Need advice for car purchase

[bskimbrell]

I need advice.  My wife and I are just out of training.  We only have 1 vehicle and need to purchase another one.  We have been in IBR and she has luckily found a qualifying job for PSLF.  She will have her student loans forgiven in 4 yrs.  My job does not qualify for PSLF; therefore, we plan to aggressively pay my student loans off in a similar time frame.  We have no other significant debt (student loan debt totals ~$650k between us both).  I am new to the forum.  Any advice on the amount I should spend on a car at this time.  We feel like we could spend a little more to have a reliable vehicle since our combined income is going to be significant.  Of course we plan on maximizing retirement contributions and saving 20% down for a home (currently renting).  Thanks for any advice you may have.

[Josh0731]

I don't know what your combined income is, but you have laid out a very ambitious plan. Maxing retirement accounts, saving for 20% down for a house, aggressively paying off at least $300k of student loans...  On top of that it will be hard coming out of training not to allow yourself some lifestyle inflation, however much you tell yourself you won't.  So that's a lot of money. By all means try, but do the math and be realistic.

With all that, keeping transportation costs low should be comparatively easy.  Buy a lightly-used Honda. Very reliable. Safe. Fuel efficient. Low cost to insure. Or, if you live close to work I would seriously consider a Leaf - you get a federal tax credit to help pay for it, $ per mile electric is cheaper than gas, and drivetrain reliability and maintenance needs should be low, save money on oil changes and emissions testing.

[drdeus]

I agree. Get a pre-owned honda or toyota. I've owned 3 accords in the past and they are all reliable and overall great cars. You can easily get one around 15-18k. I recently splurged a bit on cars and somewhat wish I waited a little longer before doing so.

[jfoxcpacfp]

bskimbrell wrote:

I need advice.  My wife and I are just out of training.  We only have 1 vehicle and need to purchase another one.  We have been in IBR and she has luckily found a qualifying job for PSLF.  She will have her student loans forgiven in 4 yrs.  My job does not qualify for PSLF; therefore, we plan to aggressively pay my student loans off in a similar time frame.  We have no other significant debt (student loan debt totals ~$650k between us both).  I am new to the forum.  Any advice on the amount I should spend on a car at this time.  We feel like we could spend a little more to have a reliable vehicle since our combined income is going to be significant.  Of course we plan on maximizing retirement contributions and saving 20% down for a home (currently renting).  Thanks for any advice you may have.

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Will you be able to pay cash? If that's an option, your car budget will be driven by the amount you can afford. Not sure how you define "significant" income. As Josh0731 said, you have an ambitious plan, but by no means does it mean you cannot accomplish it. Be sure you have plenty of term life insurance, OO disability, and umbrella policies in place. You might want to check out my Financial Guide for New Attendings, too.

If you must borrow, might consider a reasonably-priced new car at 0% interest and plan to drive it for 8 - 10 years, $35k - $40k, but it's hard to be specific without your having a comprehensive plan in place. I have NO recommendations on make and model :-)

[EH]

I bought a 3 year old Toyota after college and am still driving it 15 years later. Can't go wrong with that. Depends on the specifics of your income, debt that you owe, cash on hand, how expensive houses are where you are, etc though. A used leaf is an inexpensive commute car if you have a longer commute but probably doesn't work unless you already own a house.

[DMFA]

I like to call used cars "pre-depreciated" cars.  If you want something fancy-ish, Lexus and Acura are just fancy Toyotas and Hondas respectively.  Idk if they are as reliable after 200k miles as their main brands are, but it's worth thinking about.  Then again, today's Camry is prob nicer than 5 years ago's ES350.

WCI wrote his story about buying a Dodge Durango for $4000 and selling it for hardly less a few years later.  Once the car's value-time curve hits its inflection point and sort of levels off, which seems to be somewhere between 5-10 years for most models I've looked into (I'm in a very similar situation with my 10 year-old Kia Spectra), is when you get the best value for time held.

For the sake of example, just to choose a decent blend of luxury, performance, and reliability, there are some 2008-2010 Lexus ES 350s with <40k miles going for well under $20,000 on cars.com.  Not saying that's what you should get or how much you should spend, but that's just to say you can get a pretty nice car with something most 2-physician households should be able to pay cash for.

Obv the best mathematical choice (honestly, prob your average 3-5 year-old compact Korean or Japanese car bought cash) is not necessarily what you might want, but find the best reconciliation between what's good for your bank account and good for your car psyche (if that's a thing).

[The White Coat Investor]

Don't buy cars based on your income. Buy them based on your net worth. Since you're worse than broke, I would recommend spending very little on a car. Certainly no more than $10K and using cash from your paychecks, not more debt. If it were me, I'd be driving a $2K car, but I'm a bit of an extremist on this subject.

[jfoxcpacfp]

DMFA wrote:

car psyche

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love that.

[bskimbrell]

Great advice from everybody.  Thank you all so much.  It's just what I needed to hear.  So tempting to get a newer truck.  Now I just have to work on getting the spouse on the same page.  Which as anyone married knows, my work has just begun

[childay]

So what is your income going to be?

Ultimately I do think WCI is a bit extreme on this issue but certainly see too many new docs driving expensive cars (or in my neck of the boonies 90k trucks).

[VagabondMD]

I agree with WCI. When you are out of debt and can comfortably write a check for the car, buy whatever you want. Until then, the used Camry or Accord should suit you fine.

[AlexxT]

There was a post on this not long ago, I believe.    Check it out.   Lots of opinions there.   Personally, I prefer new cars, bought at discount.   I  get more use out of them since they are newer and have peace of mind knowing I didn't buy someone else's lemon.     I love Hondas, but Toyotas are ok too.  Just avoid the luxury cars or trucks you were lusting after and you should be fine.

[DarrVao777]

Vagabond MD wrote:

I agree with WCI. When you are out of debt and can comfortably write a check for the car, buy whatever you want. Until then, the used Camry or Accord should suit you fine.

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The cruel irony is that by the time you get there, you may find your desire for a super car has faded.

I've been out of debt now for a good 2-3 years, saving 50% of gross towards retirement, landed another annual bonus where I could comfortably write a check for any car (or make the lease payments as my wife likes driving new cars every 3 years), and have spent so much time this week with incompetent car salesmen/women that I found myself returning our lease, eschewing the 70-110K 500+ HP car I had my heart set on, and reverting to driving the boring mid-sized family sedan that carried me through residency and fellowship.

[RogueDadMD]

We just bought a 2014 Odyssey off Vroom.com -- the latest trend in auto purchasing.  It exists only online -- the car is delivered directly to your door and you never see it in person until then.  They pick up your trade in at the same time if you have one.  There are a few competitors doing similar or the same thing as well.  Cheaper than a dealer, high quality than private party purchases, more recourse if the car sucks than you get from Carmax.

However the purchase isn't final yet and the car doesn't arrive for a week, so we'll see if it's as good as I'm hoping or if I'll be suing them for my money back.  I'll admit buying a car I have not yet seen and without a test drive is somewhat anxiety provoking (and probably is crazy), but I hate car dealers and love shopping online, so if this works it's going to be great.