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The Debt-Free Car Project Chapter 8: Wrap-Up

Edmunds.comEdmunds.com Posts: 10,126
edited March 2015 in General
imageThe Debt-Free Car Project Chapter 8: Wrap-Up

In this concluding chapter, we take care of some final repairs on our 1996 Lexus ES 300, sell the car and judge the success of our project.

Read the full story here


Comments

  • It is a little hard to read past the "left us stranded twice" and still be excited about it. --- to me it sounds like a bad punchline to the good old "buy a used X brand car because they last forever". ---- I guess the real lesson here is maybe shop in the $5,000 to $7,000 range if a long list of problems is going to be inconvenient for you. Or buy a car that is newer but started out cheaper so you aren't paying for the name on a 15+ year old car. If your wife getting stranded in the 'bargain' car you talked her into multiple times isn't going to go over well with her a newer car might be a good idea. ---- It is also good to keep in mind that your jobs involve cars and taking cars to get things done to them. Many people work at jobs where the boss can get a bit grumpy if you keep going "I have to take the car into the shop again" and co-workers may start avoiding you if you keep asking "can you pick me up a the repair shop on the way into work tomorrow?"
  • zoomzoomnzoomzoomn Posts: 143
    I like this story. I've been in the service end of the car business for what now seems like an eternity and one thing that is certain is that there is no such thing as a free ride! I have had hundreds of customers with older cars and the rule of thumb for me? "Is the car letting you down, leaving you stranded?" Spending money to keep ole Nelly going is a given. Being stranded? Not so much so.

    I often use the figure of half of what the monthly payment would be on a newer model over the period of a year as a rule of resonable expense. Most customers agree, others decide that the security and sanity of a new, or newer car is worth making monthly payments. Again, nice artlicle.
  • tbone85tbone85 Posts: 27
    I'm just not sure about the selection of the vehicle for this experiment. That's an older and more expensive car to maintain.

    3 years ago we bought our daughter a 2005 Kia Optima with 76k miles for $5000 from a standard used car dealer out the door. It has never left her stranded. Even with a new set of tires and a $400 worth of O2 sensor repair, she's right under $1500 in maintenance.

    While I know that is above your budgeted amount, I'd suggest something of similar vintage and mileage, or to befriend a mechanic who can help with auction cars or private owner cars to knock another $1000 or so off of that kind of pricing.

    Even then, the key is to narrow your search and give yourself ample time to search and get a great understanding of market pricing for the 3-4 car models you are interested in looking at. Interesting article.
  • Your first mistake was when you bought the Lexus badge instead of going with the Camry.
  • bankerdannybankerdanny Posts: 1,021
    I have enjoyed the experiment, but I still think you should have avoided all luxury brands, even one with as good a rep as Lexus. The experience with the gauge lights is a perfect example. A V6 Camry would have been mechanically identical, but had conventional gauge lighting that probably wouldn't have needed any repairs, and if it did you could have fixed it for far less that $116. If you are going to shop at that price range don't bother with Lexus, Acura, BMW, Mercedes, Audi, Volvo etc. Stick to the domestics and the non-luxury Japanese brands. Parts and repairs aren't always cheaper, but they usually are.
  • steverstever Posts: 52,457
    Chapter 8: Wrap-Up? You really should have sold it at Chapter 7. That's where a lot of folks who dump a big chunk of their income on car payments wind up when their job strands them.
  • mfigge2mfigge2 Posts: 1
    Regardless of what people say this is an interesting concept. I think you guys did a good job IL/Edmunds. If my finances were tight this is definitely the route I would go, but I would probably go with craigslist, autotrader, etc. and do most of the maintenance myself. Still a well done "study".
  • I think the consensus is avoid 'luxury' cars for your affordable car, not to avoid affordable cars. Unless you are Top Gear and get to blow it up at the end of the episode. --- tbone85's example is perfect. That car will easily run another 75,000 miles. Even if you figure it dies at that point and split the cost by the 6 years you are at $70 a month and in reality after 6 years they will probably sell it for $2000 if they keep it maintained so about $42 a month. That is an affordable car that shouldn't leave you stranded and if it starts to do that after a couple years you can push it over a cliff and still be money ahead of buying new. --- I know though that if they had bought a completely practical car it would have never been driven and nobody would have read about it so it makes for more interesting reading but a bit too interesting of real life.
  • fordson1fordson1 Posts: 1,512
    There were certain flaws in the approach you took with this project, but the one that really renders it irrelevant is that most owners, having spent the amount of time and money getting the car sorted out as you did, would have kept it and leveraged the expenditure of time, money and attention, rather than getting rid of it. You did something no owner would have done, citing editorial considerations. When you finished with the car, even though it had more miles on it and was a year older, it was undoubtedly in better shape than when you bought it...but you turned around and sold it for quite a bit less than you paid and left the next owner to enjoy the fruits of all the work you did getting the car straightened out. Would more stuff have gone wrong with it? Sure - but I think you had dealt with the lion's share of the work and were looking forward to some low-cost motoring when you pulled the plug.
  • quadricyclequadricycle Posts: 827
    Considering this was not a new car test and the car itself wasn't eating much money, it should have been okay to keep it for a couple of years. I still think that if you want to be smart about purchasing a car, get an approved loan from your bank or credit union which you use to buy a certified used (10,000-30,000 miles) so that the original owner can take the biggest depreciation hit, and you get a nice almost new car still in warranty. You then drive it for the next ten years. I understand that most owners don't want to do their own maintenance, but you should do the simple stuff (cleaning, conditioning interior, oil, filters) to really get out ahead. Once it is paid off, put a little of that money aside for repairs and keeping it in good condition, and a little towards your next car purchase. Instead of running the car into the ground, sell it while it's worth about three to five thousand dollars and use that for the down payment on the next car. Rinse and Repeat.
  • duck87duck87 Posts: 649
    This was a great experiment, and even with some of the controversies regarding what a low income family would and would not do in regards to vehicle repair and maintenance, I think this gave a lot of people a good idea of what to expect from used car ownership. As tbone said though, it might have been a better idea had you guys gotten a more mainstream vehicle to start with that had cheaper parts and greater depreciation (though it feels a lot better rolling in a Lexus ES =D), and you might have saved yourselves a ton of pain/headache/costs if you had found that great garage that fixed your door clip sooner.

