Buying new car (20k+), used car, or leasing a car for M2 (classes/rotations)

[Medshpep2021]

Hi,

I am a medical student on the east coast in a large city starting M2 in the fall and am deciding on several options for a car. My school has no dorms. For M1, I lived in the city with roommates for 15 min from school but it was hard living out, cooking, getting groceries, and fighting with the landlord about heating/washing during the winter months. As a result, I have decided to live move home in the suburbs for M2 (30 - 50 min drive depending on traffic, but I'd save money/time on groceries, laundry, etc. and many students rent apartments anyways 30 min away on the subway). In addition, rent anywhere within a 20 min radius from school has risen this year to 1800/month min for a studio and 1500+ with roommates. Right now, I obviously will need a car since public transportation is unreliable and will take me 1 hour min to get to classes.

Calling dealerships for Honda/Toyota/Subaru within 50 miles, the cheapeast models are 20 - 25k and are not even guaranteed as I may have to wait until the school year starts to get one. I have asked about used cars at these large dealerships, which all have mileages of over 100k+ miles for anything under 20k. Even though there are third party dealerships that sell cheaper cars at a seemingly decent quality (e.g. found a 2016 Subaru, 50k miles for 16k), the general message I have received from friends/family is to never trust/go with third party dealers. I do have 10k in the bank right now left over from an undergrad job, but my parents do not have money to help me finance the rest so I will need to take out loans, which I am trying to avoid as much as possible as a medical student with already close to 60k in federal loans for M1. I know the white coat investor says to buy a used car for 8k or something and it may last through residency, but since the car market is **** right now, I have also looked into leasing cars. Any advice on how worth it is for someone in my situation to lease a car or risk buying used from a third party vs. a new car.

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[Putkernerinthehall]

I would try to buy a reliable brand / model, used car, from a 3rd party and have it checked out by a mechanic. See if you can find something where a family is selling their old car because they moved up to a newer/bigger van or SUV. Maybe 6-7 years old with 70-80k miles but purchased from someone who was the sole owner and has maintenance records on it. Family with non-driving kids, single owner, with records is usually a good sign that the car hasn't been horribly abused. It can be a beater because you may only need it for 3 years. Who knows where residency will take you. You could end up downtown somewhere with no need for a car after medical school.

 

[voxveritatisetlucis]

Ya I cringe at Dave Ramsey advice, “just cash flow it bro!!!”

All debt is not bad debt. Ramsey advice would lead to driving a car that doesn’t work in a few months. Get a reliable model but not one that has so many miles that it will be breaking down left and right. Federal debt is better than car dealer debt imo so if you can swing taking out the federal and using it for payments, I would do that

 

[TragicalDrFaust]

I’d get a used Honda, Toyota, Subaru or Mazda. Should be able to find one for under $12k. I’ve got a 2011 that shows no signs of breaking down any time soon and I expect to be driving it for another 5-10+ years. A new car depreciates rapidly in value, no need to eat those most expensive first few years if you have no emotional attachment to the idea of a new car.

Leasing is almost always more expensive per month and you don’t get an multi thousand dollar asset out of it at the end. Only really makes sense for someone who wants to be in the newest car and change it every 1-3 years.

 

[Dr Meow]

Get a Honda Fit! All that cargo space is awesome!
Or a Toyoto Camry!
Both can be used if there's low miles and no additional problems.

 

[KnightDoc]

I would try to buy a reliable brand / model, used car, from a 3rd party and have it checked out by a mechanic. See if you can find something where a family is selling their old car because they moved up to a newer/bigger van or SUV. Maybe 6-7 years old with 70-80k miles but purchased from someone who was the sole owner and has maintenance records on it. Family with non-driving kids, single owner, with records is usually a good sign that the car hasn't been horribly abused. It can be a beater because you may only need it for 3 years. Who knows where residency will take you. You could end up downtown somewhere with no need for a car after medical school.

THIS^^^^^. The least expensive way to go is by finding a private party seller, as @Putkernerinthehall suggests. If you can do that, you can meet in the middle between what a dealer would give the seller and what the dealer (manufacturer or third party) would charge you.

