Should I Buy A Car Before Or After I Retire?

Photo: VW

As Jalopnik’s resident car buying expert and professional car shopper, I get emails. Lots of emails. I’ve decided to pick a few questions and try to help out. This week we are discussing the timing of buying a new car around retirement, dealers that won’t sell out of state, and the best low-cost but high MPG manual car.

First up, if you are coming up on retirement and think you may need to buy a car, when should you make that purchase?

My mom is a teacher but she is going to retire this June. She has an old Mazda 3 with a lot of miles and it will need to be replaced in the near future. She wants to know if it will be harder for her to get approved for a loan after she retires and her income is reduced.

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This is a good question, and it involves two key components to the loan approval process. The first, naturally, is the credit score. If your mom has good credit and maintains or improves that score, that will be the most important factor in both getting approved and a low rate for a loan.

The second aspect of approval is what lenders call the “debt to income ratio.” This is where they examine how much money you are borrowing versus how much money you are making. Your mom will be collecting a pension, but that’s not a full-time job, so her debt to income ratio might be less favorable after retirement. That being said, as long as her credit score is strong and she isn’t buying something ridiculous like a Rolls-Royce, I don’t see her having any problem getting approved for another reasonable car.

However, if she knows the Mazda 3 is on its way out, she may want to consider getting a replacement while she is still working so she can pay it down while she is making more money. Also, some manufacturers offer additional rebates and discounts for educators. Just make sure her post-retirement budget can handle any payments.

Next, what is up with a dealer not wanting to sell to a customer out of state?

“I have bought several vehicles across the past 10 years, even some over great distances with relative ease. I am in a spot where I am able to comfortably buy a vehicle in a rare color that I really like. Reaching out the dealer they seemed very interested in working out a deal with me only to given feedback that they can no longer work with me because they only will sell to individuals within the state of California.

The car is advertised on several websites with nothing about sales restrictions are mentioned. I was very upfront that I am willing to travel and make arrangements that are amicable for both parties. On one hand the vehicle is very nice and exactly what I have been looking for, but on the other hand the feedback I received rubbed me the wrong way. Is there something that I am unaware of with car sales in California, or is this an isolated event?”

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This is not an isolated event and seems to happen with dealers in California quite a bit.

I’ve encountered several shops out that way who just refuse to sell to customers out of state. They have given a variety of reasons for this everything from, “we have had bad experiences in the past” to “it’s too much paperwork.” That being said I’ve also worked with plenty of California dealers who will gladly do it. However, I will say this, according to what I have been told, if you buy the car in California and drive it off the lot, the dealer must assess the California sales tax, which may be a bit more than your local rate. But if you buy a car and have it shipped out, they don’t charge you California tax.

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California can be a strange place for car purchases. I suspect since it is such a large state with plenty of buyers for all kinds of cars, some stores just don’t want to worry about jumping through extra hoops to get a sale.

Finally, what is a good, affordable commuter car that gets great miles-per-gallon, but also comes with a manual gearbox?

“I am starting a new position at work and my commute will stretch to 35 miles each way. I am thinking about getting rid of my G37x for something simpler with better gas mileage. My first thought is a Jetta TDI.

What would you recommend?

Some criteria:

1. Cost about $10-12k

2. Sedan or wagon (I have two kids in car seats)

3. Comes in a manual. If I am trading down I may as well get some joy out of it, right?”

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The Volkswagen TDIs are a fantastic choice for this type of purchase, especially now that they’ve been fixed to be (allegedly) emissions-compliant.

You may also want to look into the Chevy Cruze diesel. This is a car a lot of people forgot about. Chevy made not one but two generations of Cruze diesel models and both were available with a manual transmission. That being said, it is likely a lot easier to find an oil-burning VW with three pedals on the floor.

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If you decide diesel isn’t your thing, consider a manual Honda Civic. They’re always fun in their own way, even if they don’t bring massive power to the table.

Got a car buying conundrum that you need some assistance with? Email me at tom.mcparland@jalopnik.com!

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About the author

Tom McParland

Tom is a contributing writer for Jalopnik and runs AutomatchConsulting.com. He saves people money and takes the hassle out of buying or leasing a car. (Facebook.com/AutomatchConsulting)