The nice folks at Marketplace–the financial news organization helmed by the alluringly baritoned Kai Ryssdal–reached out to us a few weeks ago to ask if we could offer any car buying advice for a new podcast they were launching, called “Financially Inclined”, that’s targeted at teenagers wanting to improve their financial literacy. Between Chainsaw Torchinksy and Rustbucket Tracy, it was decided that I should maybe take one for the team and do it. I dunno, I think my advice was pretty good.
Buying a first car is exciting, but it’s also nerve-wracking. For most young people, it’s the biggest chunk of money they’re going to spend on anything other than college. When you buy a laptop or a phone, it’s almost always going to be new and come with a warranty/some protection if something goes wrong. Plus, electronics generally are sold with a set price. With cars, you’re almost always going to buy used first, which means there’s risk involved. And cars, whether new or used, come with a high level of price variability.
This episode is focused on answering the fairly basic question: What should a young person (or really, anyone) know before buying a first car?
The show is hosted by Yanely Espinal, who is a financial educator and a native New Yorker, ergo someone who didn’t need a car growing up and is, herself, only just now moving into the world of car ownership. We chatted for almost an hour and, though they cut down the 45-minute diatribe about Merkur-ownership, they created a nice, bite-sized episode.
First of all, you can watch the video podcast on YouTube below:
If you prefer to listen to it, you can download it most places and I’ll embed it here:
The production team created some nice graphics based on what I said, including this one:
Basically, the grid asks:
- What do I need a car to do (i.e., deliver pizzas, get me safely home, double as a race car)?
- What do I want in a car (i.e. luxury, speed, efficiency)?
- Can I afford new?
- Is a used car more in my budget?
These are the first questions I always ask whenever people ask me what kind of car they should buy. Carbuying is an emotional decision as much as it is a practical one, otherwise would-be consumers would end up in the minivans I constantly tell them to buy, instead of the three-row SUVs and crossovers they usually end up getting.
I wasn’t aware that they’d open the episode with high school students explaining what they’d want to buy, but here’s my favorite answer:
A Lamborghini Urus, of course, is an absolutely terrible first car for a teenager because it’s too fast and too nice. However, I love Marquay’s energy and get where he’s coming from as I’d have probably said Ford Escort Cosworth RS or something equally inappropriate if I’d been asked as a teen.
Let’s use my grid here, hypothetically, to help Marquay:
- What do I need: A safe car to get to school.
- What do I want: A supercarfast, stylish exotic SUV.
- Can I afford new? Let’s assume $235k is out of the average high schooler’s car budget.
- Is a used car better? Yeah, not just from a budget perspective, but also from a common sense one.
Congrats, Marquay, you’re getting a used Infiniti FX35! It’s plenty fast enough for you, it’s under $10,000, and it looks sportyish. I don’t love the chrome accents on this one, but you can always paint those if you don’t like them.
It’s a short episode, but the other piece I touch on is how to set a price for a car. Basically, a car is worth whatever someone will sell it to you for, so in addition to knowing what you can spend, it’s also helpful to understand what the market is like.
My price-setting advice is:
- Whether new, or used, look at dealerships and certified pre-owned cars to get the higher end of the market.
- Go to Facebook Marketplace or Craigslist to get a comparable low-end price.
- Go to KBB.com to get an average price for the specific car, with the specific features, that you’re looking to buy.
- Negotiate. Negotiate. Negotiate. Assume every car you see is priced 10% higher than what they’ll sell it for.
That’s my advice! You’re all experienced car buys, let me know what you’d add below.
“Between Chainsaw Torchinsky and Rustbucket Tracy…”
I’m not into anime, but I would watch the hell out of Chainsaw Mensch.
What do I need: A Porsche that can tow my Porsche. YES, THIS IS A NEED.
What do I want: A Porsche Cayenne with a tow package.
Can I afford new?: No, but I could if you gave me money. That purple interior is swank as heck. Please give me money.
Is a used car better?: I mean, the new one no longer lists Mahogany Metallic (my favorite color!) on the configurator, and I really do like the button-heavy second-gen interior. Maybe?
Someone who is good at the economy please help me budget this. My Porschelump is dying.
