Author Topic: Being rather recalcitrant with possible new car  (Read 1827 times)

fallonmedic

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Being rather recalcitrant with possible new car
« on: December 11, 2016, 12:45:43 PM »
Never a new car right? Well I/m considering. But like every other schmo, I have my reasons but value your opinions. So please, hear me out at least before I get crucified. 

Background: Wife and I are 40 year old. Daughter is on her own and out of the house. No other kids. Cant have any others. No debt. Will have 6 month emergency fund in place by July 2017. We have balanced budget and well within a 50/20/30 model. Currently live rent free because of my wife's work. Commuting between jobs and school (my career is a little stickier and I just cant switch locations) adds up to 4000+ miles a month. Fuel budget monthly is around $500-$600 depending on other extra driving. This will last for about another year before location changes will occur. Most of the commute is in a 2012 Ford Fusion that we paid cash for used. No major mechanical issues, although it was a rental car lease before we got it. And I have been diligent with routine oil changes and such. Our other vehicle is a 2003 Toyota 4-Runner 4wd that we bought new and have had no payment on it in years. I live in snowy Montana and 4wd is a necessity at times, not an option. Plus I need to for towing a small trailer from time to time. I plan on continuing owning that SUV till it dies but it has never had anything wrong with it in 13 years and has 183,000 miles. 

I am pondering buying a new Toyota Prius. Cost out the door would be about $26,000. After cash down and cash from selling the Ford Fusion, the loan would be about $18,000 and I would chose probably a 48 month loan making payments to be $382/month. Dealer incentives include 0.9% APR. MPG would increase from 30 to 50. Reducing my estimated fuel budget from $600-$700 a month to about $300-$400.

-Estimated $300 month fuel savings. Not including probable cost increases in insurance and registration
-I will have no need to get a larger car in the future as my family will not grow.
-I plan on keeping the vehicle for 13+years or until it dies
-I have peace knowing I will have a full manufacturer warranty and I will know without a doubt that it had no previous issues and has had routine maintenance performed. This one is huge for me.
-Also, I would get $4500 income tax credit come April

Am I having any logic in my debate or am I being a fool? Thank You all for your time and feedback. God Bless.
« Last Edit: December 11, 2016, 01:07:55 PM by fallonmedic »

babybug

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Re: Being rather recalcitrant with possible new car
« Reply #1 on: December 11, 2016, 01:18:45 PM »
Somehow I feel MMM would object, but I can't imagine why!!

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Metric Mouse

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Re: Being rather recalcitrant with possible new car
« Reply #2 on: December 12, 2016, 05:58:57 AM »
Somehow I feel MMM would object, but I can't imagine why!!

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You mean the guy who literally just bought a brand new car?

If you can save $300 a month in gas, by the time the loan is up you would almost have paid for the difference between your new car and the old one. Seems like a good deal to me, though I'd leverage it out for a 60 month loan, if they offer it. At that rate, why not?
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Bruinguy

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Re: Being rather recalcitrant with possible new car
« Reply #3 on: December 12, 2016, 03:39:36 PM »
Is it the most financially efficient thing for you to do?  No. You can get the $300 per month in gas savings without buying a new car.  If you buy a used Prius for the $8,000 (which sounds like the amount you have now), you can have the savings without a car payment.  What else could you do with that $300 per month if you didn't have a car payment?

I had a similar dilemma when I was considering leasing a new Leaf for what I was paying in gas each month.  Ultimately, I talked myself out of it because I really wasn't going to save any money if I traded gas payments for car payments.  I decided to go for a $12,000 used Prius that got the 45 mpg and I did get a savings of $200 / per month.

Good luck!




Bruinguy

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Re: Being rather recalcitrant with possible new car
« Reply #4 on: December 12, 2016, 10:10:20 PM »


You mean the guy who literally just bought a brand new car?


BTW I know you probably said this in jest, but don't forget he also just gave away $100,000. MMM has FIRED, and probably has a ton more than he needs. Now MMM is one of the Jonses that we have to remember not to try to not keep up with.

Metric Mouse

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Re: Being rather recalcitrant with possible new car
« Reply #5 on: December 13, 2016, 05:08:38 AM »


You mean the guy who literally just bought a brand new car?


