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Wednesday, 08 July 2015

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Upon exiting graduate school on his way to a good job, I asked a young man what kind of car he was going to buy to replace his seven year old basic economy car. He said that he was going to drive his current car until the wheels came off. And he did.

A lady I know doesn't care what kind of car she drives as long as it starts every morning and takes her where she wants to go. And it is a Lexus, BMW or Mercedes.

In both cases, they buy new cars new, take good care of them and keep them for more than 10 years.

I don't know ... let's say a cheap Versa (either base model or demo with an automatic transmission) is $12K. Put $2K down and finance the balance over 4 years and you're paying $200 or so a month. Buy a car outright and start saving that instead. You'll have repairs covered in no time. Sure, you don't want a lemon, but a mechanic should be able to help you avoid that.

The problem with a cheap little car like that is that by the time you've paid it off in 4 years, you're probably dying to upgrade to something with padded seats and acoustic insulation. I'm making that up, but when Kelly Blue Book's review says that "better candidates include" the Ford Fiesta and Honda Fit, this doesn't sound like a satisfying car. Lack of power windows and door locks sounds aggravating enough. It strikes me very much as a "starter car" which implies short term ownership and cycle of debt.

In a bit of irony, BMW just announced their intention to phase out manual transmissions.

As for the old 2002, one word: holistics. The experience is unlike any Versa or even modern BMW (I recently test drove a 2-Series manual - meh).

Fun, modern compacts are rare: Fiat 500 Abarth, Golf GTI, JCW Mini, Chevy Sonic Turbo (yes, believe it or not). We had a scare recently with the Nissan IDx concept, which looked to be a possible modern 2002 substitute, but Nissan, predictably, pulled the plug.

http://www.thetruthaboutcars.com/wp-content/uploads/2015/05/IDx_FREEFLO__002_Kai_S2.jpg

Aaaah. The BMW 2002tii. I lusted for one with orange paint when it came out but there was something about it that wives couldn't understand. We settled for a much frumpier Volvo.

Decades later I bought a pristine model. As classic cars go they are not expensive today. A truly fun car to drive. Classic car insurance and registration are dirt cheap but finding BMW parts and service can be an expensive adventure today.

In many ways a classic car can be a good "investment" as a daily driver. Parts and service for the Detroit built classics are not more costly than for a modern car. They are basic with no electronic gadgets to go bad. And it will usually resell for little or no depreciation loss.

I think she made the right decision. A wisely-chosen older car is a far better financial move, in my view. Yes, she may have to pay more maintenance costs. But these aren't guaranteed, whereas a car payment is for certain.

Lose your job? Have an emergency expense? Your car gets repossessed, and your credit score tanks. Good luck finding a new job with no car. With an owned car, you just have to park it and minimize driving until you can afford it again - but at least you still have a car. Yes, it might break down, but very few employers will fire you for having a car break down.

People are far too eager to jump into automotive debt these days. A record 85% of new cars are financed today, mostly because everyone has been convinced by car companies, dealerships and bankers that only a new car will do. Meanwhile, the average car is more reliable today than it has ever been in the past!

Unless a used car is an absolute lemon, most people will spend far less money per year keeping an older car serviced than they would on a monthly car payment, and it puts you in a much less risky financial situation (as above).

To avoid lemons, just do some research before buying, and importantly, talk to mechanics about the car you're considering. If you tell them you are looking for a new car and will be needing a mechanic, they will be more than happy to help you out. Ask about common problems, things to look out for when shopping for one, and the best and worst model/year combinations to shop for. Take notes.

It's not much work, but can save you a ton of money: do some research to find a good make/model/year combination that fits your needs. Find a reliable example for sale that's been well-treated. Get it inspected by an unaffiliated mechanic before you buy it. If the seller won't let you get it inspected, move on.

Learn to do basic maintenance and troubleshooting yourself, or at least, read up on how cars work so that you'll know if a mechanic is trying to rip you off (e.g. blinker fluid and muffler bearings).

Know your car's service history and what the schedule is for maintenance. Some mechanics make a lot of money on maintenance that doesn't actually need to be done. If you know the transmission fluid lasts 50,000 miles and you had it changed 20,000 miles ago, then you don't really need it even if "the transmission fluid's looking a little dirty, we could change it for you for $200".

