When should I get rid of my high-mileage car?

I’m approaching 193,000 miles on my 1998 Nissan Sentra GXE, and I’m in a quandary. When should I buy another car with lower mileage?

My Sentra, unlike the one shown here, is in fair condition. It runs a little more sluggishly and loudly than it used to. A small dent from backing into a friend’s car is noticeable, but not terribly so. The interior is clean and tear-free, with a few minor upholstery stains that I could scrub out.

My wife and stepdaughter see my Sentra as a “junker.” I see it as a wise choice for my driving needs. I’ve logged 100,000 miles in about four-and-a-half years traveling 105 roundtrip miles daily to work and the car has required just one non-maintenance repair of over $500. It’s 30 miles-per-gallon has been nice in this era of $2.50-plus per gallon gas prices. And I could conceivably sell it for about $2,800, according to Kelly Blue Book—an amount that’s held fairly steady even as the miles have piled higher.

Sell the car now or later?
With 200,000 miles approaching, I’m actually a little excited. Just how many miles can I get? But I also know I’m living on borrowed time. If the car does die, it will be worth nothing.

I’ve been watching the market for used Nissans, Toyotas, and Hondas on phillycars.com, a local car-buying site. I could get something similar to my Sentra with less than 100,000 miles for $4,000 to $7,000. M and I have some cash saved to get another car for me, but we also dip into that reserve when our monthly cash flow gets tight. A part of me wants to use that money for the car sooner rather than later, before we drain it completely.

Going to keep driving—for now
Still, I’m tempted to keep wringing as many miles as I can out of my trusty Sentra. There’s a good chance that it will die a slow death, with steadily increasing repair bills, rather than suffer a sudden automotive cardiac arrest. Then I could keep it running until I find a car and a deal I like, which is better than being forced to take whatever cars and deals are available at the time because I need a car to drive.

What would you do?

Lessons learned from buying a used van

The search is over. I wrote in January that M and I were in the market for a minivan and we finally bought one: a silver-blue 1999 Honda Odyssey EX that has just 89,000 miles. It’s already proven a nice addition to the family; on a road trip last weekend, we buckled CJ Jr. into his carseat and peeled off wet jackets while staying warm and dry within its spacious interior, as a Nor’easter raged outside our windows.

As an added benefit, we saved about $1,000 on the purchase price—money we plan to shift toward our goal of building an emergency fund of three months cash reserves.

As thrilled as M and I are with our purchase, it wasn’t easy. At times, we both longed for the convenience and security of buying brand new. But I did learn a few good lessons from our Odyssey-shopping “odyssey.”

Be patient
The search was slow, lasting six weeks start to finish. Along the way, I visited nine dealerships within a 50-mile radius of our home. I responded to four private ads, even test driving one vehicle while on the way to a family function (for which we ended up being late). And I spent many evening and weekend hours hunting for prospects on cars.com, kbb.com, and phillycars.com.

Even more maddening than the time spent was the time wasted, checking out vehicles that didn’t live up to their billing. Opening the hood of an Odyssey at one small dealer revealed what looked like actual tumbleweeds lodged in a grime-covered engine. A 2001 Nissan Quest advertised as “well-maintained” vibrated unnervingly as M eased it out of the driveway on a test drive.

Was the time and effort worth the ultimate benefit? It didn’t always feel like it. More than once we considered throwing in the towel and diving deeper into savings to increase the $10,000 maximum pricetag we wanted to pay. Now, as we enjoy the extra space and the automatic sliding doors (which CJ Jr. opens with an enthusiastic “Abracadabra!”)—all within our original budget and requirements—I’m glad we patiently stuck to our plan.

Be skeptical
I’m smart enough to raise an eyebrow when a vehicle’s seller says the emergency brake-indicator that continually stays on during my test drive “doesn’t mean anything.” But I almost gave in on one of my key buying criteria—having my own mechanic inspect the vehicle I wanted to buy—because I wasn’t skeptical enough.

Several used car dealers told me I couldn’t drive their vehicle to my mechanic before buying it. The reason? Insurance wouldn’t cover it (my mechanic is near my home, so it usually meant a trip of several miles). After the first few dealers threw up the same roadblock, I was almost ready to concede the point.

But my father, an attorney with lots of experience suing car dealerships, said the dealers’ rationale was nonsense. It was unlikely the vehicles weren’t insured, and even if that was the case, I had coverage as a driver. Most likely, the dealers didn’t want to take the chance that my mechanic would find something wrong.

Sure enough, the dealership that eventually won my business had no problem with me driving the Odyssey the 25-plus miles to my mechanic before I paid a cent. Jason, the salesperson, didn’t ask for a deposit or even the keys to my car. “We’re confident that our guys found everything and anything, so have at it,” he said. My mechanic gave the van a nice thumbs-up (“It’s got a lot of life left in it,” he said) and I had some much-needed peace of mind.

Make an offer
Like many people, I don’t like haggling over a car’s price. But I know that haggling can mean money in my pocket, and I am cheap by nature. So I haggle.

