When to Buy a New Car -- Car Enthusiast's Purchase

I wrote a post awhile back about my friend Car Enthusiast* and how he asked for my advice about how much to spend on car. He took my advice in part - I love it when people do that. J

* I have also referred to him as Car Fanatic in some previous posts. Somewhere along the line I inadvertently changed his nickname. Sorry for any confusion.

I thought I’d share an update on his story in conjunction with a follow up to the open discussion from last week regarding When to Buy a New Car.

Car Enthusiast bought a new car the Saturday before Easter, he called me up that evening all excited about it and drove over to Mr. Be-Mine’s house to show it to us. Its a beauty. He purchased a gorgeous black Honda Civic Si - the sports package. He’s hoping to race it as a hobby.

We’re close enough where we talk finances, while we may not discuss salaries, we do talk big purchases so he told me some of the details of the deal. He put down $2,000 which he’d saved under my advice and financed just under $20,000 at 6.75% for 5 years with a monthly payment of just under $400.

Personally I’d prefer to be able to buy a car outright, but I know that’s not an option for him right now and timing for everything else worked out right where it was the best time to buy a car. I think that financing will work for Car Enthusiast, even thought he’ll have to pay interest it will work out for the best and he should be able to handle the payments after all he’s managed to save more than that for the past four months in order to create his down payment. All and all I think he might a right move for him.

It got me to thinking about when to buy a new car, which promoted the open discussion from last week.

I thought it would be an interesting case study to examine his timing for buying a new car. I had told Car Enthusiasts a while back about my post about the advice I gave him and I ask last Saturday if he minded (not that it would matter since I post anonymously anyway and could have just done it anyway) and he told me to feel free to analyze his purchase.

The big areas to look at before buying a car in my opinion are:

Personal Timing, Financial Timing, Life Span of Car Timing, and Anon added Research which I’m in full agreement with adding to the list.

So here goes the examination of each area for Car Enthusiast’s situation:

Personal Timing – Car Enthusiast is being transferred from Atlanta to Louisville and will be there for the next two years starting in June. With his transfer it makes sense to exchange his 16 year old Honda Civic that has been driven over 280,000 miles for a more reliable car. Car Enthusiast doesn’t mind doing car repairs, in fact he enjoys it but once he moves won’t have the equipment to do any major repairs that his last cars. In Atlanta he’s able to have access to just about any tool or equipment he needs for repairs since his dad owns a car repair shop and he could always go over there and the best mechanic in the shop (his dad of course) would fix it. Being 8 hours away will limit this opportunity.

Financial Timing – While many of us, me included, would rather wait until we can buy a car out right I think Car Enthusiastic passes the financial timing test because he planned for this expenditure. Saved for months, adjusted his budget to accommodate this new monthly payment and knows he can afford these payments since he’s been “playing house” and making them for the last few months.

So check – financial timing

Life of Car Timing - As mentioned in personal timing, Car Enthusiast’s car was well past the mileage mark most would being the life span of his vehicle. While he could continue to make the repairs on this vehicle, no longer having free mechanical work it would not be cost effective to make the repairs.

Research - Car Enthusiast definitely did his research, as you can tell by his name he’s very into cars, attends car shows all the time, researches all the models and could quote spec on just about any car on the road. To make this purchase he has been planning for months and has checked out every detail from gas millage to performance to seat color for just about every car on the market. He also did his homework on pricing and the options he wanted.

So check – research

All in all I’d have to say my friend bought a new car at the right time. I hope/plan the timing will work out as well from me when it starts getting time for me to buy a new car.