Learn how to recognize symptoms of trouble before things get bad. Nearly all maintenance issues can be caught early by visual or audio cues. Search online and get an idea for what is causing the issue and common solutions (I saved myself a $600 ignition switch replacement this way). Get multiple quotes for big repairs or maintenance - the price differences for big jobs at different mechanics may surprise you. Ask why they are more expensive than another mechanic. Find out if they use OEM parts (real Toyota parts for example) or knock offs. Find out if it matters or not (again, online searches will help you here). You can even search online - I caught a mechanic trying to charge me $400 for an AC condenser when anyone can buy them online for $200. He sheepishly lowered the price accordingly.

All that sounds like a lot of work, but only at the beginning. After a while, you know what you need to know, and it's second nature. I have always driven about ten-year-old cars, and my average monthly cost for them is $50-$100/month, including spreading the purchase price across the number of months I own the car, but not including gas and insurance. A lot cheaper than a car payment.

Mike, thats unbelievable. $2600 for insurance on a $5000 car. She must have a horrible driving record and/or credit, or maybe she just lives in the wrong state.

In Arizona we pay less than that for liability insurance on four vehicles, a full size van, a 4WD vehicle, a mustang GT, and a Airstream trailer.

The only insurance needed should be liability with a $5000 car that is paid for and a good driving record. I can only imagine what the insurance would be on a Versa where she would be making payments. Have her check other insurance agencies for liability insurance.

Fortunately we don't have the Versa in Europe. Good thing Mr. Ghosn decided to spare us the eyesore. The car is simply grotesque. Its design is flawed and incoherent, and the interiors are dull. It may be the less expensive new car in the USA, but so was the Yugo back in the day and price didn't make it an interesting proposition.
There are some interesting Nissans, though. The Versa doesn't belong in this category, but Nissan does have the Qashqai and Juke CUV's, the latter being the Ernest Borgnine of cars: ugly, but quite charming in its own quirky way. And they come with a 1.5 turbodiesel engine (sourced from Renault) that ought to be the best small-displacement diesel engine ever made.
You've really been comparing apples to oranges, but at least you brought the portentous Bimmer 2002 to mind, which was a good thing. I'll never be able to compare its ride to the Nissan Versa because I'd refuse to get inside the latter even if it were the last car on Earth. I'll have to trust your impressions...

The cheap econoboxes of today are better cars that the lusted-after hot cars of yesteryear. We just remember them with fondness because that's how our brains work. We lusted after them, therefore they must have been special.

You will have fun living only a half-hour or so from Watkins Glen. Just be alert to the possibility of a mob of BMW 2002 owners approaching with overhead camshafts in-hand, ready to teach you a thing or two.

Ah Mike -- as a longtime supporter it would make me so happy if instead of writing about cars and money and houses, you would write about your opinion on the new Sony A7rII with IBIS, or the new Zeiss 35mm F1.4 (which seems really really good)... waiting for old Mike again :-)

BMW could have brought back the 2002. Instead they brought back the Mini.

Manuel: the Nissan Pulsar is the same car, though it appears the sedan version is not available in Spain (both the hatch and sedan can be had in the U.S. and Canada, but the hatchback costs a bit more).

The Nissan Note is also closely related, and the Micra is effectively a short-chassis version. They're all built atop Nissan's "V platform," previously known as the "B platform", and also the underpinning of various Dacias and Renaults.

So what I'm saying is if you've been in a small Dacia, Renault, or Nissan in the last few years, you've pretty much ridden in a Versa.

Roger that's funny you bring up the 510. My high school buddy was a Datsun/Nissan fan, and he drove a 510. But he really missed his 110 1200cc, which was faster in corners and super light.

$2600 does sound surprisingly high even for full coverage. We pay around $2000 for two cars combined, and that's with our teenage daughter on the policy. But I know it can change change dramatically by state.

I have a 2012 Nissan Versa hatchback and have been quite happy with it. The interior and looks are totally boring, but that's fine by me. I wanted a small car with good milage, but lots of cargo space when needed, and the Versa is just that. I bought it new, because I wanted something relatively trouble free with the latest safety features. I also considered the Honda Fit, which is slightly better in terms of cargo versatility (one of the rear seats folds up for tall objects that need to stay upright) and tighter handling, but the Versa feels roomier for a small car.

Ah, but closing the door of a pre-90s Bimmer or Merc is a tactile delight matched only by that of cranking an M winder. Priceless. Same goes for the perfectly judged suppleness of its suspension. I would not call that feeling "light on its feet."

