House and Car purchase - Which order?

**marla** · 11-05-2007, 09:22 PM

How about buying a house that is located in a place that has access to your workplaces so there is no need for a car? That would save you a ton of money and you can always rent a car if you need to (still much cheaper than owning). Just an alternative thought.

**InDebtInDC** · 11-06-2007, 04:12 AM

When you're evaluating a lease, there are several factors you need to consider:

1. The current market value
2. The marginal depreciation
3. The marginal benefit
4. The leasing expense

You can look up all those terms on Google.

What I recommend is decide right now if you want to keep this car. Money aside, is it a good car? Is it reliable? Is it easy to maintain? etc.

Then look at the value of the car vs. the balance on the lease. Are you better off just getting out of the lease and buying another car? Should you keep this car and buy it out at the lease's end? Should you buy out the car right now?

Or should you get rid of the car immediately and walk away from the lease? Should you walk away at lease's end?

It all depends on what you want and the car. What is the car's year/make/model/mileage? What are the terms of your lease? How much wear and tear is on the car right now? Are there pre-termination penalties?

**mom-from-missouri** · 11-06-2007, 08:10 AM

Originally posted by marla View Post

How about buying a house that is located in a place that has access to your workplaces so there is no need for a car? That would save you a ton of money and you can always rent a car if you need to (still much cheaper than owning). Just an alternative thought.

Some of us don't have that option...

**jIM_Ohio** · 11-06-2007, 09:42 AM

house first. the car loan might make the credit ratios to high to get best interest rate for the house.

I would get a used car for $500 when the lease expires, then get the house, then get a newer car a few months after you close on the house.

We kept both our cars (used ford and used saturn) until after we got into our house and saw what the budget was, then went and got 2 new Hondas.

**lgslgs** · 11-06-2007, 12:04 PM

Could you return the car at the end of the lease and make do with only one family car for 3-4 months?

Between savings on insurance and car payments it might be a good way to save up for a used car - if you still really feel like you need two cars after that time.

I'd seriously look at how much of your family driving now actually really requires having two cars, and what is the actual dollar cost of those miles. It may be worth dealing with a bit (or even a lot) of inconvenience depending on how much you cold save every day.

Lynda

**cschin4** · 11-06-2007, 10:06 PM

Most people need 2 cars. Most people live in areas where there is no mass transportation. But, it is a good thought if you live in an area where this is available.
I think your plan is sound. I assume the car is fairly new (less than 4 yrs old) since it is leased. If you have maintained it and it runs well, then I think you should proceed with your plan of buying it. You are unlikely to find anything better for that price and you know the car's history.

**project15** · 11-07-2007, 03:52 AM

Thanks for all the ideas. It's a 2005 Mazda3, so it's fairly new and will still be under warranty by the time the lease is up. I would really like to go down to one car, but our work schedules don't allow us to have only one car. I have thought about buying a junker car for a few months, but I doubt I would be able to buy another mazda3 for the same price when the junker dies, so it seems that buying it at the end of the lease is going to be my best option.

Hopefully we can close on a house before we need to buy the car. If not, we'll be paying cash for a junker car to drive for a while since I would rather get a worse deal on a car than a higher interest rate on the mortgage.

One car and public transportation could be an option since we live in Chicago, but my work is only 10 miles from the neighborhood we want to live in and riding the bus would turn my commute into 1.5 hours each way. The trains around here don't go where I need them to, either. The convenience of a 20 minute commute and more time with my wife is worth a second car for me. Yes, I do bike in the summer, but that's not an everyday option due to weather.

**lgslgs** · 11-07-2007, 05:14 AM

In Des Plaines in the summer, with a flat 10 mile commute, you could always bike most days and even take a taxi or carpool with a coworker on the day or two a month when biking might not work.

3 months of car insurance savings could buy you a good enough car to handle that commute during the winter months.

Lynda

**loanstar** · 11-07-2007, 07:42 AM

i think the house is more important than the car, pay the damages and buy a cheap car as temporary solution. after a year you may have saved up enough to get a decent one!

**Jaun22** · 11-07-2007, 09:08 AM

I would go with a house first, but it all depends on where you are in life and what your needs are.

**mom-from-missouri** · 11-07-2007, 02:44 PM

The more I think on this one, I'd go for the house. It will go up in value. A car, goes down. You can always drive a cheaper car. We have some friends who are worth several mil, and have never ever had a new car. Their homes are paid for (one here and one down south for the winter), and each of their children were given a small starter home for a wedding present (and I do mean small 2 bedroom houses). She once made the comment they have never helped one of their children with a vehicle-only with their education, health and homes.

**cschin4** · 11-08-2007, 04:58 AM

Don't buy a junker car. What kind of price are you talking for you "junker"? And, the price may cheap but it may have problems that cost $$ to make it usable. And, for $8000 you can buy the car you have and know has been reliable maintained, never wrecked and so forth.
As for buying the car before the house, I don't see what difference that makes either way. If you have good credit, then what is the concern?

**InDebtInDC** · 11-08-2007, 05:49 AM

Originally posted by project15 View Post

It's a 2005 Mazda3, so it's fairly new and will still be under warranty by the time the lease is up.

Mazda3's are fairly good cars and last a long time, but they tend to have lower resale and are a little rougher than Hondas and Toyotas. Mazdas are sportiest of the bunch, but you pay for it with the low resale and harshness.

Before you do a lease buyout, just take a quick look at the used car market and see how much they're going for.

1. Buy it and keep it.
2. Buy it and sell it.
3. Walk away and buy another one.

It all depends on which one nets you the most money.

Right now it sounds like the forum wants you to do #1. It's a fine car, but just do your homework before you make a decision.

Decide now while you still have time on the lease so you don't have to make a last minute decision.

**InDebtInDC** · 11-08-2007, 05:53 AM

Originally posted by mom-from-missouri View Post

The more I think on this one, I'd go for the house. It will go up in value. A car, goes down.

To be fair, sometimes houses go down and sometimes cars go up. You just have to be careful no matter what you do.

In order for a car to go up though, you really have to know what you're doing and spend a lot of time/money. Other than 25+ year old classic cars, like I said in the other thread, the only modern cars I know to hold their value is the 93-98 Toyota Supra Turbo 6-speed (MSRP $40k, current market price $30-40k) and the 97-98 Acura Integra Type R (MSRP $25k, current market price $15-20k).

Any other car will just depreciate.

House and Car purchase - Which order?