Penny wise or pound foolish?

[kork13]

As everyone can probably see, it's a choice that's very much dependent on the person/family/situation.

In my case, I had a full scholarship to college, so my parents offered to pay up to $10k for a car my senior year in college (I hadn't really needed a car before that). While they did encourage that I get a safe, reliable, economical, and also new car, I had total control over what I would get. I did all of the research and decisions myself, but I did bounce ideas off my parents. In the end, I got something that I am VERY happy with, which happened to pretty much also fit all of the things my parents were recommending (though my one additional requirement was a sporty engine--gotta love it). Getting it brand new, it cost me almost $11k of my own (by way of a loan, which I'm just about completely done with 1.5 years later ), but I couldn't be happier with my decisions. I hope to keep this car for at least the next 7-10 years, so it will have been a worthwhile expense for me.

LAL, it really does depend on what you were after. If you're happy with what you did, and retrospectively consider it a good move (which it seems you do), then it was the right one. I feel that sometimes it's too easy to second-guess yourself (and be second-guessed by others) when it really isn't necessary. You made a decision that works for you, and has been good for you in the long run. I wouldn't give it another thought beyond that.

[LivingAlmostLarge]

Zetta that wasn't going to happen. I lived 3k miles away from my folks. No driving possible! I think thus the overreaching control in someways. Not being close by in case of emergency. Being a plane ride at a minimum away I know made my mom more controlling.

What car did you buy kork13?

[kork13]

Originally Posted by LivingAlmostLarge

What car did you buy kork13?

Honda's '07 Civic Si. Nothing extravagent, but I enjoy it a great deal.

[PrincessPerky]

Well if you like the options, I don't think it matters to let your parents think they have control,

not like buying a different car would "show them" or change them in any way, just would be a different car.

[tripods68]

[quote=kork13;209799] Honda's '07 Civic Si. Nothing extravagent, but I enjoy it a great deal.[/QUOTES]

Honda SI is a nice car. I had to part ways my RSX TYpe S 01 after owning for almost 4 years (all sup up-- full of aftermarket stuff). I love driving it to the track and do time trials, auto-x...I do miss it that part on weekends especially.

[Scanner]

We have 2 cars - one that is 10 years old and another that is going on 5 years old.

My plan is to buy a new car because I am afraid if I buy a used car at 3-5 years old, that places the "age of expiration" on both cars at nearly the same time.

[disneysteve]

Originally Posted by Scanner

We have 2 cars - one that is 10 years old and another that is going on 5 years old.

My plan is to buy a new car because I am afraid if I buy a used car at 3-5 years old, that places the "age of expiration" on both cars at nearly the same time.

Do both cars get equal usage? Can you adjust your driving to work around that? For example, since we have two cars, We will sometimes take mine on a long trip and other times take my wife's so that I regulate how many miles are getting put on each one. Both of our cars are getting up there, so I try and pay a little more attention to that. Of course, I don't have a crystal ball to tell me when each will die so it is a guess at best.

[Scanner]

My crystal ball was owned by the magician, Murphy, and it tells me if I have 2 cars the same age - the transmissions will die within 3 months of each other.

No, let's see - we try to put the mileage on our Taurus (yes, I decided to keep it back in October). It's a 1999 and it has 97K on it. So, when we go on a long trip to see my parents, or her family, each about 70 minutes away, we put the miles on that. Plus, even though my practice is 1 mile away, sometimes I pull hours at the hospital which is 22 miles away. All in all, I put about 10K/year on that car. My wife only puts 8K/year on her car.

So, the older car is getting the miles right now. The Matrix has about 38K on it and it's a 2004 (a virtual creampuff!)

As is the tradition on my side of the family - the man gets the older car. My father always told me to do this so the woman was in the "safer" car. . .of course, with roadside assistance being part of auto ins. nowadays, I guess that's a little passe but I still do it. So, if I get a new minivan, I would get the Matrix for commuting (at about 40K), which is a good thing because it's good on gas. And then the miles would continue to be put on the older car.

This may all be confusing but it works in my head

I guess we could continue to manage a 3-5 year old car and a 10 year old car and just trade in 3 years following that (trade in at 8 years old and at 13 years old) but I guess I want my wife to be in a car at least 5 years young so I am just electing to buy new and do my part in stimulating the economy.

PS: As you can sort of see in this plan. . .a car gets circulated in my family for about 10-12 years.

[jIM_Ohio]

Originally Posted by Scanner

My crystal ball was owned by the magician, Murphy, and it tells me if I have 2 cars the same age - the transmissions will die within 3 months of each other.

No, let's see - we try to put the mileage on our Taurus (yes, I decided to keep it back in October). It's a 1999 and it has 97K on it. So, when we go on a long trip to see my parents, or her family, each about 70 minutes away, we put the miles on that. Plus, even though my practice is 1 mile away, sometimes I pull hours at the hospital which is 22 miles away. All in all, I put about 10K/year on that car. My wife only puts 8K/year on her car.

So, the older car is getting the miles right now. The Matrix has about 38K on it and it's a 2004 (a virtual creampuff!)

As is the tradition on my side of the family - the man gets the older car. My father always told me to do this so the woman was in the "safer" car. . .of course, with roadside assistance being part of auto ins. nowadays, I guess that's a little passe but I still do it. So, if I get a new minivan, I would get the Matrix for commuting (at about 40K), which is a good thing because it's good on gas. And then the miles would continue to be put on the older car.

