First time buyer. Need advice please.

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First time buyer. Need advice please.

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First time buyer. Need advice please. - 12/2/2006 3:14:44 PM

stoavio

Posts: 11
Joined: 12/2/2006
Status: offline

Hello everyone. As the title of the thread says, I’m a first time buyer and I’m looking for some advice.

I’m just now beginning to look around at new vehicles and the Mazda3 has really caught my attention, both because of its very stylish body and affordable price. I’m currently 19 years old, working part-time at Best Buy, and going to school full time. I also run a business that produces a residual income of around $300.00 per month. I tell you this just to help better convey my financial situation.

Currently I drive a 1992 Chevy Cavalier, which I loathe. It was my first car and I felt it was a good choice for a new and inexperienced driver but now I’m ready to upgrade!

So my questions to you are these:

• How much should I expect to pay? I need to keep the total cost of the car (including warrantee) below $15,000.00 and would like a monthly payment of $250.00 or less.

• Like I mentioned, I’m young and I’m a first time buyer. My credit history is limited and I don’t have the money to pay for the car in full. How much should I put down on it? I was thinking $4,000.00. I heard a good rule of thumb is to avoid buying a car you can’t put at least 20% down on. 20% of roughly 15k would be 3k.

• What kind of APR should I expect to get considering my scant credit history? I’ve been a Visa and department store cardholder for about a year and half. I use both cards responsibly and keep a $0.00 balance on both of them. This leads me to my next question.

• My parents may be willing to co-sign on a loan but I’m still undecided on whether I should lease or buy. I’m leaning very strongly towards leasing for several reasons. Can my parents co-sign on a lease as well? How does that work? How much of an impact will that have on my APR? They have an outstanding credit score, by the way.

I don’t necessarily have to own a 2007 model. I need to emphasize that the total cost of the car needs to be below 15k. If I can’t own a 2007 model for under 15k (or around $250.00 a month), then I’ll need to compromise for a 2006 model or older.

I really want this to be a smart and informed purchase. I need a monthly car payment that I can manage while still socking away money for other expenditures. A monthly payment of around $250.00 won’t break the bank.

I’d like to hear from both experienced car buyers and young single time buyers alike. What advice can you offer me? What should I know before walking into the dealership? If you’re young, like me, and you’ve only made either 1 car purchase or lease, can you tell me a little bit about your experience?

That’s all for now. Sorry for the lengthy post. I want to be as educated as possible on the matter.

If you’ve made it this far, thanks for reading. I look forward to reading your response.

-Mason

< Message edited by stoavio -- 12/2/2006 3:17:53 PM >

Post #: 1

RE: First time buyer. Need advice please. - 12/2/2006 3:55:40 PM

sstlaure

Posts: 2339
Joined: 11/28/2005
Status: online

Buy yourself a used 05 model. They can be had for ~12,000 or so with decent mileage. Try searching Traderonline.com

Unless you plan on keeping the mileage really low, a lease may not work out for you. I know that leasing doesn't work for me as I drive 24,000 miles/year.

(in reply to stoavio)

Post #: 2

RE: First time buyer. Need advice please. - 12/2/2006 4:23:41 PM

stoavio

Posts: 11
Joined: 12/2/2006
Status: offline

quote:

Buy yourself a used 05 model. They can be had for ~12,000 or so with decent mileage. Try searching Traderonline.com

Unless you plan on keeping the mileage really low, a lease may not work out for you. I know that leasing doesn't work for me as I drive 24,000 miles/year.

Based on the last two years of my driving, I'd say I put about 10,000 miles per year on my current vehicle. Naturally, owning a new car will enable me to make longer trips and I'll want to drive it far more often so I think it's safe to add an extra 5,000 miles to the existing 10k I drive per year.

I don't think I'll rule out the leasing option just yet. Thanks for your input! I'll check out traderonline.com as well.

< Message edited by stoavio -- 12/2/2006 4:27:28 PM >

(in reply to sstlaure)

Post #: 3

RE: First time buyer. Need advice please. - 12/2/2006 5:41:40 PM

luckyboy

Posts: 6
Joined: 11/29/2006
Status: offline

I have to say, leasing has always seemed like a sucker deal to me. It's not your car, and there are a lot of things you can't do with it.