BROOOOOOO ONE OF THE TEENS ANSWERED PORSCHE CAYENNE AS THEIR DREAM CAR! THE KIDS ARE ALL RIGHT! THE KIDS ARE ALL RIGHT!!!
Second half of that opening paragraph really did it for me. Love the nicknames. Torch is never going to live that chainsaw thing down.
Being a person that despises body work in any form, and is not afraid of any mechanical failure my car can throw at me, it’s rust. I just want a car with no rust. First car, or any car, no rust. With that said, my Caddy is a rust bucket, but it’s all hidden underneath.
I’m assuming you either don’t live in a rust state or you’re very, very masochistic.
I don’t know how rust states manage, man. I just like, would not use any good cars in those months. I may hoon the snot out of mine, but like, don’t put that evil rust on them.
buy new or one that was regularly oiled with N.H oil or some similar frame spray.
Anyone’s 1st car should be dirt cheap like the $100 car I had so they can learn when the accelerator cable breaks to hook a string from the throttle into the window and drive it like that on backroads all the way home…also the #1 thing they need to learn is how to change a tire (I was thinking about it the other day & it’s basically such a simple thing to do that there’s no excuse not to know how)
“My parents hit me and I turned out okay…”
Yeeeeeeah, mine took the opposite approach and insisted on a brand-new car with a warranty so I wouldn’t get stranded. I also turned out okay. It is possible to still teach the basics of how to handle car mishaps on a safer, newer car.
I’m glad I went through both challenges on multiple occasions, but I wouldn’t force ’em on everyone. (Well, carrying an inflated spare, at least, is a good idea.)
In Maine/ New Hampshire, you would be hard pressed to find an inspectable car for less than 3-5k. Most of those are on the verge of becoming un-inspectable, anyway. Cash for Clunkers also did a number on the supply of those cars. Yearly inspections are mandatory and thorough in both states. Mechanically inclined you can do the 3-5k ones and nurse them for a year or 2. If nobody in your circle works on cars, youre probably looking at 8-10k for something you can get 4 years or more out of.
1) If you finance, do it through your credit union.
2) Get a used car inspected by an independent mechanic. If the seller refuses, then walk away. If the car needs lots of repairs, you just saved yourself a pile of grief.
3) Like others say, learn how to do basic maintenance and fixes yourself. Why pay sixty bucks (or more) for a twenty five dollar oil change?
3)a Learn where to buy good quality parts for the best price.
This is helpful, since I’m in the market for a new car, but doesn’t address my biggest hangup: the dealer experience.
I dislike haggling and salesmanship; I’ve done my research, liked the car on the test drive, and have my loan and insurance estimates ready to go. If it’s outside of my estimates due to dealer add-ons and protection packages I’m going to walk. It’s not worth putting myself in a worse financial position for stuff I didn’t want in the first place, and leaves a sour taste in my mouth.
I just want an orange 2023 Civic Si, for God’s sake. Work with me here.
Yeah, I took my 18 year old son with me when I bought a car last week so he could see the process. The car price was negotiated already and I had the total and monthly payments all worked out and they stuck with it, but they always take you to the person trying to sell you all the add on protections. In this case, they were trying to add $349 a month in extras (warranty, maintenance, tire and wheel protection, key fob replacement, windshield insurance, etc) to my payments for 60 months. I’m sitting there doing math in my head saying, that’s $21,000 (about half the price of the car)! Anyway, he’s giving me the hard sell and I was having none of it. He’s saying how expensive the windshield is, and I’m saying, I have car insurance for that. He’s saying, “the wheel and tire package is only $50 a month, these rims are $950 each and the tires are $350.”. I do the math in my head and say, “, I can buy 2 rims and 3 tires then and still come out under the $3000 you are charging me”.
So thats my advice… Do the math! Dealers always want to talk in monthly payments. You should always talk in total cost. Watch lots of car negotiation videos and learn the tricks. They do this all day long and you do this once every couple years, so they are always going to win a little, but don’t let them take you. And if they refuse to give you the total costs, run away. I’ve had to do that before.
Completely agree…nobody wants the TruCoat!
Get much more car than you need (or even want) for the lowest monthly payment over the longest possible term and don’t skimp on the extra cupholder protection package.
