Money 303: Big Decisions – Cars

Back To Main
Money 302: Big Decisions – Unemployment

Many lifestyles and regions don’t need a car

Cars create expenses, so they don’t always add freedom to a lifestyle

  • Registration fees are for each vehicle, usually based on its value
  • Insurance increases with each car and individual on the policy
  • Autos incur maintenance expenses whether they’re running or not

You may have a more affordable option with public transportation or a bicycle

Even with a family, you usually only need one car

Only get another car for the right reasons

If the vehicle needs significant repairs and fixing is cost-ineffective over buying a newer car

If you need more room for a growing family

If you can’t trust the vehicle to reliably serve its purpose of getting from one place to another

Consider re-purposing an old car as one of your children’s first cars, as a work car or a road trip car

A $1000 repair about every year is usually worth more than replacing it with another car

  • Ask if the repair cost is worth what you’d pay to buy a fixed version of that car

Buy a used make and model

Buy in the range of 5-15 years old

  • Only buy more than 15 years old if you’re prepared to make frequent repairs
  • Anything newer than five years old will significantly drop in value over the next few years
  • Buy at least two years old if you adamantly refuse to develop simple auto repair skills

Purchase a brand with a reputation for reliability

  • Never buy the first-year of a model, since they are more likely to have problems

A dealership is the authority to “certify” certified pre-owned cars, which means nothing and shouldn’t be part of your decision

Never lease a car, since leasing is by far the most expensive way to possess a vehicle

Get a smaller car

  • Larger vehicles burn more gas and are more expensive when they break down
  • Even if you imagine occasionally using a pickup truck or SUV, look at the cost of a smaller vehicle and consider renting when you need one

Walk into an auto purchase with some awareness

Look at the Kelley Blue Book to learn the car’s approximate value

Automotive quality varies wildly by brand and year

High-end brands are excellent, but cost a lot to repair

  • e.g., BMW, Renault, Ferrari

Large brands are highly reputable and affordable to repair

  • e.g., Toyota, Honda, Ford, Subaru

Mid-level companies create reliable cars but have a higher chance of breaking down

  • e.g., General Motors, Nissan

A few companies make cars that break down frequently but are easy to repair

  • e.g., Volkswagen

Value-priced cars are affordable but expensive to maintain from frequently breaking down

  • e.g., Kia, Hyundai, Fiat

Even with a Blue Book value, every used car is different

Used vehicles will have three potential problems

  1. Mechanical problems
  2. Poorly maintained
  3. Was stolen or involved in a major accident

Ask for a Carfax or other vehicle inspection report

Ask for any maintenance records, like oil changes or repairs

Write down any questions you have while you’re examining it

  • Even if the questions are dumb, you can disregard them later

Take someone with you experienced with autos when you inspect it

Bargain to not be taken advantage of

  • Be ready to walk away, and never look desperate
  • Have cash with you to lure the buyer’s desire to sell to you

Inspect it before you buy it

1. Look around the outside and body of the car in broad daylight

Check underneath for oil leaks and white dust (body filler)

Look at the tires for cupping or gouges, which points to a more significant problem

Inspect for body damage

  • Open and close all doors, then check if the door seams are the same
    • Pull back the rubber around the doors and windows to compare whether the paint is the same
  • Slam the hood to see if it’s correctly aligned all the way around
    • Compare the left and right side
  • Pop the trunk to see any rear-end damage
    • Check the factory seams underneath the trunk’s spare tire
  • Observe the paint reflection to spot any dings or fixes

2. Crank up the bottom of the car

Check the CV joints

Check if the engine or transmission has any leaks near it

3. Scan it with an OBD-II reader

You can buy a reader for as little as $40

The OBD-II port is usually somewhere under the steering wheel

Read any engine codes, if there are any

4. Test drive it

  1. Cold start it
    • A cold start is under 90°F without the keys in the ignition for at least 8 hours
  2. Let it idle for 3-5 minutes
    • Test the signal lights and all headlights
    • Test the heater/defroster, rear defroster, and air conditioner
    • Shift the gears several times
    • Test the windshield wipers and radio
    • Check the exhaust for drips or black smoke
    • If the car is running hot after idling, turn it off and walk away unless they are giving it to you
  3. Drive through the city to the highway from 25 to 40 mph
    • Listen for buzzing noises, humming noises, clicking noises
    • Set the inside fan to hot and defrost, then set it to high and try to smell any leaking fluids
    • Hit the brakes quickly without touching the steering wheel and see if the car swerves left or right
    • Test the power steering by turning the wheels while stopped
    • Drive it through an alleyway or near a flat wall to hear its running sounds
    • Swerve back and forth in a parking lot to test the suspension
  4. Accelerate at 1/2 to 3/4 throttle onto the highway, then stay on it for at least 5 miles at 55-60 mph
    • Check to see if the steering wheel shakes or the whole car seems to lean one direction
  5. Drive through the city back to the location, continuing to test the different systems
    • If it overheats during the drive, don’t buy it