BTW I know you probably said this in jest, but don't forget he also just gave away $100,000. MMM has FIRED, and probably has a ton more than he needs. Now MMM is one of the Jonses that we have to remember not to try to not keep up with.
That's exactly what I was saying. If MMM says to do something, one must remember that he has a much different perspective and much different situation than many people. One should not try too hard to keep up with a person as rich as he is.
Give me one fine day of plain sailing weather and I can mess up anything.

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Linda_Norway

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Re: Being rather recalcitrant with possible new car
« Reply #6 on: December 13, 2016, 05:14:32 AM »
I wouldn't take up a loan to finance the car. Otherwise I do understand the arguments for buying a new car for having good guarantee for a couple of years. Especially when you don't intend to sell it after few years. But I would only buy a car cash.

Liberty Stache

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Re: Being rather recalcitrant with possible new car
« Reply #7 on: December 13, 2016, 10:01:52 AM »
Is it the most financially efficient thing for you to do?  No. You can get the $300 per month in gas savings without buying a new car.  If you buy a used Prius for the $8,000 (which sounds like the amount you have now), you can have the savings without a car payment.  What else could you do with that $300 per month if you didn't have a car payment?

This. Also, you said you needed 4wd/AWD. To my knowledge, in the US, the Prius isn't AWD.
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neo von retorch

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Re: Being rather recalcitrant with possible new car
« Reply #8 on: December 13, 2016, 10:08:06 AM »
How many miles do you end up putting the 4WD car because you don't have any other choice?

What tires are you going to put on the 2WD drive car that you buy to replace the Fusion (i.e. what tires are on there now?)

The Money Monk

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Re: Being rather recalcitrant with possible new car
« Reply #9 on: December 14, 2016, 11:24:16 AM »
You said the long commuting is only going to last another year before location changes. So is that $300 fuel savings not going to be ab ongoing thing?

Either way, I agree with the poster above, I don't see any reason why you can't buy a used prius (or other car that gets better mileage).


marielle

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Re: Being rather recalcitrant with possible new car
« Reply #10 on: December 14, 2016, 11:42:56 AM »
-I have peace knowing I will have a full manufacturer warranty and I will know without a doubt that it had no previous issues and has had routine maintenance performed. This one is huge for me.

Why is this important to you? Is it because of the costs? If so, repairing is pretty much ALWAYS cheaper than financing a new car. Even if someone did not take care of a car (and I assume you're going to inspect the car for obvious signs of neglect). The used $10k Prius will not have an extra $16k+ of repairs compared to the new, ever. Remember, the new Prius won't be new forever, so it too will have repair costs. Unless you plan to buy new every few years...

Is it because you can lose your job if your car breaks down on the way to work? Unlikely but I guess it's possible. It doesn't sound like you drive for a living either. Instead of justifying a new car because of repairs/reliability, why not set aside a couple hundred for an uber/taxi ride if something happens? And perhaps a AAA membership. If you set aside $500, that's not even a dent in the cost of buying that new car.

Don't forget that insurance is more expensive for a new car as well, so it's not just the monthly payment you need to consider. My insurance, liability only, is $22 a month for a 13 year old car. New cars can be $200+ unless you do liability only...which is risky for a new car but that's another choice you have to make.
« Last Edit: December 14, 2016, 11:46:27 AM by marielle »

KCM5

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Re: Being rather recalcitrant with possible new car
« Reply #11 on: December 14, 2016, 12:23:08 PM »
If that warranty is really important to you, consider a certified used Prius. Three years old, just off lease, probably $16.5k?

Look, I just saved you $10,000!

What's the tax credit for? Does Montana give you money for buying a fuel efficient car or is it for something else?

StartingEarly

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Re: Being rather recalcitrant with possible new car
« Reply #12 on: December 14, 2016, 06:18:06 PM »
If Montana is anything like Wyoming with insane snow drifts even when it hasn't snowed in a week then I can see how you might want a 4wd car. The downside I see to that is any road conditions you run into where a set of new or less than half worn out Nokian Hakappalita R2s won't get you through is likely to result in the road actually being shut down. That seems to be the limiting factor out west. Maybe have a set of chains if you need to go through passes in weather since the 4wd allows you to not have chains under the most severe conditions the roads will stay open and the front wheel drive requires chains and snow tires at least in Colorado, don't know Montana's laws on going through passes.