    As you guys stated yourself, considering you had given this car new tires (most would have gone slightly used or the cheapest of the cheap), bushings (this item especially since it's the big ticket suspension maintenance item and usually most expensive), rotors (most would have done fronts only), battery, and fixed a ton of minor issues, you would have needed at least 3 years to leverage all of the repairs that you have done; else if it was only for a year of ownership you would have continued rolling on with most of the issues you've had.
  • legacygtlegacygt Posts: 599
    I've really enjoyed following this story and appreciate what you did here. It's been a helpful perspective and a nice change of pace from the vehicles you typically cover. But count me as one of the skeptics. Was the car cheap? Yes. Was it cheaper to maintain than expected? Yes. Is it a better deal than the buy here, pay here alternative you present? Yes. But was it reliable? Not really. All of the repairs and days out of service were well documented. But it's a matter of perspective. For Edmunds, each of these repairs was part of your job. Diagnose a problem, search for a solution, drop the car off at the shop, pick another car from the long term fleet to drive for a couple days and then write the blog post. However, many people shopping for cars in this price range cannot miss a day of work. Missing work means not getting paid. It might mean losing your job. At Edmunds, car maintenance is part of your job. For most people, car maintenance can mean losing your job. That's a big difference.
    My conclusion: If you're looking for a second/third car or a beater or you work in the auto industry, a 20 year old Lexus may make sense. But if you need one car to get you and your family where you need to go every single day you need to find something a bit newer.
  • huisjhuisj Posts: 1
    Who in the world is out there buying a 10 year old Taurus for $9600? Maybe prices are wacky out in California, but a quick browse of listings here in Michigan shows a ton of them available for a lot less. The best of the best 2006's are selling for $7000 max on lots at new car dealerships. A true 10 year old one is maybe $3500 to $4000.
  • texasestexases Posts: 9,358
    +1 huisj - that Taurus 'cost analysis' stunk of BS. "overhead" is not in addition to "dealer markup", they're the same thing. Plenty of 2002-2003 for $5k retail here.
  • noflash1noflash1 Posts: 13
    It was a good experiment, but in the end it failed. Your scenario of the poor folks paying 17% interest is the clincher. I can think of dozens of cars I'd rather get than pay $365/month on a 10 year old Taurus.

    A new Civic LX for $300 month for the first five years and then no car payments for the next 12 years. That's the way to go.

    Cheers, nf

    PS The cheapest car is always the one you're driving now.
  • evodadevodad Posts: 135
    As of others have stated good experiment, but with keeping the car for only a year it failed. After maintenance costs and the loss on the sale vs your purchase price you guys spent 4k to drive a 17 year old car for one year. I actually think it costed edmunds/IL less to drive their ferrari for a year. Anyways, I will gladly spend $2k a year in maintenance on my Evo if need be, because it's fun (so I wouldn't consider trading it for a similarly priced newer car that will require less and cheaper maintenance) and $2k is still less than any car payment for any halfway decent car.
  • 330i_zhp330i_zhp Posts: 55
    @Evodad - I completely agree. Spending a couple grand to keep my (paid for) 04 330i rolling is easily worth it to not have to drive a newer (probably more reliable) econobox like a Civic, etc. Plus, having bought my car used, keeping it for a few years
  • empowahempowah Posts: 64
    It would have been helpful to consider the time costs as well. If you figure the typical driver of such a vehicle earns $15/hour, how much did it cost after factoring in the time spent stranded, waiting at the mechanic, and DIY-ing?
  • All this fine and dandy, but compare that with a lease on a new civic and the civic comes out ahead.

