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Q: I am 26 years old and recovering from a recent job loss. I currently work full-time as a substitute teacher during the day and part-time at night at a local department store to make ends meet. I find myself in desperate need of reliable transportation. [Should I] purchase a new car or a modest one such as a Honda Accord? Should I save up at least half of the [purchase price first], or jump into car debt with both feet?
–F. Key , Columbus, Georgia
A: Since you seem to be just getting back on your feet, I wouldn’t suggest jumping into debt with both of them. The good news is you don’t need a new car (see “A New Attitude Toward Used,” Shopsmart, November 2001). Today, cars are so technologically sound that buying a second-hand car with a good warranty may actually be a better investment. But, as with any purchase, you have to do your homework. Visit these Websites: www.goodasnew.com gives step-by-step information on what you should know about purchasing a used car; www.warrantyby net.com provides information on extended warranties; www.edmunds.com is where you can find the true market value of any car that you’re interested in.
Don’t forget to factor the cost of insurance into your budget. Shop around for those rates, as well. The Insurance Information institute www.iii.org) is a good site for information on how to select and save money on insurance. Because of popularity and demand, Honda Accords and Toyota Camrys tend to be higher priced in a second-hand market. But if a Honda is what you want, make sure you do enough investigating to ensure getting the best deal.