Gotta learn somehow and anyway, it will probably make you feel better about your student debt.
I feel like there should be a default list of common maintenance parts (or services, I suppose) anyone should price out before considering a specific car. Like, what’s a set of tires run? Are frequent maintenance items only accessible with contorting your hands like a Cirque du Solei performer? It’d be a little sobering to get the reminder that just because the car is cheap doesn’t mean the parts are.
“t just because the car is cheap doesn’t mean the parts are.”
+1 Yup. That makes me think of my dream car.. A Tesla Model S. You can now buy them used for around CAD$35,000. But stuff like tires, suspension stuff and brakes all cost about double of what they cost on my Fit. Now having said that, there is a lot stuff that my Fit needs (like gas, regular oil changes, changing spark plugs, O2 sensors, mufflers, etc) that a Tesla would never need… so I suspect it would be a wash over time… even if I have to do an expensive battery replacement.
So… I have a slightly different take given current environment. While all excellent points, I’d suggest at least considering a new, relatively basic car right now, even as a first, provided the recipient is a decent driver, conscientious and resourceful enough to be able to take care of it. Hear me out – given the pricing of used cars and the fact that you never know what you’re going to get, even with an inspection, the long term value is almost the same. That plus the peace of mind knowing no one else has beat on it and a great warranty (if buying right) can make the difference. Finally, it can be a source of pride having something nice, give extra incentive to keep it nice. All this with a grain of salt if you can swing the financial side of things AND they’ve already been driving enough to have the first few oops out of the way.
Can say from first hand experience working with my niece at the moment, I simply don’t have the time to go see so many ‘possibilities’ and then negotiate with private parties. I’ve owned and driven many sub $500 cars in my life, but seems nothing that even runs with less than 200K miles is under $4k. Figure it lasts a year or two before major work, or nickel and dimes you to death, you’ll spent at least $20k for ten years and end up with crap, vs spend that up front and have a nice experience and something with remaining value.
It’s different for every situation – being a lifelong motorhead driving mostly 20th century iron, I’ll never buy a new car again for me, but always for the Mrs. – not only her peace of mind, but also mine
I think even without the current used car market, a basic reliable new car could be a solid value. That is, if you commit to a couple things:
1) Keep it long-term. 10+ years. 200,000+ miles.
2) Keep it well maintained. Including regular car washes if in a salty northern state.
I remember late 90’s being in high school and seeing a Toyota Corolla for sale for basically $10,000. In the space that car would have lasted, I think I owned 4 cars INCLUDING THAT SAME GEN OF COROLLA!!! I could have just stretched to buy a basic Corolla in hs and driven it through most of my 20’s and been just fine. I owned a couple “fun” cars in that period. But really, they weren’t actually that fun and no one was impressed by them–base level gen 1 Ford Probe and base gen 2 Integra. Functionally, they were economy cars just like the Corolla and they didn’t even have a stick.
Y’all need to remember that “stretching” is absolutely not an option, not even close, not in this universe, for a lot of people, through no fault of their own. Not due to “bad financial decisions” or other factors judgmental middle-class folks like to ascribe to broke people. Minimum wage with no benefits doesn’t cover basics these days, never mind leave room to stretch. A lot of people get locked into a cycle of poverty where the only car they can afford is a shitbox that will keep them in the poor house from repairs, because they literally can’t save money for a less shitty shitbox, and they pay for repairs out of their food budget.
I will add that a lot of people overextend when they get a new car. Seven year loan that may leave you upside down for much of the loan and paying huge amounts of interest. But it is all about your situation. My mom was a teacher,divorced, didn’t make much money and, after looking at a lot of used cars with issues, bought new. She didn’t work on cars herself, and she needed to get to work everyday. This was a long time ago, when cars did not last nearly as long, but anyway, despite being a bit of a stretch probably made sense for her.
You are so far ahead in the used car buying game if you can do your own work or are willing to learn. Everybody’s situation is different. The article does ask good questions about what your purpose and needs are for your vehicle.
A lot of people do overextend, but in the worst possible way. As in used-Kia budget, stretches it not to buy a slightly newer Corolla but a slightly older Volvo XC90 (could have been a Benz M-class or whatever).