    It will be more fuel efficient reliable and cheaper to run, sure it doesn't have a LEXUS badge, but this thing is beat to crap anyways.

    Point being for someone non mechanically inclined there are other ways to save money on cars than taking a risk on a used luxury car.
  • autoboy16autoboy16 Posts: 992
    While the idea didn't exactly come from Edmunds, I personally am living this daily. I'm coming from a 2005 Vw Jetta TDI that needed some repairs, making payments, etc. I ended up letting that car go to Carmax and taking the money I had attempted saving and the Carmax money (luckily I wasn't upside down) and I went and bought a used 1995 Vw Cabrio for cash.

    It's been a few months now and I have definitely recouped the money. I have more cash to spend on my daily life and so far the most expensive repair on my car was an oil change and the money needed to buy all of the tools and stuff to complete it. I now have a savings with each month without a car payment. While the fuel from going TDI back to Gas/petrol is gone, the car still gets great mileage.

    I personally would recommend this type of project to anyone that wants to break the debt cycle. This project ends for me when I have money saved to buy something new cash and not a moment before.
  • great article and thoughtful summary. I hope it is useful for Edmunds readers. Thank you!
  • Having owned a Mercedes diesel for many years (also other MBs) and have found their TCO to be the lowest of any car I have owned. At 30+ mpg, very low repair expense, and extended maintenance using synthetic lubricants I run about 45 to 55 cents per mile TCO. With 280K miles on the clock I have never been left stranded. Only one or two repairs have take more than one day.
  • fooojfoooj Posts: 1
    Since you sold this car to an employee, why not continue quarterly updates on how the car is functioning, especially in terms of maintenance costs? Sounds like year 2 should be a pretty cheap year to operate and it would make for interesting reading.
  • laciealaciea Posts: 2
    8 months ago, I sold my beloved, fully loaded 2010 Pilot because my husband and I decided we want to live debt free. We're not credit card people but as a family of four on his USMC paycheck, our student loans and car payment weren't going away very quickly. As a mother of 2 young girls with a husband who's gone a LOT I did not want to be dealing with a ton of maintenance issues, but at the same time we were committed to changing our financial lives. We ended up buying a 1997 Saturn station wagon, and it was a great decision. After dropping all of $1700 on the car, putting new tires and brakes and a new radiator in it we have invested $2500 total. I have not been stranded once (but I watch this sucker like crazy) and we will be debt free in less than 12 months from when we started. Talk about freedom. If anyone is considering this, we really recommend it - it was a great decision for us. Of course I miss the Pilot, but when I get to drive a car with automatic windows and a little more under the hood I will appreciate it that much more because I own it, not the bank.
  • laciealaciea Posts: 2
    I would also like to add that the Saturn still gets 33 mpg and costs only $25/month to insure. Doesn't get more economical than that!
  • zsuzsizsuzsi Posts: 1
    I just found this story ... loved it! My husband & I have been driving used cars for 25 years now, and have used many of the tips listed here, but figured them out on our own before internet! The only thing we do differently is we rent cars for cross-country trips, use our CC from our insurance company so we don't have to buy extra coverage; plus, we get our "new car fix" for 7-14 days, then go home and count all the money we have saved over the years :-)
  • lucasylucasy Posts: 1
    Or buy an old used Honda for $2500 and do nothing but oil changes and new tires for 5 years until it starts to run rough, then get a new one and sell the old one 'as-is' on craigslist. That's my method and my cost of ownership is less than 1/10th of the Edmunds approach.
  • I realize I'm late to the party, but I just came across this. Spending $252 in maintenance repairs every month is crazy and makes no sense. It certainly shows that sometimes buying-and-keeping-forever isn't the smartest thing to do. I know there are people that probably haven't spend $252 in maintenance TOTAL on their older cars for years. Heck, I'm leasing a mid-level 16 Civic for $265 per month (nothing down) and that's with BRUTAL Georgia taxes plus other fees that could've maybe been avoided. This vehicle was clearly a fail.

    I think (as others have mentioned) that if you're going to do the whole old-car thing, the key is to avoid putting any major money into it. There's risk of being stranded and car not starting and scary noises and such, but you just have to keep it until the first major problem and then junk it and start again. If you can buy at auction, you can probably have really cheap monthly expenses.
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