Penny wise or pound foolish?

**Broken Arrow** · 02-24-2009, 05:31 AM

Base model Civics or Corollas right?

To me, what's worth considering is the Total Cost of Ownership for the lifetime of the car that we own it.

To "save" $1k to $2k upfront may actually cost MORE in terms of TCO, depending on what car it is. Or, it may not. Again, it depends.

With or without the match, I really don't think it was a bad idea to have spent a little extra on vehicles like these. You'll probably more than make that up in the end....

**Russell** · 02-24-2009, 06:47 AM

I agree, if you keep it for a long time and the cars turn out to be reliable and low maintenance (and they should being a Civic/Corolla) then you made a good choice. With either of those cars you could sell it in 5 years for $8k.

I'm big on cars, have always worked on them myself etc and was a big believer of buying used. Until we had our DD and I wanted her and my wife to be in a new/safe car. That's when we bought a new Accord and it's been great. I've spent almost $6k on my older BMW in upkeep where as the Accord you just put gas in it, change the oil and it's ready to go cross country anytime. It's got 60k miles on it now and I'm thinking about getting another new car. I'm now a big believer of having at least one new car in the household - but it has to be the car that's also smart to buy new (i.e. one that holds its resale value and one that's reliable). My next purchase might be replacing my BMW 3 series with a Honda Fit but in this economy I'm just going to have to wait.

**LivingAlmostLarge** · 02-24-2009, 07:22 AM

Turns out I kept the car a decade and still have it. And I went with the toyota corolla.

Broken Arrow, I don't know what I would have bought. Maybe a used Toyota or Honda like i have now, almost 10 years old, would have been what $4k would have bought me likely. I would have stuck with a highly rated reliable car. I would not have bought a newer american car.

Russell, one of my friends whose a used car advocate, said he buys new because he wants the latest airbags for his wife and kids. He drives a beater, but he wanted a minivan with side airbags, better crash ratings than a used 5 or 10 year old minivan like he might have purchased without kids. So perspective on safety as well?

**disneysteve** · 02-24-2009, 07:27 AM

I think there are 2 issues here: the car issue and the parental control of adult children issue.

On the car issue, I think you'd be nuts to pass up the match and get a junker that you could afford on your own instead of a brand new Toyota or Honda.

The parental control issue is more troublesome to me. My parents bought me a car, too, but I was totally involved in the process and got to pick out the model, color, features I wanted. They didn't dictate to me what I had to buy. That really bothers me and I think I might have refused the money simply on principle.

**Goldy1** · 02-24-2009, 07:42 AM

When I was in hs and college, I was given my parents hand me down cars, but I was never bought a NEW car. This was more than most my freinds got though!
My dad likes to promise stuff and not go thru with it. He told my dh for years he would give him a down payment for a new car on dh's next car purchase. I never ever expected it and HE offered it many many times. We are adults and can buy our own things thru working. However, on the principle of him backing out, it created a strife between us esp since he did the same thing for other items.

**DebbieL** · 02-24-2009, 08:39 AM

I would have taken the match in a heartbeat. It doesn't sound like LAL had a problem with either of the options that was presented as affordable. If I absolutely hated the style or something, then I might think twice about it, but a Corolla or Civic are pretty good basic cars. No problems there. I wish my parents had given me a match on a new car when I was young instead of buying me an older beater (which was a Pontiac Sunbird and a piece of crap). Don't get me wrong, I was grateful to be given a car, but that thing broke down a lot. It nickeled and dimed me to death, kwim?

**DebbieL** · 02-24-2009, 08:48 AM

LAL - you have some whack job named Sundance on your blog with some very nasty comment!

**Ima saver** · 02-24-2009, 09:00 AM

I would have taken the match too!!

**jIM_Ohio** · 02-24-2009, 09:39 AM

In general you will come out ahead on either car if you buy new and finance for 3 years or less. So getting the 12k car (or was it a 10k car) is the best deal when presented with 12k car which will last 9 years or a 4k car which may only last 3-5.