5. Reread the codes with the OBD-II reader

If the seller reset the codes, a test drive will allow you to see them

If you like what you see, bring it to a predetermined mechanic to do a final check

A $100 inspection may save you thousands of dollars

6. Negotiate the price down if you can

If possible, have a male present when negotiating to avoid gender bias

If you can, negotiate in the rain

  • People don’t want to stand in the rain and are often less willing to resist haggling

Parts usually have a predictable lifespan

Diagnosing issues is much easier when you know when your parts are likely to break down

Lifespans of car parts can vary between models and the size of the vehicle

Keep track of the date and mileage when parts get replaced

Starting system

Alternator – 80K-100K miles

Battery & battery cables – 3-5 years

Starter – 80K-100K miles


Air filter – 10K-15K miles

Electronic engine control module – 80K-100K miles

Engine belts – 40K-60K miles

Fuel injectors – 100K miles

Mufflers and exhaust pipes – 50K-80K miles

Oil pump – the full life of the car

PCV valve – 30K-40K miles

Spark plugs – 100K miles

Thermostat – 40K-60K miles

Timing belts – 60K-100K miles

Valve lifters – the full life of the car

Fuel system

Fuel filter – 30K-40K miles

Fuel pump – 70K-90K miles

Cooling system

Radiator – 100K miles

Radiator Hoses – 40K-60K miles

Water Pump – 70K-90K miles


Automatic Transmission – the full life of the car

Clutch (on manual transmissions) – 40K-60K miles

Front Axle Shaft – 70K-90K miles

Suspension and structure

Leaf spring (in large vehicles) – 5.5 years

Lower control arms – 70K-90K miles

Shocks (if no struts) – 15K-35K miles

Springs (if no struts) – 70K-90K miles

Struts (if no shocks) – 40K-60K miles

Tie rods – 70K-90K miles

Universal joints – 70K-90K miles

Brakes and power steering

Disc brake calipers – 70K-90K miles

Disc brake pads – 30K-40K miles

Drum brake shoes – 30K-40K miles

Power steering pump – 80K-100K miles

Exhaust System

Catalytic converter – 100K miles

Driving convenience

Air conditioning compressor – 80K-100K miles

Heater cores – 70K-90K miles

Horn – 100K miles (assuming you’re not an idiot)

Power window motors – 60K-90K miles

Windshield washer fluid pump – 70K-90K miles

Windshield wiper motors – 70K-90K miles

Make your parts last longer

Avoid parking where the elements can destroy it

  1. Extreme heat or extreme cold
  2. High-salt environments like salted roads or at docks
  3. Consistently wet conditions

Drive where a full cup of water on the dashboard won’t spill

  • Save gas and engine wear by lightly tapping on the accelerator
  • Increase the lifespan of the air conditioner by rolling the windows down under 40 MPH
    • Roll down a front window and the opposite back window to cut down on wind
    • It’s more economical to drive with the air conditioner on over 40 MPH
  • Every 5 MPH above 60 MPH costs about 3-4% more gas per mile and wears out the engine
  • Take 50-100 more feet to stop than you’d expect to need to increase brake lifespan
  • Save wear on axles and power steering by turn the steering wheel slowly

Make errands back-to-back to keep the car from getting cold in between times

Keep the tires inflated within 5 PSI of the recommended pressure levels

  • Inflated tires save on tire wear and increase the brakes’ effectiveness

Save money in your routine

Refuel gas mindfully

  • Don’t drive until the fuel light comes on
    • Debris and sediment in the fuel tank can get picked up by the fuel pump and damage it
    • Running out of gas can ruin the catalytic converter
  • Go to fuel stations with at least one other station nearby to ensure a competitive price
    • Use GasBuddy to find the best prices in the area
  • Unless the manufacturer specifies otherwise, getting premium gas makes no difference in fuel economy or engine performance
    • Fuel additive is cheaper at an auto parts store than in premium fuel
  • Half-press the trigger to avoid counting air through the meter

Gas stations offer air (for tire inflation) or water (for the radiator) for free, even when they have a coin machine

Wash your car yourself

  • In automatic car washes, the Basic is just as good as the deluxe, and it’s often only changing the color of the soap
  • If you do take it in, check back if it rains within 48 hours of getting one, since most car washes have a rain check policy

