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I will be 18 in 2 weeks and I need a new car before I start college (in about 6 months). I make around $1200 a month right now and I have $1050 saved. After I start college I will have to get a new job because I’m moving out of state. Can I afford to do payments at a buy here pay here car lot (~$10,000 + full coverage insurance) or should I save up to buy one that is about $7,000.

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    Unfortunately there is ABSOLUTELY NO CHANCE you can afford a car. I am sorry to say it. Truly set this idea aside.
    – Fattie
    Jan 22, 2021 at 18:12
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    I don't see a need for you to spend $7 - $10K on a car. As Fattie notes in his answer, shoot for $3 - $4K. We also have no idea what your other expenses are. You make $1,200/mo now, but how much are you spending on other stuff? How much are you going to have to spend once you get to college? If you won't have a job when you get there, you can't assume $1,200/mo of income anymore. We really need more data.
    – BobbyScon
    Jan 22, 2021 at 18:33
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    An acquaintance in the US who's worth would be high 8 figures recently bought a car. i don't have the actual link but exactly like this cars.com/vehicledetail/detail/832103328/overview So it is a literally as-if-from-the-factory Lincoln Town Car (which is simply the most comfortable, smoothest and best large luxury car ever made), perhaps 40,000 miles, it was $8,000 plus appox $2,000 for one of thse "CarMax style" "new car warranties on a used car" (utterly everything covered to 100,000 miles),. So $10k total for a literally-as-new copy of the arguably best vehicle in existence,
    – Fattie
    Jan 22, 2021 at 19:12
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    Hi Samra, please don't finance ANY car from a "buy here, pay here" lot. If you wish to buy from them, fine. Just don't owe them any money, it is very expensive and can go bad in so many ways.
    – spuck
    Jan 22, 2021 at 19:45
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    Are you sure you need a car? I lived on-campus for years without a car. Are you living with your parents? If not, can you rent closer to the college and walk or use public transportation?
    – Mattman944
    Jan 22, 2021 at 22:06

2 Answers 2

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(You absolutely cannot get a car currently - just totally forget that idea.)

Your plan would be:

  1. Achieve $12,000 in solid savings

  2. Achieve separately, $1,000 saved in a distinct account for emergencies.

  3. If you own a car (a starter car), you need to set $50 a week aside automatically as a "sinking fund" to pay for everything (tires, inevitable repairs, etc). You need a separate account for this. It must be paid $50 a week automatically. (Obviously old people with more expensive cars and many cars, set aside much more than that per week automatically in such a sinking fund.) You must setup the $50/week automatic transfer at your bank and...

  4. You must let the sinking fund run for 10 weeks, for two critical reasons. (A) load it up and (B) prepare for the cost of the sinking fund every week, get used to it.

Once you have achieved 1, 2, 3 and 4, purchase a fine car. For $3500 you can easily buy a car that runs as if new from the factory and has all comforts.

(I recently had to buy a "spare car" and we found an absolutely incredible one for $5,000. For a starter car, $3,500 is in the "magnificent" realm, it would be like me buying a Veyron.)

You MUST achieve 1, 2, 3 and 4 before purchase.

NOTE: obviously, once you have done 1, 2, 3, 4, only buy a car if you truly and profoundly need one. If there's a way to do without, do without.

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Remember auto insurance, fuel and maintenance, plus whatever you spend on food and enjoyment: go for a $5-6000 car, and bank the rest for unforeseen events and the time it takes to get a job.

  • Money in the bank gives you options -- freedom to choose -- you don't have when there's no money in the bank.
  • Make a budget. It's grammar school math, and a simple equation: what goes out must equal what goes in.

In this case, "what goes out" includes saving for deferred spending:

  1. the oil's going to need changing,
  2. the tires will need replacing,
  3. the state makes you re-register the car,
  4. it's a used car, so things might break,
  5. if you're in an accident, you'll need money for a different car.

As a parent and Old Geezer: IMO, embrace the notion of "poor college student". When you graduate, you'll have more money and less debt when you graduate.

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  • Please highlight/boldface insurance. I do not have an 18-year-old in my household so I have no firsthand experience, but a little Googling gives me ballpark $400-600 per month to insure an 18yo driver in the U.S. in 2020.
    – shoover
    Jan 23, 2021 at 0:27
  • @shoover that was the cost for my two kids. Definitely nothing to sneeze at.
    – RonJohn
    Jan 23, 2021 at 0:30
  • Indeed, R.John has hit the nail on the head: INSURANCE. Why oh why does everyone forget this when it is often the biggest cost ?!?!?!!
    – Fattie
    Jan 23, 2021 at 3:40
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    An example about the value of cash: I was looking for a laptop for a young relative. One was offered for £479 cash, or £21.20 monthly for 36 months. Now multiply £21.20 x 36. (I was actually a bit shocked).
    – gnasher729
    Jan 24, 2021 at 13:45
  • @gnasher729 that works out to be 16.8% APR.
    – RonJohn
    Jan 24, 2021 at 20:59

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