In any event, you'd want a trusted mechanic to inspect the car. As you have seen, the alternative is to buy a certified used car from a dealership, but you will pay dearly for the privilege. Pick your poison. Personally, I'd go for an entry level new car for the peace of mind that comes with a new car warranty. The cost will hurt, but you will basically make it back through the rent you will be saving over the next few years, less gas and maintenance for the car.

 

[operaman]

Would definitely avoid leasing if possible in your situation. The mileage and other fees can add up fast and you would end the lease at a time when you may not have the cash flow to handle a massive balloon payment at the same time you need to pay for ERAS and interviews and Step exams and all those fun things. At least with purchasing the car your costs are more predictable.

Aim for used and cheap and get it checked out by a mechanic. Finding something decent in the 10-15k range should be fairly doable.

 

[LunaOri]

A used Prius could be affordable. Very low maintenance and saves money on gas. They easily survive to 250K miles.

 

[Lexdiamondz]

A used Prius could be affordable. Very low maintenance and saves money on gas. They easily survive to 250K miles.

Considering gas prices these days, Hybrids are going for something of a premium which will eat into any savings

Another thing to make note of is that while Priuses are pretty reliable, hybrids are more complex than conventional combustion engine cars, so when they do break down the repairs tend to be more expensive.

Honestly, OP is probably best off trying to find a 10 ish year old economy car - they'll get solid mileage, are easy and cheap to repair and are overall very reliable.

 

[Angus Avagadro]

Some dealers have newer used models with lower mileage coming off a lease. They will include a factory or brand warranty. Ford has this. I bought used Escapes and they are cavernous, good for students moving around. About 27 mpg. Something to consider. If an older used car, consider about $2,500 a year in maintenance costs. Tires, brakes, etc.. Don't lease, too expensive.

 

[NITRAS]

$20k is a very expensive car for someone without an income. You’d be better in the $5-10k range. Frankly, I’d avoid payments. Using student loans to pay for a car payment is in stupid territory.

My current care is worth less than $20k. . . . . My wife’s might be in that range.

 

[voxveritatisetlucis]

You’d be better in the $5-10k

With how high car inflation has been, this is like a 2.5-5k car a few years ago. this is bordering on the “maintenance will wind up costing more the the sticker price” territory

 

[International_student]

I second what someone said earlier, I got a used 2002 Toyota Camry in 2017 from a third party and it never had any single issue. It was my everyday car and I actually took it on a few road trips, one of 6h each way and it was great. One of the most reliable and least demanding cars out there in my opinion. Plus it was great on gas

 

[bnedr431]

With the market right now, used cars cost the same or more as new because of demand. I get called monthly with the dealership trying to buy my car from me. I would try to buy new (especially if you have good credit & can get 0% APR), which comes with warranty & usually included maintenance for the first few years. Put down a few thousand & get a reliable car like the ones you mentioned & not only will it take you through med school but through residency, if needed. Another bonus is that if you don't need the car for residency, those cars have great resale value & you would have been the only owner. Do not lease.

 

[LadyDustyBlue]

Considering gas prices these days, Hybrids are going for something of a premium which will eat into any savings

Another thing to make note of is that while Priuses are pretty reliable, hybrids are more complex than conventional combustion engine cars, so when they do break down the repairs tend to be more expensive.

Honestly, OP is probably best off trying to find a 10 ish year old economy car - they'll get solid mileage, are easy and cheap to repair and are overall very reliable.

I second this, @Medshpep2021 . Lease is a no-go for your situation. Speaking as someone who has gone on some test drives within the last year throughout dealerships, I would be cautious & I’d honestly go with a Camry… but I don’t think OP could afford the new hybrid (nothing against them, just being realistic with the way the market is — I’m looking at you dealerships!) on borrowed money. So I do agree with those who’ve said to use what you have saved & definitely don’t use all of your savings on a car.

Best-case scenario: Find a private owner who’s selling at a reasonable price & a mechanic — a friend if you’ve got one — whom you trust who can check out the car with you. Then you find the car you’re interested in checks out, especially if it had little usage (unusual but it happens sometimes) & you decide to purchase it. And maybe you get lucky that someone really wants to sell their Honda Civic or something at a decent price. But people love stealing those… so maybe just get an older Toyota Camry or a Honda Accord. 😅 Anyhow, your living situation puts less pressure on accessing daily necessities. Make the most of that & be vigilant when looking for a used car since people are selling them at ridiculous prices.

