You can find a reliable car and not go into debt

You can buy a car with cash.

I have to say this because there are a lot of people who have just accepted that borrowing for a vehicle is the only way to get one.

But think of the money you can save if you pay cash for your car and hold on to it for as long as it will hold up (and this includes factoring in repair costs).

Edmunds.com, a website providing all sorts of useful information about automobiles, has come up with the “Debt-Free Car Project” to convince consumers that they can purchase a reliable used car for less than $5,000.

The project developed after the editors became concerned about “Buy Here, Pay Here” used-car outlets. Consumer advocates have long complained about dealers who court consumers with credit problems, then prey on them by offering auto loans with interest rates that are double and sometimes triple the national average. The loans are financed by the dealerships. But because of the high interest rates, many people default and their cars are often quickly repossessed.

One thing about the Buy Here, Pay Here transactions that caught the attention of the Edmunds staff: They noticed that in many cases buyers were coming up with down payments of about $3,000 in an attempt to purchase cars that would not require constant repairs.

“We were thinking, why don’t people buy a car outright?” said Edmunds.com Consumer Advice Editor Ronald Montoya. “If they are putting down deposits of $3,000, then that’s more than enough to buy a car that is reliable.”

But is it really?

That’s what the editors want to prove.

“We are used to paying tens of thousands of dollars for a car thinking that otherwise we’ll get a car that is in the worse shape possible with a smelly interior and smoke coming out the back,” Montoya said. “That’s what we think of cars in the $3,000 to $5,000 range. But you can find cars in that price range that are nice and fun to drive.”

Edmunds.com editors recently purchased a 1996 forest green Lexus ES 300 for $3,800, including taxes, tags and fees. Over the next year, they will track and write about the vehicle’s performance, repair and fuel costs, and what it’s like driving a 16-year-old car.

After two weeks of Internet research and test drives, the editors bought the Lexus from an independent car dealer in California. The car the editors settled on had 135,000 miles.

To find the car, they used three online sites: AutoTrader, eBay Motors and Craigslist. They looked at both dealer and private-party for-sale listings.

They also paid $45 for a 30-day subscription to AutoCheck.com, a service that provides vehicle histories. The vehicle-history report for the car they settled on showed a clean accident record and multiple service visits to a Lexus dealer.

It’s worth it to read the details how the editors shopped for and negotiated the final price for the Lexus. Go to www.edmunds.com and search for “Debt-Free Car Project.” You can also track the vehicle’s progress on Edmunds’ Long-Term Road Test blog at www.insideline.com. Search for “1996 Lexus ES 300.”

“We were determined not to buy a beater that would have us visiting a mechanic every month and, like any car buyer, we wanted a car that we would not be ashamed to drive,” Montoya said.

The key to finding a good used car is doing the legwork. Don’t do what I did when I was desperate for a car right out of college. I made some classic mistakes when I bought a pumpkin-colored Datsun B-210 for about $1,800. I didn’t take time to look around. I didn’t test drive any other cars. I didn’t take the Datsun to a mechanic or even ask for any repair records. Thank goodness my grandfather was a tow-truck driver. I had to call him numerous times to rescue me after breaking down.

Edmunds points out that inexpensive used cars now are generally much more dependable than the cars of two decades ago. And by buying a car outright rather than financing it, you free up money to pay for repairs.

This is what the editors plan to do with their Lexus. They are going to take the money they might have spent making a monthly car payment and save it for any repairs, which for a borrower with credit issues is, on average, $365 a month for a used car, Montoya said.

I love this project and hope it confirms what Edmunds.com and I know. If you save, plan right and do your homework, you don’t ever have to go deep in debt to buy a car.

Michelle Singletary: singletarym@washpost.com.

Washington Post Writers Group

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