The key to making an older, used car a workable alternative is to use the cash saved from not making a monthly payment to build a cash reserve for future maintenance and repairs. If one isn't willing or able to do this, then Yes, an unexpected repair bill can be a problem, so a new or newer car with a warranty may make sense for an owner who lacks sufficient discipline to save money. But that doesn't mean it makes any sense otherwise, as saving a $200/mo. car payment will pay for a lot of maintenance and repairs over a few years.

As for comparing the Versa to a BMW 2002, I think you must be smoking dope. They're roughly as similar as chalk and cheese. And Yes, I've driven both and assure you there is no way that one can ever be mistaken for the other.

Unless you mean they're "spiritually" similar rather actually similar, but even then I'll still disagree with you, because even today, a well-maintained 2002 is a far more engaging car to drive than a Versa. The Versa is an automotive appliance (and a very good one at that!) but in 40+ years time, nobody will be fondly recalling the driving experience they offered vis-à-vis the average car of the day nor have any desire to collect them.

I'm in the UK driving a Nissan Note, which apparently is marketed in the US as a Nissan Versa Note. Big mistake. I think it's much prettier than the Versa. I'm consistently getting 45 miles per US gallon on the highway, and it's quieter and smoother than my last car, a Honda Jazz (= Fit).

A lot of times with the "young", insurance costs are the great "decider". Car sales among the young are way down, and it's because college loans are so high, jobs pay so little, and if you can get a bus or train, you do it. The big problem with counting insurance into the "fray", is the little known fact that if you haven't paid insurance in the U.S., even for a few years, and even as a much older person, you will pay ridiculous prices because you don't have a history of being insured!

I once had a guy who was older than me, transfer in to our company from Chicago, where he had not owned a car for years. He ended up paying about 3 times what I was paying because he didn't have any recent "history of insurance". That he hadn't been driving for 10 years, made him even a bigger risk!

Waiting until an older age to see if the insurance will go down will be a surprise for you!

I agree with Manuel, to my eyes that Nissan (all Nissans, to be frank) really is ugly. But since we are also talking about BMWs I'd add that BMW's design peak passed some time ago. They strike me as examples of complexity for complexity's sake.

Sorry Mike, this is not a very good compare/contrast. The Versa is possibly dependable as low-end transportation, but it is a grim, uninspired, un-fun piece of low-end transportation. As a beater in an inner city, it might be fine. Thugs probably won't bother vandalizing it. In contrast, the BMW 2002 is still fun and energizing - an enduring classic. It is a lot more fun than most of the contemporary automatic-transmissioned mush mobile BMWs. But between the Versa and 2002, I really see almost no points of comparison.

[Have you actually driven both cars? --Mike]

Depreciation and interest payments on a nearly new car are far worse than the average repair costs on a six year old car, unless you are very unlucky. Just make sure it has decent tyres, a full service history (fluids, brakes, cam-belt), no obvious accident damage, and no rust.

But insurance for young drivers is painful.

Mike,
Since you've been looking at used cars a lot - do you know of any decent wagons? I'm hard pressed to find a reliable wagon*, and I really need to replace what I'm currently driving with something that sits low, has good visibility, and will let me drive the kids & dog from event to event.


*i've heard horror stories about used Volvos. Very nice cars, very safe, exactly what I am looking for, but some wear out their rear axels and whatnot.

What sort of insurance? Is it fully comprehensive? That's always outrageously expensive for young drivers because they crash so much. Careful drivers don't need it, especially in what my mechanic calls a 'town car' - dents and scrapes all over. I have full comp but only because it's dirt cheap at my age with an accident free record. Just get TPFT (Third party fire and theft). She's bound to have parking mishaps but they won't matter in an older car with a bit of ding history.

I side with the buy cheap and bank the payments camp above. Teaches saving as well, and at some point not too far down the road she will need to be putting money in a retirement account so the habit is very useful.

I am interested by your comparison of the Verso with the 2002. I drove a 2002 for a month and 1,000 miles back when it was nearly new. Quite an impressive car despite the fact that in the rural area where I live the s/p was zero or lower.

Car & Driver certainly does not agree with your impression of the Versa, but they didn't like the BMW I just bought either so their opinion is a little suspect in my view.