In your situation, it's possible that your income will change drastically in the next few years. What are the general prospects for your business? If you're looking forward to graduating and getting a decent job in a few years, or selling your garage business and becoming an instant millionaire(!) you can always sell your soon-to-be current car for a new one, even if you haven't paid it off yet.

I'm sure CarMax or a dealership would pick up the paper on it if it was in good condition. You probably wouldn't come out even, but not too bad, either. Or, you could go ahead and pay it off in one shot, then go buy your new one, and sell the old one.

My guess is that financing through the dealer will not get you the best rates, which is kind of the position you're in if you lease. Maybe somebody with more buying savvy than me could give some advice on whether it's better to put a lot down or use the cash in hand to pay ahead on the payments as a way to limit how much interest you end paying.

Since you're not a college grad yet, you may get lower insurance by having your parents co-sign; see about that. In any case, good luck!

(in reply to stoavio)

Post #: 4

RE: First time buyer. Need advice please. - 12/2/2006 6:32:16 PM

stoavio

Posts: 11
Joined: 12/2/2006
Status: offline

quote:

I have to say, leasing has always seemed like a sucker deal to me. It's not your car, and there are a lot of things you can't do with it.

Can you support your position on that? Of course there are certain advantages to buying a car, but there are certain drawbacks as well. I think leasing suits some people better than it does others and the same goes for buying. In my case, I think leasing is a good option for me because:

a.) Little or no down payment
b.) Lower monthly payments
c.) No up-front sales tax
d.) Being able to own a new car at the end of each term (I really like the sound of this)

75% of the above deal directly with finances. I'm on a fixed budget with little flexibility, so the idea of lower monthly payments, no upfront sales tax and a nominal down payment are all enticing.

I'm young and I'm trying to establish credit. I don't mind having a monthly car payment nor do I mind that by leasing I don't establish equity in the vehicle. What I'm most concerned with are having a nice and reliable car to drive, manageable monthly payments, and a manufacturer's warrantee. I also really like the idea of being able to upgrade to a new vehicle in 3 years (or pay whatever principle I have left on my car and acquire it.)

I think buying is a great option for those who can afford it and who are looking to escape monthly car payments. Like I said, different people benefit differently from buying and leasing.

quote:

In your situation, it's possible that your income will change drastically in the next few years. What are the general prospects for your business? If you're looking forward to graduating and getting a decent job in a few years, or selling your garage business and becoming an instant millionaire(!) you can always sell your soon-to-be current car for a new one, even if you haven't paid it off yet.

I'm sure CarMax or a dealership would pick up the paper on it if it was in good condition. You probably wouldn't come out even, but not too bad, either. Or, you could go ahead and pay it off in one shot, then go buy your new one, and sell the old one.

I just started college and am still in my freshmen year. I'm going to school locally for the time being but intend on transferring to a university eventually. I don't foresee my income changing drastically anytime soon. I also don't intend to sell my business simply because I'd rather have a recurring residual income than a lump sum.

That's an interesting point: about selling the car without having paid it off entirely. I'll think more on that.

quote:

My guess is that financing through the dealer will not get you the best rates, which is kind of the position you're in if you lease. Maybe somebody with more buying savvy than me could give some advice on whether it's better to put a lot down or use the cash in hand to pay ahead on the payments as a way to limit how much interest you end paying.

Since you're not a college grad yet, you may get lower insurance by having your parents co-sign; see about that. In any case, good luck!

Is it possible to have my parents co-sign on a lease? If so, that should reduce my APR, right? Also, they're deliberating on whether to keep me on their insurance plan or not. I think my dad wants to push me entirely out of the nest and force me to find my own coverage (tough love kinda thing) to help make me more self-sufficient. I hope that's not what happens though!

Thanks for your input,
Mason

< Message edited by stoavio -- 12/2/2006 6:46:28 PM >

(in reply to luckyboy)

Post #: 5

RE: First time buyer. Need advice please. - 12/2/2006 8:00:37 PM

dentinger

Posts: 1518
Joined: 10/14/2006
Status: offline

k, lets see, im 18 and im leasing an '07 mazda 3

-it's completly base, the only thing extra it has is air conditioning

-my dad put down a $3000 downpayment + the $1500 they gave me for my '92 civic

-my lease payment are i believe are $210 a month (this is all CDN dollars by the way)

-i've had my car for about 1.5 months and i've put on 1300km.