Goes on to skip most or all maintenance, abandons the car at the mechanic after the mechanic quotes them $6K minimum and $3K up front to get started. I saw this happen at my shop; it took him weeks for them to come pick up the car.
> I’ll never buy a new car again for me, but always for the Mrs. – not only her peace of mind, but also mine
For someone as money-savvy and value-conscious as you seem to be, buying new instead of CPO makes little sense. I get no peace of mind from overpaying by 10-15%.
FWIW, with the used car market being what it is and the dearth of affordable cars, a lightly used cheap car should retain value pretty well. The cheapest, ’07 Toyota Yaris I can find is $6K with an accident and 150K miles… even a 3-year-old rebadged Mazda one (Yaris iA) goes for $20K.
I came up with a few tips for used car buying via the school of hard knocks:
1) Making payments and repairs simultaneously absolutely blows.
2) Sometimes an extra 500 gets you an extra thousand worth of car. See rule 1.
3) look for the highest rated reliability with the worst resale. See rule 1.
4) check emotion at the door. If you test drive a car without emotion it will likely be honest with you. See rule 1
I had this conversation some years ago with a young guy. He had enough money for a nice Grandpa Sedan – low miles, well cared for – or a clapped out Boy Racer.
Of course he bought the – I forget what – used up street star and in less than a month it was toast.
Sorry but Marquay and a Lambo SUV probably equals an unpleasant outcome in a very short amount of time. But no shade thrown or intended. Just saying.
The Chainsaw Torch shout out was superb and will become the stuff of legend one day…
My advice? Learn to wrench. New or used, modern or classic, you’re better off knowing how to do at least basic maintenance and small repairs yourself, even if you choose not to later on. So for a first car, simpler is better, so you can learn.
Yes. There’s a YouTube video for nearly everything now. Watch a couple to get all the tips, because sometimes they are wrong. A service manual is great to.
Buy a pre 70s car!
This is only good advice in California.
I spent decades with cheap used cars where paying for an inspection would have had a significant impact on the total price. Now that prices have gone insane, a mechanical inspection is a better investment.
Most of these are applicable to anyone buying a car, and not specifically your first but:
-Always always always be willing to walk away. Even if you’re desperate, never let the other party on to that.
-Related to the above, take a sober-minded person with you. Someone who will tell you the unvarnished truth. Don’t shop alone. Bonus points if this person has some mechanical experience (if you’re looking at something used).
-Be on the lookout for “unloved” models that may be just as good as more popular ones, but priced more reasonably. Learning to drive manual transmission, besides being rewarding in itself, can help you find some of these diamonds in the rough.
-Don’t be afraid to sleep on a decision. It’s an important one! No one who says anything like “This deal is only valid right now” is worth doing business with.
-For a used car, individual condition generally outweighs manufacturer reputation. A clean Land Rover with a stack of receipts may be a safer bet than a sketchy Toyota.
-Protect yourself. Bringing a stack of cash to meet someone from FB Marketplace carries some risk. Meet somewhere public.
These are good points. For the last one, most Police stations will gladly let you use their parking lot for such transactions. Saying you want to meet at the Cop Shop weeds out the crazies pretty quick.
Mostly good advice, but I’m not sure buying a Land Rover is ever a good choice as a first car. That stack of receipts is there because it spent so much time in the shop. 😉
Bringing a sober minded person, at least for me, is a must. I’m pretty good at finding the good in a car when car shopping, while filtering out a lot of the bad. Bringing along someone with you that’s willing to stare you in the eyes and say “dude, what the hell is wrong with you, all the rubber on this car is cracked and peeling and the interior smells like your moldy basement” can save a lot of future frustration.
Instead of ‘sober-minded person’, my bil & I dragged the other along as Devil’s Advocate. He’d talk to the owner, while I’d go & nitpick the car to death. That way, the guy being a dick about the car wasn’t the one handing over the cash. Mostly worked well
> Don’t be afraid to sleep on a decision. It’s an important one! No one who says anything like “This deal is only valid right now” is worth doing business with.
Corollary: anyone who says they have someone interested coming to test drive the car later today so you should decide now is lying.
Ooh. Is this going to become a new regular piece for this site? I like these types!
Agree!