Mike, I'm sorry but you lost me at "except for rear wheel drive vs. front wheel drive." There couldn't be much more of a difference than that. Also, the fact that one car looks great, the other doesn't and the difference in interior design and quality. All cars drive (at least most of the time) so the differences you named are pretty much also the differences between a Nissan Versa and a Ferrari.

Another interesting difference between N America and Europe is that near identical cars are specified to 12k or 20k miles between oil changes here and much less in the USA.
I'm not sure if it's down to a supposed risk of carcinogens in the waste oil or just that Americans have got conditioned to frequent changes. I don't think that climate or driving regime can explain it.

My accountant has always driven used cars. His advice on buying:

"Never buy a car with a butt print in the driver's seat."

I had not put it into words before I heard him say it, but a big part of how I judge an older car is from the condition of the driver area - seat, steering wheel, carpet and so on. And it has been a reliable predictor for me. The few cars I have bought with bad driver's seats have all had problems and wear beyond what one would expect from their age or mileage.

Overall I've had very good luck driving older cars. Like the post above my cost after resale is usually in the $50 to $100 per month range - including repairs. But I have the cash reserve to deal with problems and typically I own two vehicles at a time - a van or pickup plus something fun or sporty.

I remember when the signs of a luxury car were air conditioning, electric windows, and FM radio.

Now how do we tell?

Sorry, I thought this was a Photography site, not a help line.

The 2002 did not have power steering and that might not sound like a big deal, but try it again sometime. Like the rollup windows and film cameras young people might never have experienced it. For me it's been about 40 years. I live in Mexico and when you have even a semi-exotic car you need a second Baja Beater for the times when parts and service are promised mañana. Mañana does not mean tomorrow like most of you think....It means "not today".

Buy one Honda Accord or CR-V every ten years until you die and you will never have to think about what to buy. Save up a pretend car payment in each month of the last five years of ownership and always pay cash. You'll never have to think about how to buy. Choice is highly over-rated, just ask anyone who has switched from Nikon to Canon to Olympus to Panasonic and back again. Oh crap. I forgot Sony.... Car? The same.

I got really turned off to BMW after buying a 3xx (don't recall the exact model) for my daughter. One of the U joints went out. On every other rear-wheel drive car I've owned, replacing a U joint was a matter of 1/2 hour, 8 bolts, and a modestly priced replacement part. On this BMW, the failed U joint was welded to the drive shaft, which cost over $700 for the part alone. Clearly the factory found it cheaper to make that part non-repairable at high cost to car owners than to spend a few more cents making either a repairable part or one that wouldn't fail before 70,000 miles. I won't buy another BMW unless I can be sure that their priorities have changed.

If the picture shows the best angle of the Versa, then it's a really hideous looking car. But that might be good for a utilitarian vehicle, keeping it boring. Incidentally, I saw a 2002 for sale recently, there's a certain charm in its classic lines and cars of that vintage have a lot of glass.

I'm not a car owner myself since I don't really need one, but people I know who are tend to spend every now and then talking repairs and money; it's an expensive proposition to get a car, getting one that is care-free is very valuable both in money saved on repairs but also on time not wasted.

I guess the 2002 was a good car; never drove one. My car in 1970 was a brand-new, bright red 1600.

Sooooo....which car did she buy?

[She bought a 14-year-old Mitsubishi Mirage with 60k miles for $2,500. Everyone appears to be happy. --Mike]

The young lady made the right decision to buy a used car. While there are unknown reliability issues with a used car, I deem them far more acceptable, and safer, than to drive that new abomination with a bag over ones head, so nobody knows who they're laughing at. Too far at half the price.

BMW 2002: no power steering. It was a car that you really had to drive, and stiff to parallel park.

It was a ton of fun, especially with the handcranked sunroof.