And it works. In buying our Odyssey, I made an initial offer of $8,000, 20% below the dealer’s $10,000 advertised price. I thought it absurdly low for one of the best vans I’d seen, and Jason seemed to confirm it by quickly shaking his head.

“No way,” he said. “There might be some wiggle room, but not that much. We don’t price our cars artificially high and then discount them thousand of dollars during the sale to make buyers think they got a great deal. We advertise what we feel is our best price.”

I took a breath. The Odyssey’s price was certainly in line with others I’d seen advertised for similar vans, I said. But it wasn’t the lowest either, and besides, we had no real idea what other vans were actually selling for. It was probably less than $10,000, I concluded.

“Let me take it to my sales manager and see what we can do,” Jason said.

Five minutes later, he came back with a $9,000 offer. I shook his hand and sealed the deal. Looking back, I wonder if I my “absurdly low” offer was really too high.

Time to shop for a van

The CJ family is growing. M and I have just found out she’s pregnant, God bless, due in late summer.

While we still have to get through that crucial first trimester—as M cautions, she is 39, which means a greater chance of complications—I’m throwing caution to the wind and proceeding full-speed ahead to prepare for the new arrival. So this weekend I’ll start shopping for a minivan to replace M’s 2002 Honda Civic.

A new experience
I bought my last car, the slightly used 1998 Sentra I drive to this day, eight years ago. Back then I traded in my 1988 Ford Festiva, took out a five-year loan, and made all 60 payments.

This time, I’ll be putting some of the personal finance wisdom I’ve learned to the test. I’ll be selling M’s car privately instead of trading it in. I’ll be looking for a vehicle around three to five years old and between 75,000 and 100,000 miles on it, instead of just slightly used. And I’ll be paying cash instead of carrying around a car loan for half a decade of my life.

Private sale means more cash
The advantages of this approach: First, by selling M’s car privately, I should be able to get more money for it than I would as a trade-in. According to Kelley Blue Book, a good condition Civic like M's sells privately in my area for about $9,400, nearly $1,400 more than its trade-in value. It’s also paid off, so every dollar we get for it goes to us.

Sure, showing the car to buyers will probably be a hassle and it may cost a few bucks to run some ads. But will the time and money be worth another $1,400 that we can apply to the van purchase? I think so. We’ll see.

Used doesn’t mean unreliable
Second, we can in no way afford a brand new Honda Odyssey—the van M prefers—which currently has a minimum pricetag of $26,000. Even if we could, I’d have a hard time shelling out that kind of money for something that will likely worth about half that amount in a couple years.

A high-mileage Odyssey is still relatively pricey—around $9,000 to $12,000—but much of that cost should be covered by the sale of M’s Civic. And while we do run the risk of buying something with unforeseen mechanical problems, Honda and Odysseys have a great reputation for reliability. I also plan to check certified pre-owned vehicles first to see if they are in our price range.

In the end, I expect we’ll pay an additional $2,000 to $4,000 for the luxury of not having to hear my teenage stepdaughter complain about being wedged between two carseats. That’s family peace at an affordable price.

No borrowing costs, less risk
Lastly, I’m looking forward to telling a car salesperson that I want to pay by check instead of taking out a loan. Financing mostly benefits the dealer, since loans are often where auto retailers make their biggest profits.

For buyers, however, a new car’s value drops like an anvil in its first couple years on the road. Used car values still lose ground each year, though not as quickly. Having a car loan is like borrowing money to buy a stock you know is going to lose money. It doesn’t really make sense.

Plus, say M and I hit dire financial straits down the road and had to sell the van. We may owe more on it than we can sell it for—what’s known as being “upside down” in a loan. That would likely make our tough money situation only slightly better.

Paying cash might mean a dealer and salesperson are less willing to negotiate on a van’s price, since that’s where their only profits will come from. But I’m willing to take that chance. Last I checked, there were lots of used Odysseys for sale in my area.

New cars may be more affordable, but still don't buy one

Cnnmoney.com ran an article recently that cars are at their most affordable levels since 1980. According to Comerica Bank's "Auto Affordability Index," better productivity in the auto industry combined with intense competition has driven the cost of a new car downward since its high in 1994. Meanwhile, the average family income has risen five percent over the same period.

"It's a pretty happy story for the consumer," Dana Johnson, chief economist at Comerica, is quoted as saying.

Not this consumer. Including finance charges, Comerica estimates the cost of the average passenger vehicle sold in the third quarter of 2006 at $26,500. That's about five percent less than the same period a year before, but still an awful lot of money to pay for something that's going to be worth about half that amount in a year or two.

If you are trying to get your finances on track--working to pay off debt, amass funds for your retirement or your kids' college, build up an emergency cash reserve--then a new car is a sure way to run yourself off the road. Just say no to buying one.

Used cars are a lot better deals than they used to be. I saved a few thousand dollars buying a 1998 Nissan Sentra with 12,000 miles on it eight years ago. It just passed the 170,000-mile mark. Best of all, it's completely paid for, giving M and I the freedom to work on our other financial goals--like trying to move up to a single-family home without mortgaging our life away.