This week: Car Talk

According to several recently published articles and surveys, Americans are reacting to new car prices by holding onto their aging autos longer. At the same time, new luxury sedans and $50,000 sport utility vehicles seem to be all the rage. As monthly purchase payments become more astronomical, consumers are increasingly taking the option of "leasing" the car -- making monthly payments but not buying anything.

One thing is certain: With very few exceptions, the value of cars depreciates quickly. New cars are usually worth significantly less the second you drive them off the lot, but high interest may result in your owing more than your vehicle is worth for most of the life of your loan. Is a car a luxury, an investment, or just transportation? Do you favor leasing, purchasing new, purchasing used, or repairing that old bomb in the driveway and driving it until it falls apart?

Read what others have said.

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crand: I'm going to hedge somewhat by saying that no one answer will be good for everyone. Some areas of the country are riskier than others for breakdowns, so safety and reliability are a variable in the "new" decision.

Also, one might have other priorities for one's savings (i.e. house, baby's college). I used to think I'd replace my car with a brand new one, but frankly it might make sense to forgo the ego factor and buy a model that is 1 or 2 years old...and cut about a third off the price of buying new (which could me several thousand dollars!)

bauccio: My car is my lifeline. I 'm planning on driving it until it falls apart (which won't be long). It's virtually impossible for a new college grad to afford loan payments, rent, and a car payment -- plus the increased insurance that goes with the new car.

dbeck: There is no best answer. If status is most important...new car. If reliability... probably still new car. But when we get down to basic transportation (and cost), then used starts to look better. It helps a lot if you are mechanically inclined and have time and the place to do most of your own repairs. Otherwise you need to trade often enough to avoid the really big repairs.

pialoca: I would check out consumer reports and blue book values before buying ANY car. I'd also suggest comparison shopping for a car that is one to two years old. That way you get the most reliable car, for the cheapest price.

TubaChick: I believe that a car is just transportation, until you have the money to make it a luxury or an investment.

KMorrison: I finally, after 18 years of desire, have my dream car, a 1977 Corvette Stingray. I'll drive it until I die. If I go blind, I'll just sit in it. If my house burns down, I'll live in it.

Daedalus: A car is an investment to me in the same way a hammer is an investment to a carpenter. If I didn't have one, I couldn't work in the job I have now. So, in that sense, I need a car.

On the other hand, if someone knocked on my front door offering me an "investment" opportunity that was certain to lose most, if not all, of its value in 5 years AND required that I provide a continual cash re-investment just to assure the minimum amount of loss, I would probably call the Better Business Bureau.

I've owned three cars in my time, two have been purchased new and the third was leased new. The lease was a disaster, the mileage limits got me (I went over - to the tune of $.12/mile). With all of that behind me, I'll probably buy used from here on out. It just doesnt' make sense any more to lose all that money owning a depreciating asset...

remida: Forget the ego trip, buy used, under 40,000 miles. Going on a trip?? Rent, and save your bucks for a a vacation.

khoang: If you do the number crunching, leasing is going to be about the same as buying or financing. I decided to lease, because who knows if I'll really want this car 3-5 years from now. Maybe there will be a better looking model in the future -- and to have the flexibility to walk away from something is great!

khurt: In my opinion, the best thing is to buy a used car. Considering that a new car depreciates in value 30-40 percent after its first year, buying used makes sense. One can often find good values on 2-3 year old cars with 24-36 thousand miles. Good buys are Honda Accords and Honda Civics.

spicer: After a few years doing this, I think I have finally found the answer -- lease new, buy used. And try to find dealer buy-backs to lease. They are much more reasonable, and normally in excellent condition with 25 - 40,000 kms on the clock. In two years, walk away and/or choose another. BTW, I'm driving a leased Ford Contour (Mondeo) now (leased) and I love it.

sneeboo: I once had a horrible experience leasing. My insurance premiums were sky high (much higher than they had been for the previous car, which I had been purchasing rather than leasing), and (like Daedalus) I got zapped for some serious mileage charges at the end of the lease.

I currently drive a ten-year old used car that I bought for $1500 bucks. It looks fine and runs great. I get teased about it sometimes, but really couldn't give a flying rat's ass whether my car meets anybody else's standards of cool. The only previous owner took wonderful care of the car (a very regular maintainence schedule, which I have continued), and I have had good, dependable transportation from it. There are more important things in life than status symbol cars. Personally, I'd much rather travel than look at tens of thousands of dollars worth of pig iron depreciating in the driveway.

BUHL91: I have a 1987 Ford Crown Victoria which I purchased two years ago for $1500.00 I have spent $1000.00 on it and it is a fabulous car. I had it checked out before the purchase and all major items were good. It now has 125,000 miles on it and runs well. My new car purchase days are over.

shieu: Gosh! Sold my first car to a good friend of mine a few months ago, and I still dream about it. Can't car hunt now. Just graduated. Have no job yet. When I do get employed, will go get a good USED car to get me around. That or find a rich boyfriend. Buying a car is hard to do these days. It has got to be nice-looking (bearable at least), reliable, and affordable. Me, I want a Ford Mustang GT (Red, tan seats, loaded.) Right now I'll just settle for a second-hand Volkswagen Beetle -- but it has got to be red.

jmd: I spent six months thinking about buying a car. In that time I moved to a different place, which elevated car status from accessory to necessity. I scoured the used car market, with at least one lead a week, and finally settled on a brand new car with a five year loan.

It's really important to take into consideration your needs and ability to pay, and to think about what you really want -- not everyone needs a new car. On the Web, I found a host of useful resources: one at Tripod called how to buy a car, and the online Edmunds Guide, which has all kinds of info on new and used cars, including dealer invoice prices.