we’d hit the big time that we could get a “new” car.

If we had been prepared (and better-educated) we wouldn’t have felt the pressure to go out one day and come home with a vehicle that very same day.

So then we were driving two Honda Accords, and that was kind of awesome. The new one was way bigger than the ’93, but I always felt like my ’93 understood me. Probably because I learned to drive on it (yeah, I didn’t learn to drive until I was in college!) and I just got very used to the way it handled.

Of course, that car eventually got driven into the ground. The air conditioning didn’t work well, and my husband was driving it on his hour commute (so that we could have MORE time to drive the 2007 into the ground!). It finally was ready for donation (which was a nice thing to do, I think) and we started looking around for another car.

We did learn from Mistake #1, and H spent a good deal of time researching different makes and models of cars that would work for us. We didn’t want to rush into buying a car because we had to right away, we wanted to feel like we were making an informed choice.

We had decided that we wanted a 4-wheel-drive, because we thought we needed it for the area of the country we now lived in (and still live in). It’s mountainous, and we have friends who live off of dirt/gravel roads (not that we enjoy driving on those). We also wanted to be better prepared when there was bad weather. Mistake #2: We really did not need a 4-wheel-drive vehicle. (See Mr. Money Mustache’s post on AWD vehicles here.)

We knew we weren’t buying new because I was tired of the big payments. We had started making extra payments on the 2007 Accord so that we wouldn’t be paying two car payments at once (knowing that the ’93 was on its last little legs and we’d need something again soon). We did a lot of research and H spent a lot of time online looking at used cars available in our area (and that one-hour radius around us again). The fact was, 4-wheel-drive was not going to be easy to find in our price range. We could definitely not afford a Honda CRV (and I really didn’t want an SUV or a crossover anyway – I wanted a sedan), and we ended up with (I’m pretty embarrassed) a 2004 Audi.

The price was decent (we paid under $200 a month for it), but seriously. An Audi. It was available and it was functioning and it wasn’t ancient (not to us, anyway). But we never should have been trying for a 4-wheel-drive car in the first place – it turns out we really didn’t need it. If we hadn’t been so focused on that “necessity,” we could have found something a lot cheaper and more practical.

The Audi was expensive to maintain (we paid at least $4000 in repairs that first year!) and, while it was comfortable, it was a big regret. H enjoyed driving it – I did not (too big for my tastes).

When I got my side hustle in February 2014, we used all of the extra money coming in to pay down our car loan we had on the Audi. I knew we couldn’t sell it or trade it in anywhere for a smarter choice unless we weren’t going to be under water on it. We lived in fear that some other expensive thing would need to be done to it – each month that we got through without some minor car-catastrophe, we would heave a sigh of relief! We actively paid that sucker down so that if something bad DID happen, we’d at least be able to move forward (and not go down to one car when we were both commuting in opposite directions).

Finally, we paid off the car and could relax a little bit. My parents ended up giving us their old van (a Honda Odyssey!), and I managed to convince H that we should sell the Audi for whatever we could get for it and keep the van. He wasn’t psyched (who wants a van, anyway? We only have one kid, and vans are gas hogs) but at least repairing it doesn’t cost an arm and a leg. And we could get more for an old Audi than for an old Odyssey. I managed to get him to give in because neither of us is commuting long distances anymore (since I got my new job last fall and now we work in the same town!). So we sold it and put that money towards our Student Loans. Bonus: our car insurance went down!

My parents always told me: buy used, and buy Hondas. The times I deviated from those rules are ones that give me pangs of regret, though buying the Audi certainly caused us the most pain. I know some people are happy with other car brands, but Honda is the one for me!

Okay, I might consider a Toyota.

My dream cars include a Toyota Prius, a Honda Fit (though I worry that I would get squashed in a car accident), a hybrid Honda Civic (or the Toyota equivalent), or maybe some kind of fancy Subaru. H wants an electric car all the way!

Mostly, I just want something that doesn’t involve a monthly payment.

When our student loans are paid off, it’s time to start a car fund! (Don’t worry – it would only be used when the cars we’re driving bite the dust!)

Tell me about your experiences with buying new/used cars… Anything you regret?

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