This may all be confusing but it works in my head

I guess we could continue to manage a 3-5 year old car and a 10 year old car and just trade in 3 years following that (trade in at 8 years old and at 13 years old) but I guess I want my wife to be in a car at least 5 years young so I am just electing to buy new and do my part in stimulating the economy.

PS: As you can sort of see in this plan. . .a car gets circulated in my family for about 10-12 years.

Scanner- we generally buy our cars new, and the way it works for us is each time finance it for 1 year less than before (if you don't pay cash). If last car was financed for 4 years, finance the next one for 3.

In general my math suggests if you buy a car new and finance it for 3 years it has a lower cost of ownership- MOST of the time, than buying a used car 2-3 years old which is same make/model.

[Scanner]

JimOhio,

You are probably right as I have come to learn to never question your arthimetic.

Again, I am just trying to space out car purchases as much as possible. I would be bummed to purchase a new car and then, bam, have the transmission go on the older car or something but I suppose that is what an EF is fer. . .

[jIM_Ohio]

Originally Posted by Scanner

JimOhio,

You are probably right as I have come to learn to never question your arthimetic.

Again, I am just trying to space out car purchases as much as possible. I would be bummed to purchase a new car and then, bam, have the transmission go on the older car or something but I suppose that is what an EF is fer. . .

Scanner- for us it worked out like this:

Get a new car for $1100/mo over 36 months
Get same model used (3 years old) for $800/mo over 36 months.

The length of car payments is the same
The difference is $300*36 months=$10k (meaning used car is 10k cheaper).

Assuming the used car kicks the bucket 3 years before the new one (same model, both should be on road for same length-right)...

a 2006 model lasting 12 years will die in 2018 (we get 9 of the 12 years)
a 2009 model lasting 12 years will die in 2021 (we get all 12 of the years)

The question I ask- is it worth it for me to spend 10k more to avoid a car payment in 2018? Youir price might be higher or lower than 10k... just plug your numbers in and make the decision.

When you finance for longer you will see a few things make this favor the used car more:

1) interest rates for new cars under 3 years of financing are usually real low, but 5+ year financing rates might be higher than used car rates.

2) for some cars, the 10k difference is amplified larger- for example hyndai or GM-Ford-Chrysler will have closer to a 15k difference on a 35k SUVs and probably 7-8k on a 20k sedan- meaning the larger depreciation favors the used car. Honda and Toyota have less depreciation over 3 years, so the new car is favored in same scenario.

3) cash flow is greater with used car in short term- if a person needs to maximize cash flow now, used car is the decision regardless of above (because less cash is coming out of account now).

[Scanner]

I guess you are also assuming $0 down. . .we tend to put 25-50% (usually 50%) down on our cars.

[jIM_Ohio]

Originally Posted by Scanner

I guess you are also assuming $0 down. . .we tend to put 25-50% (usually 50%) down on our cars.

Scanner- I generally do not put money down if I secure 2.9 or 3.9% type financing.

That should not change equation much (the different in payments should still be about the same whether there was a down payment or not, and my analysis is comparing the difference in total price I pay for the used car vs new car).

If you had 15k to pay for a car (assuming you would buy a new one for 30k or a used one for about 23k).

You then plug the numbers into a financing calculator
assuming used car is 3 years older than new car

35k financed at 36 months at 3.9%- this will last x years $1115/mo
25k financed at 36 months at 4.9%- this will last x-3 years $808/mo

difference is 11052 over 3 years.

35k-15k down is 20k financed at 3.9% lasting x years $640/mo
25k-15k down is 10k financed at 4.9% lasting x-3 years $323/mo

difference is $11412 over 3 years (difference is higher with down payment).

Is 3 years using a car worth an extra $11412 to you? It is to me.

2 big reasons in your situation (putting money down and buying new)-
if you are saving the down payment, this gives you 3 more years to save the 15k to put down on the next car.

I doubt you would spend $11400 on car repairs (transmission or body work) on a new car over 12 years. Unless something was really wrong. Whatever was not spent goes towards the 15k cash for the new car in 3 more years. Meaning if you budget now to put 15k down, I am suggesting you can budget 26k over 12 years to savings to the car- either as the down payment in 12 years or car repairs. If you bought used you would have 9 years to save the same 26k.

[disneysteve]

Originally Posted by jIM_Ohio

Assuming the used car kicks the bucket 3 years before the new one (same model, both should be on road for same length-right)...

That depends on mileage.

Let's say that you typically drive 15,000 miles/year. Buy a new car and after 3 years, it will have 45,000 miles on it. What if instead of new, you were able to find a 3-year-old model that only had 25,000 or 30,000 miles on it? That means the used car has only gotten about 2 years' worth of usage based on your average. All things being equal, the used car would last an additional year.

As I mentioned in another thread, we bought a new van in 2000. It was wrecked in 2002. We replaced it with a used 2000 van but the used one had 8,000 fewer miles than the one we had wrecked. Even though it was 2 years old, it was like turning back the clock 3/4 of a year for us, so in a way, it was only just over 1 year old based on mileage.

[LivingAlmostLarge]

Nice steve. I think I'd love a new car. But I doubt it's in our future. Right now our cars are 9 and 10 years old. I've gotten little savings for a new car, so I think used is what we will do.