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  • We’ll be buying that new car soon (and financing it)

    So much for my goal of paying cash for a new car later this year. However, we think we’ve made a good decision to go ahead and buy a new car now (or in the next month or so). The biggest factor is that our 1997 Honda Accord needs some work if we’re going to drive it for the rest of the year. So rather than spend $1,000 on a car that we’re only keeping for a few more months, we’ve decided that it makes sense to just trade it in and buy a new car now.

    As I’ve mentioned before, we’ve had a hard time deciding what car to buy. Nothing has strongly appealed to us, though we eliminated SUVs and minivans from consideration due to their higher fuel consumption. We’re happy with our 2003 Nissan Altima, so we’re going to test drive a 2008 model and if we like it, we’ll end up with a second Altima in our garage. Fortunately, the 2008 model looks a little different from the 2003, so it’s not like we’re buying the exact same car. Marc took a look at the hybrid version of the Altima but discovered that it has half the trunk space, which would be a problem for us.

    I’ve been studying the tips in the car-buying series at Gather Little by Little, and at his recommendation, went to I priced out a V-6 model with no bells and whistles – it comes to $23,211, which includes a $1,000 cash back rebate with dealer financing at 3.9%. I plan to finance $19,000, which will give us a monthly payment of about $350 for 5 years. Then I’ll put the money that we had saved up for the car purchase and make a large payment toward the principal on my remaining student loan (the interest on that loan is higher than 3.9%). We’ll still have both loans paid off within two years, at which point we’ll be debt-free except for our mortgage.

    As a side note, I asked my husband about getting a 2007 Altima, since it would come with 1.9% dealer financing. But he pointed out that the car would have been sitting around for at least a year, and quite possibly baking in the sun (the first dealership we plan to go to has at least two storage lots where the cars are parked outside, and the Southern California summer sun is intense). Plus the difference in total interest paid would be negligible, particularly in light of the fact that the loan will be paid off within two years. So we’ll go with the 2008 model.

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    Deciding which car to buy: sedan, minivan or wagon?

    As I’ve mentioned before, Marc and I will be buying a new car in the next year or two. But we can’t decide what that car should be.

    Size and space are major – perhaps controlling – issues. We currently have two sedans that fit into our two-car garage without leaving much room around the sides, in front or in back. So we can’t buy a new vehicle that’s significantly bigger than the one we’re replacing (4-door Honda Accord). At the same time, we’d love to have more interior and trunk space. With two car seats in the back seat, there’s no room for someone to squeeze between them. It would be really nice to be able to go somewhere with our parents and not need a second car. Is it possible to find a seven or eight-seater that still fits in our garage?

    Another consideration is fuel economy, particularly with the rising cost of gas. When I met my husband nearly 10 years ago, $1.50 per gallon was high. Earlier this year, we were paying almost $4.00 per gallon. Considering we live in Southern California, we actually don’t drive that much. But I can imagine a few road trips in our near future, even if it’s just down to San Diego, and I definitely don’t want to pay $100 for gas each way.

    Reliability is a huge issue for us since neither of us is knowledgeable about cars. Because of this, we gravitate toward Japanese cars with high resale values. But it really limits our choices when it comes to wagons, since most stylish wagons are made by non-Japanese companies or smaller Japanese companies who aren’t known for their resale value (like Subaru, which makes the Forester). If we eliminate wagons from consideration, we’re left with just sedans and minivans.

    Now, everyone I know who owns a minivan loves it. But we’re pretty hesitant. There’s the fitting-into-the-garage issue I mentioned earlier. And there’s also looks – which, I freely admit, are important to us. We want our car to be stylish, and minivans don’t really fit that description. Although this may be one of those times when we sacrifice looks for practicality.

    But then there’s cost. And it’s easy to find quality sedans that cost less than, say, the Toyota Sienna, which my friends have raved about. Our budget for the purchase is about $25,000 (I say “about” because we’d be willing to pay another thousand or so for a car that has all of the features we want). However, before we make a final decision, I’ll be contacting our insurance agent and pricing out the increase in our policy based on the cars we’re considering, and also checking out the True Cost to Own calculator at to estimate the costs of maintenance and repair.

    Finally, our new car must have two features: air conditioning and a V-6 engine. These features make driving around LA a much more pleasant experience than it would be otherwise.

    It’s worth noting that we aren’t interested in any fancy packages. A built-in DVD player isn’t even high on the list (we have our iPod and a portable DVD player as well should we ever feel we need it). This certainly saved us a lot of money when we bought our Nissan Altima – hopefully it will also save us money this time.

    Right now, I honestly have no idea what we’ll end up getting. I think we are kind of hoping that between now and buying time, we will come across a car that meets all of our wants and needs and, most importantly, our budget. I’ll write soon about how we’re planning to pay for the car.

    In the meantime, do you have any suggestions on what car to buy?