As a former poor person myself, I think you missed an option in the original post - bangernomics. You find a friend with an old but reasonable milage car to sell for peanuts, and when it becomes economically unviable you scrap it. Rinse,and repeat. You get to drive lots of different and interesting motors but don't have any huge financial investment in then. Insurance is cheap. You break down once in a while (you join the RAC or similar here)

Wow .... that got pretty emotional for some and utterly logical for others. I was a Fiat enthusiast in my late teens, a very cool 850 coupe. In NYC, home of beater Chevies (weather ravaged roads, salt ravaged cars, weekend drivers) our small band of 850 enthusiasts stood out. And then, without notice, my widower Father came home with a brand new tangerine 2002. Being a poor (but live at home) college student, I had just read Car & Driver's history making 2002 report "better than sliced bread" and now I was hopelessly out cooled by my Dad. Without consulting me!
He went on to a succession of BMWs for the rest of his life. I met my wife to be the day I bought the Fiat. In California in the early nineties, she fell for a '76 2002 we called "the Dutchess". Impossible to park, hard to maintain (early emissions plumbing) but a car with undeniable charms. The Dutchess went to older son at college age ... like many first cars it was not a match made in heaven. For the car. Nobody got hurt, sons are grown, marriage is solid. We both still look wistfully at 2002s in no rust California.

Given your predilection for interesting cars like the Miata, I'm a little surprised at your preferred approach for a young person Mike.

I get the impression used cars are less of a bargain in the US, but here in the UK buying an older car will nearly always be cheaper, as long as you exercise a bare minimum of caution in choosing. (By, for example, checking service history to ensure the cam belt isn't due for replacement.)

For new drivers here, it wouldn't be uncommon for insurance to cost double the price of the car. A typical 17 year old might spend £1000-2000 for a 10 year old hatchback in good working order, and then £2000-3000 for insurance. That's if they can find the cash of course - I'm not sure what the numbers are, but car ownership is certainly less common amongst young people here, because it's just not very affordable, nor necessary in many areas.

Cars are like cameras, some are just nice to own and use and some just aren't but it's hard to explain why.
Anthony

That Versa is just ugly.

I had a '71 2002, bought used in late '72. Great car to drive, expensive to own, etc. My brother bought a new Datsun 510 about the same time. Cost very little, was crude but fun to drive, saved a lot of money ... until he totaled it rolling down an embankment. I sold my 2002 in late '73 for what I'd paid for it. That evened the books. :-)

For a young person today, buy a three to five year old Honda or Toyota after you find out which of those has good mechanics in your town or city. Save the depreciation, save on insurance, foster a good relationship with the mechanic you choose and LISTEN to their advice. Most cars that age have most of their life ahead of them, any honest mechanic will,tell,you up,front which to avoid.

G

You could see the entire surrounding world very well from the driver's seat of a 2002; you can't see jack from any of the current chop-top bucket cars.

I just had a Versa as a rental car and couldn't have hated it more. I would hate to have a permanent relationship with one. Ymmv, however, as they say on the Internet.

Your headline made my heart skip a beat, Mike. A "New BMW 2002"? I want that! Just exactly the same, except with six air bags and some reasonable pollution controls.

I could wax semi-eloquently about the delights of boxy German sports sedans of a certain age, but instead I'll say simply-- she must have the wrong car insurance company. My teenager has cost me something less than $500 per year to add to the family policy (Geico). It helps a little that she's an honor student, but overall her insurance has been much cheaper than I expected.

[Have you actually driven both cars? --Mike]

Mike, I think it fair to say, nobody who has agrees with you.

[Not only not fair to say, not even logical. --Mike]

Never owned a BMW or any other expensive brand, but I've been seduced by the first really radical BMW for decades, the i3. It's an amazing and wonderful car, despite its numerous minor flaws.

The fundamental question is, should you get your kid a new, cheap, reliable car or a unique, high-mileage collector car? The latter would be much more fun and memorable, when it ran. The former would be the safer choice in every way, and still fun, because it's her First Car.

The choice may depend on the kid. Are they inclined to learn a little about auto repair and maintenance? Would you worry about them getting stranded? Since this is a daughter, I'm leaning away from the BMW. But it's the kind of oddball choice I made when I bought first a Fiat 1500 Cabriolet, then an NSU Prinz. Those cars gave me a lifetime of memories, including their problems. But would I send my precious up in a crate like that today? At the risk of hypocrisy, I'd say no, not on your life, or hers.

I just deferred the whole kid-car question by allowing my grad to go to an expensive liberal arts college 1500 miles away. It's a small, walkable in a small city, and she'll commute from home by air. We'll save thousands by not buying, maintaining and insuring an extra car, which will help a little with the expensive tuition. Instead of driving around, she can spend more time on the idyllic campus where a car-free lifestyle is actually feasible. She can learn all the alternatives, which include buses, Vip Cars, trains and uber rides to the big city. I think it's a win-win strategy for everybody.

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