-and i can do alot of things to my car, the only exception is that i have to buy them through mazda, so like, wheels, trim pieces, lowering kits, spoilers, fog lights, stuff like that. and i read that they're working on a exhaust package

oh, and for insurance, im under my parents name, and i pay $200/month. so its pretty sweet, i can pay the insurance/lease/gas all with one paycheck

and as for leasing an '06 model, there might not be any left....at least there wasnt when i went to my dealership last month

oh, and the higher the deposit, the lower the monthly payments.....right?

(in reply to stoavio)

Post #: 6

RE: First time buyer. Need advice please. - 12/3/2006 4:32:12 PM

Mazda3Chic

Posts: 11
Joined: 12/3/2006
From: Delaware
Status: offline

Well I just bought a 2007 Mazda3...The asking price was 18 something...I put $2000 down and brung my car down to 16 something...I am 18 and I was a first time buyer myself....I bought the car in Salisbury Maryland @ Mazda...They have a first time buyers program..Where they will finance young kids that are atleast 18 years of age...I bought the car, I didn't lease it out....My payments are $324.18 and my insurance is also $318..I love the car, they are short looking but, they have alot of space...But, leasing is always a good option also..Depending within the 3 or 4 year lease...But, if you decide you want to keep the car after 3 or 4 years you can buy the car out...But, don't forget some car dealerships only want you to much s much miles on the vechile...

(in reply to dentinger)

Post #: 7

RE: First time buyer. Need advice please. - 12/4/2006 1:28:58 PM

stoavio

Posts: 11
Joined: 12/2/2006
Status: offline

Thanks a lot for your responses both dentinger and Mazda3Chic. How are you liking your new cars by the way?

@dentinger: Did you have someone co-sign on your lease (if that's even possible?) or did you take care of everything on your own? $210.00 CAD is about $185.00 USD, which is quite affordable. How much was the car before the $4,500.00 deposit? What about after? There's no APR since you're leasing, right?

@MazdaChic3: You have a monthly car payment of $324.00 on top of an insurance payment of $318.00? That's $642.00 per month! With payments like that, I wouldn't have money for anything else. Are you working full time? Are you under your parent's insurance plan?

After further consideration I'm actually leaning more towards buying now. My parents will likely help me finance the car (and by help I mean co-sign on a loan for me) and I think they're more comfortable knowing that if I default on one of the payments or can on longer make each monthly payment, they can sell the car and cut their losses. If I leased, on the other hand, then there would be an early termination fee if I were unable to continue making the monthly payments (which is extremely unlikely but I suppose unlikely and unforeseeable events should always be taken into consideration.)

< Message edited by stoavio -- 12/4/2006 1:30:15 PM >

(in reply to Mazda3Chic)

Post #: 8

RE: First time buyer. Need advice please. - 12/4/2006 6:57:11 PM

stoavio

Posts: 11
Joined: 12/2/2006
Status: offline

After spending another half a day looking at models, trims, prices, etc, for the Mazda 3, I'm trying to get a feel for what a 2006 Mazda 3i will cost. I'm assuming less than the 07 model? The reason I'm considering the 06 model now is because it's very similar in style but comes in the color I love, which is the Titanium Gray. The 2007 M3i comes in the Galaxy Gray Mica which I also like, but I think I prefer the Titanium Gray.

Will I have a difficult time finding the 06 model in Titanium Gray? I read someplace that the 2006 models are hard to find. Is there any truth to that? Also, none of the 3 dealerships in my area appear to have any on their lots. If I walked in and told them I wanted to buy one, would they be able to order it? Is there any cost associated with ordering?

(in reply to stoavio)

Post #: 9

RE: First time buyer. Need advice please. - 12/4/2006 7:27:50 PM

sstlaure

Posts: 2339
Joined: 11/28/2005
Status: online

I got mine (absolute base model but w/AC) with the company discount for $15K out the door. The car I wanted was in Grand Rapids (~120 miles away) and my dealer was able to trade the GR dealer for the car. It didn't cost me anything to do this.

(in reply to stoavio)

Post #: 10