Despite people doing this b/c of demand, I really do believe there are good people out there who want to sell their cars fairly & are desperate to get rid of something they don’t need/want to take care of/don’t use. You just gotta know how much your limit to spend would be & honestly - at the rate things are going w/ the market, having to get a car will be a game of haggling where ever you go.

Know your price & make sure you pick something safe for you w/ the least maintenance needed these next few years before residency. Do your research & best of luck!

 

[SCallergydoc]

Motorcycles get great mileage

 

[jamaica jan sun princess]

As someone who repaired and flipped cars during undergrad and grad school, I highly recommend picking up a 2015+ Honda or Toyota. You can get a new Corolla for ~$22K(plus dealer fees), that will reliably last through the rest of medical school, residency, and into attendinghood. These days, a $10k car is either 15-20 years old or has 150K+ miles. There are exceptions, and as a shade tree mechanic, I've found them. But if you aren't mechanically inclined, you'll spend more paying someone to maintain a used car than you would on a new car payment.

 

[FarmerToDoctor]

Look HARD for a used Toyota, Honda, or Subaru! Dealerships and 3rd parties might be willing to cut a deal with you. If from a 3rd party, have it checked out by a mechanic and pay the money to get the Carfax on it. I know money is skimp right now but don't get a beater that will go down on you within a year from now. The you'll really be up a creek. Plus, over time you'll pay more money in mechanics fees and parts. Toyotas and Hondas are known to be VERY reliable cars and go the distance. Even if you see one with 100,000-120,000 miles, but everything checks out and it was well-maintained, you could still get another 100,000+ miles out of it.

 

[SurfingDoctor]

Never buy a new car. Like ever.

 

[OraclePL]

The new car rule hasn’t held up well given the strange car market in the last couple years. But in this case you’re broke, you cannot afford a new car. You need the cheapest car that will actually be somewhat reliable.

My best advice is to be willing to travel to get your car. I’ve used Autotrader and similar websites to search across the country and put in specific filters. For example right now there’s over 200 Accords under $15K with less than 75,000 miles on them, some are closer to 11 or $12,000.

Get a Corolla or an accord. Look for something under 100,000 miles, preferably under 75,000 miles. Clean history. You should be able to find some thing under $15,000 if you’re willing to search wide and far. People limit themselves to just their geographic area which limits their options.

Although additional debt is not great, if your car loan is far lower than your student loans you’re better off taking the car out on a loan and minimizing student loans with the cash you have.

 

[Medshpep2021]

Thank you all for posting advice! Really wavered back and forth on old vs. new. Since the Japanese models were too expensive, even for used, decided to bite the bullet and go with a new Hyundai sedan for 19k. Taking out several extra grand in loans this year beyond my 10k cash budget (some federal, some 0% interest from family) but hope that it will be a nice investment as opposed to buying used, and will last me through residency!

 

[xffan624]

Thank you all for posting advice! Really wavered back and forth on old vs. new. Since the Japanese models were too expensive, even for used, decided to bite the bullet and go with a new Hyundai sedan for 19k. Taking out several extra grand in loans this year beyond my 10k cash budget (some federal, some 0% interest from family) but hope that it will be a nice investment as opposed to buying used, and will last me through residency!

Hyundais are great cars. My elantra worked as good as the day I bought it after 120K miles with nothing except routine maintenance.

 

[jamaica jan sun princess]

Thank you all for posting advice! Really wavered back and forth on old vs. new. Since the Japanese models were too expensive, even for used, decided to bite the bullet and go with a new Hyundai sedan for 19k. Taking out several extra grand in loans this year beyond my 10k cash budget (some federal, some 0% interest from family) but hope that it will be a nice investment as opposed to buying used, and will last me through residency!

I think you made a great choice. It's not a Honda/Toyota, but the newer Hyundai/Kia cars are still very reliable. The 10 year warranty ensures you won't have to worry about paying out of pocket for major repairs until you're an attending. My wife had a Kia with ~150K miles when we got married and it still worked great.