Another option if the commuter car is just a commuter car is a first generation insight with manual. They'll blow everything out of the water mpg wise and are going for a song right now, just be prepared to do some basic work yourself and do research. They actually get through a lot once you put one size up tires on them that are snow rated and get the rear track close to the front track width with one inch spacers. They come from the factory with over a half inch ground clearance advantage to a current prius and with 175s instead of 165s that bumps up to about 6.25 inches, only about three inches less than your 4wd has unless it is lifted. With a set of Hakkas and wheel spacers they still get more mpg than a prius on a good summer day generally. YMMV

Signed a hypocrite who still owns a Ford Escape Hybrid that gets a paltry 22-25mpg ;) Damn I wish I could track down that gremlin :(

Slow&Steady

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Re: Being rather recalcitrant with possible new car
« Reply #13 on: December 15, 2016, 10:53:42 AM »
I am not a full MMM follower and will probably never be but I enjoy saving money and prefer a more simple life than most of America so I follow the forums.  I am actually going tomorrow to by a brand new car ... Nissan Leaf that I am getting a $10k rebate on in addition to the tax credit and it will be financed as 2.5% interest.

We currently have a Toyota Prius, purchased brand new in 2006, we drive it daily and have over 280k miles on it.  I look at that car as one of the best purchases (outside stock/investments) I have ever made.  We have a 2nd Prius that was purchased used last year, 2008 with 83k miles on it.

Do you know which one we worry about more?  Which one we are considering getting rid of?  The 2008 with 200k less miles on it, we seem to have to fix things more often on this one.  They are always small things and not reasons in themselves to dump the car but rather annoying when the older car doesn't seem to have these things pop up.

I vote for a Toyota Prius (new or used) and if you are going to keep it for 10+ years and 200k+ miles I feel there is nothing wrong with buying new.  In a purely financial opinion a slightly used model would probably be better but I agree with the statement below that you made, bold added for emphasis.

...I will know without a doubt that it had no previous issues and has had routine maintenance performed. This one is huge for me.

BigRed

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Re: Being rather recalcitrant with possible new car
« Reply #14 on: December 15, 2016, 12:14:27 PM »
If that warranty is really important to you, consider a certified used Prius. Three years old, just off lease, probably $16.5k?

Look, I just saved you $10,000!

What's the tax credit for? Does Montana give you money for buying a fuel efficient car or is it for something else?

I just got one of those for $15,000.

As an added bonus, if the car has been, and will be, in a CA Air Resource Board state (CA, New England, MD) the warranty on the Hybrid system is good for 10 years/150,000 miles.

ketchup

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Re: Being rather recalcitrant with possible new car
« Reply #15 on: December 15, 2016, 12:44:04 PM »
-I have peace knowing I will have a full manufacturer warranty and I will know without a doubt that it had no previous issues and has had routine maintenance performed. This one is huge for me.

Why is this important to you? Is it because of the costs? If so, repairing is pretty much ALWAYS cheaper than financing a new car. Even if someone did not take care of a car (and I assume you're going to inspect the car for obvious signs of neglect). The used $10k Prius will not have an extra $16k+ of repairs compared to the new, ever. Remember, the new Prius won't be new forever, so it too will have repair costs. Unless you plan to buy new every few years...

Is it because you can lose your job if your car breaks down on the way to work? Unlikely but I guess it's possible. It doesn't sound like you drive for a living either. Instead of justifying a new car because of repairs/reliability, why not set aside a couple hundred for an uber/taxi ride if something happens? And perhaps a AAA membership. If you set aside $500, that's not even a dent in the cost of buying that new car.

Don't forget that insurance is more expensive for a new car as well, so it's not just the monthly payment you need to consider. My insurance, liability only, is $22 a month for a 13 year old car. New cars can be $200+ unless you do liability only...which is risky for a new car but that's another choice you have to make.
Building on this, the bathtub curb of reliability means that in the most objective terms, the most reliable car will be probably a very lightly used one that's passed the "infant mortality" range.  So probably something along the lines of a 2yo 25-30k mile car.

StartingEarly

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Re: Being rather recalcitrant with possible new car
« Reply #16 on: December 15, 2016, 01:52:10 PM »
If you are going the Leaf route make sure your AGI is high enough that you will get the full rebate or that could be a several thousand dollar blunder. Again, winter tires are your friend on any vehicle, especially 2wd. Most 2wd winter tire vehicles handle snow better than most awd or 4wd all season tire vehicles.