Make repairs yourself as much as you can

You can remove many medium-sized dents with a good-quality plunger

Keeping up with preventative maintenance ensures parts last longer

Fix any problems right away

  • Small problems quickly become significant repairs

Keep the battery terminals clean

Change the oil about every 7K-10K miles

Watch for wear on the air filter and spark plugs, since they are extremely easy and affordable to repair

Check the fluids monthly and keep them topped off

  • Brake fluid
  • Coolant
    • Should be 100% antifreeze, diluted antifreeze is a waste of money
    • Keep water in the trunk in case there’s a leak
  • Motor oil and oil filter
    • Older vehicles burn or leak oil faster than newer ones
    • Keep unopened oil in the trunk in case it needs to be topped off
  • Power steering fluid
  • Transmission fluid (about every 100K miles)

Try to buy auto parts with a lifetime warranty

  • Keep the receipts in a safe place

Once you learn how to change them, brakes are easy to change

  • Keep the car secured with chocks or a sizeable rock
  • Use a spackle gun as a brake caliper holder

Only replace the tires when you need to

  • Unless you live in the mountains, you can drive with nearly bald tires
  • Test tire treads with a penny
    • It needs replacement when you can see Lincoln’s head through the groove

Buy the right equipment for when you need it

A jack and jack stands

Latex gloves

Air tools and an air compressor, which can be a few hundred bucks

Scan computer(s), which can be $30-200

  • Learn online how to read the data if you don’t understand it
  • If you can’t afford one, you can often borrow one at an auto parts store

Get a steering wheel holder and pedal depressor to avoid needing a second person to step on the pedals

Get whatever other specialized tools you need for the job

  • A $200 tool is less than a $500 mechanic’s repair

Get a  shop manual for the vehicle that shows how to replace every single part of the car

When something fails, diagnose whether your car is worth fixing

  1. Observe the circumstances and context of the failure and write down notes
  • The weather conditions
  • The angle the vehicle was traveling at
  • How much weight it was carrying
  • The gear it was in and the experience of shifting gears
  1. Check any warning lights and look up any codes in the OBD-II scanner

  2. Search for the codes online to find three specific things

  1. Direct information on the code, similar to what a repair manual would tell you
  2. A step-by-step video where someone walks through the problem and how to fix it
  3. A message board or blog post about the issue
    • Look for consistent information across everything to find out the most accurate answer
  1. Either fix the problem yourself or give it to a technician with a written diagnosis of your problem
  • Your analysis helps them skip the diagnosis stage of their work, saving you money
  • By proving your mechanical capability, you discourage them from taking advantage of you

If you do have to take your car in, pay attention to where you go

Visit on a Monday and not a Friday, since the mechanic will want to finish the work by the weekend

Check for certification in the shop and a state license (in the USA)

Look for a clean garage, since a cluttered floor filled with dirty rags may be a red flag

Pick a small business owner over a large chain store

  • Hourly workers are never as ethical or industrious as someone paid in referrals and consistent customers

Watch what they tell you

Be wary of scare tactics, especially when they claim they wouldn’t drive your car another foot

If they tell you they don’t need fancy equipment like a conventional engine analyzer, go elsewhere

Be careful how you act

When getting a second opinion, don’t give the mechanic what the first diagnosis was

Never sign a blank work authorization form

  • Always have a specific estimate for each job before signing

Many times you will get charged doubled labor for multiple tasks

  • Ask about labor time beforehand

Ask for your old parts back

Request factory equipment to ensure you have legitimate parts

Look out for common markups

You don’t need your fuel injector cleaned

Coolant flushes are usually a gimmick, and you can do it yourself

Power steering flushes are also usually a gimmick

Transmission flushes aren’t recommended by manufacturers and cars almost never need them

Avoid lifetime mufflers

  • You’ll still have to pay for pipe repairs

Dealers are often legally required to give catalytic converters or emissions systems

Metal particles in a transmission pan is completely normal

You can change your air filter by yourself

  • An air filter full of dirt might not have come from your vehicle

Mechanics will commonly cut corners

If the tires are an unusually good deal, you may be getting old treads

  • Ask about the build date

Be mindful of brake jobs

  • Many mechanics will mark up cheap parts
  • A mechanic will often not make any money on an advertised $100 brake job

Personally inspect used tires, since there are no government standards for them

Know when to let go of your vehicle

A used car incrementally increases in its repair costs every year

Getting another car eventually becomes a better idea

  • The experience of buying a car becomes simpler each time you purchase one
Next: Money 304: Big Decisions – Getting Married