Can you afford a car?

There’s definitely a plus side to owning a car: the freedom to go anywhere, to take friends along, to come and go as you please.

But that freedom comes at a high cost. The average new domestic car cost $18,725 in 1999, while the average new import cost $30,350.

Even a decent used car will set you back at least several thousand bucks. Other expenses include oil changes, tune-ups, insurance, parking, gas and repairs. The expenses are not only measured in dollars. It takes time to shop for a car, compare insurance prices and take it in to be fixed. A car can gobble up your time and money, and you may not have much to spare of either one.

Another danger with a car is that you quickly become dependent on it. If your car conks out before it’s paid off, you have a lifestyle that requires a car and car payments—but no car. Then you’re looking at a second set of car payments while you’re still paying for that first car that no longer runs.

If you really have to have a car, my best advice is to save up and pay cash for one. It may not be a hot new model. Hey, my first car was a 10-year-old carrot-colored Celica. But if it’s at a price you can afford, and if a trusted mechanic says it still has a few good years left on it, it’s just the right fit for you. Remember, you want to control the car. You don’t want the car to control you. If you get in over your head with an expensive car and car payments, you’ll find yourself arranging your life around making those car payments. The bottom line is that a car is just a way to get from one place to another.

Shopping for a car
Getting a good deal on a great car is a lot of work. I’ll just cover the basics here. Make sure you have someone with car-buying experience help you out. This is one area where mistakes or poor judgment will cost you lots of your hard-earned cash.

Figure out your budget. Read through some car sales magazines and classified ads to see which cars fit your budget.

Do some research. Look up reviews of particular models on Web sites like www.automobilereviews.com, www.auto-reviews.com and www.edmunds.com. Come up with three cars that would meet your needs and your budget, and begin shopping.

Decide whether you’d rather shop at a dealership or buy from an individual. Individuals offer lower prices, but you can’t protect yourself from lemons, and you have to handle all the paperwork.

Before you look at cars, find out the Blue Book value of the models in which you’re interested. Aim to buy the car for a price somewhere between the trade-in value and the retail value. By researching online, you’ll find out the car’s value specifically in your area of the country. You can also get information about car values from the library and from most banks.

Go look at some cars. Test drive at least 10 cars if you’ve never bought one before. Don’t make an offer or talk price unless you have already done price research for that particular model and year!

Get it checked. Before you purchase the car, have your own mechanic (not one employed by the dealership or a friend of the seller!) check over the car thoroughly. You should be able to get this done for about $30 to $100, depending on how thorough the inspection. This inspection can end up saving you lots of money.

Paying for a car
There are two ways to afford a car. One is to save up the money and pay cash. This way, you won’t have to deal with getting approved for financing or making monthly payments. Do you have the money saved? Can you get by without a car while you save money for a year or more?

The second way to buy a car is to make a down payment and finance the rest. That means that if you have $1,500 saved and you choose a $4,000 car, you will put $1,500 down and finance the remaining $2,500. Your payments will depend on what the interest rate on your financing is. (A rule of thumb is that your monthly payments should not exceed 15 percent of your income.)

To figure various payment plans, simply check with your bank or car financing company, or use any of a number of online calculators. (Edmunds.com has a nice one.) Interest rates vary depending on your bank or finance company, your down payment, your credit history and the economy. The lower the interest rate, the less you’ll end up paying for your car.

Don’t buy a car and then try to make your budget work around it. Get your budget straight and then decide how much, if any, car you can afford.

Laura Purdie Salas is a writer living in Minnesota. She has driven plenty of reliable, ugly cars.

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