**tripods68** · 02-24-2009, 10:22 AM

That reminds of my mistake I made. After joining the Navy in 1989 right after H.S, my parents gave me full cost to pay for a brand new car (Hyundai). I kept it for 5 years (clean and well maintained) when decided foolishly traded it for a brand new Dodge Avenger in 1994. At which time, I began making my first car payment ever. Big mistake! What I should have done is kept it for another 5 or 7 years and could have saved $20K - $22K car payments.

**LivingAlmostLarge** · 02-24-2009, 11:33 AM

DS, they definitely wanted to control the decision. Felt the cars were reliable and safe. Buying a used car was not an option. They felt I was young, naive, inexperienced, and not sharp enough to buy a used car. Hence the purchase with strings attached. Not unlike college. I didn't mind and looking back, I still don't.

Goldy it was a match of my savings contingent on purchasing one of two cars they picked out. In fact my parents placed the order with the dealership, no weasling out of specifically what they wanted. Stripped down base models of Civic or Corolla. No power windows, no power door locks, etc. My DH still teases me about my car 10 years later.

DebbieL, no problems with taking either car. I was grateful to get anything. I certainly did NOT expect my parent to match my savings. In fact my mom had always said we're not buying you a car! Surprise they matched my money!

Jim, why would you say I came out ahead? The car was $10k at the time. It was a stripped down model in the ad. Base model, no clock, no stereo, nada. It was a car on 4 wheels. Wouldn't the $4k car last at least 5-10 years?

Tripod, I know about wanting to trade in the car! I always have car fever but I remember that I had a nice paid for car so I have to restrain myself. Although if it makes it 20 years I might allow it to give up the ghost.

**disneysteve** · 02-24-2009, 12:26 PM

Originally posted by LivingAlmostLarge View Post

DS, they definitely wanted to control the decision. Felt the cars were reliable and safe. Buying a used car was not an option. They felt I was young, naive, inexperienced, and not sharp enough to buy a used car. Hence the purchase with strings attached. Not unlike college. I didn't mind and looking back, I still don't.

If you didn't mind, that's all that mattered. Personally, at 21 I would have felt uncomfortable if my parents were trying to dictate which car I had to get. I probably would have taken the money and the car (I'm not stupid

) but I wouldn't have liked it being handled that way. I would have wanted to be more involved in the decision.

**jIM_Ohio** · 02-24-2009, 12:55 PM

Originally posted by LivingAlmostLarge View Post

Jim, why would you say I came out ahead? The car was $10k at the time. It was a stripped down model in the ad. Base model, no clock, no stereo, nada. It was a car on 4 wheels. Wouldn't the $4k car last at least 5-10 years?

4k car last 10 years- that would be a great deal.
4k car last 5 years- maybe

Here is how I do the math- for ME-

New 2009 honda pilot for 31995 and a 3 year payment plan of $1100/mo. Expect to get 10-12 years of use from vehicle.

Used pilot- 2007 or 2006- will sell for 25000 and a 3 year payment of $700/mo. Assuming car lasts the same amount of time as a new pilot above, I will get 7-9 years from the used car.

The question I ask myself- is the $7000 cost savings worth 3 years? It would cost me $700/mo at year 7 to replace the used pilot.

To me that means get the new one (which will last longer) for a lower overall cost of ownership.

The longer you finance, the less of a deal new really is (using the logic above).

**wincrasher** · 02-24-2009, 01:27 PM

well you leave out a few items.

first, the term on a used car is typically 3 years max. also, the interest rate can be much, much higher. so from a cash-flow basis, as used car can cost the same, if not more each month. people consider that.

second, you have to put a value on risk. a new car is basically risk free because it is under warranty. a used car can be a crap shoot, depending on how old and what brand. even honda makes lemons.

Penny wise or pound foolish?