Author Topic: Advice on Unmustachian New Car Purchase  (Read 2608 times)

bjclifto

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Advice on Unmustachian New Car Purchase
« on: August 12, 2013, 04:46:33 PM »
So, we did something not so smart......

My wife got rear-ended three weeks ago and her car got "totaled".  We received a check from the other guy's insurance for $15,700 for her 2009 Toyota Camry which we recently paid off.  The original, smarter thought was to use the $15k for a 2-3 year old car with decent mileage and hopefully get something for $12k or under.

However, after looking at vehicles and test driving a few different models, we opted to buy a new 2013 Subaru Impreza hatchback.  Don't get me wrong, it's a nice vehicle and will be great for our family and we plan on keeping it FOREVER, but I'm definitely feeling some buyer remorse.  I still drive my 2004 VW Jetta with 130k miles on it and plan to drive it until the wheels fall off.  Her newer 2009 Camry was supposed to be the car that lasted forever, since my Jetta could crap out any day.  Obviously, accidents happen....but, buying a new car wasn't necessarily top of mind.

We got the new car for $20k.  We put down $5k and are financing just over $16k (taxes, etc.) at 1.6% for 36 months.  Obviously, this was not the original decision or the best financial thing we've done.  Would it be sensible to just make the monthly payments for $480 over next 3 years becuase it's a decent rate and then just invest the other $10k remaining? Or should we put a significant portion ($10k) towards the vehicle to shorten the payment cycle?

Let me know your thoughts.  Thanks in advance!

Numbers Man

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Re: Advice on Unmustachian New Car Purchase
« Reply #1 on: August 12, 2013, 04:51:30 PM »
Face Punch!

bjclifto

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Re: Advice on Unmustachian New Car Purchase
« Reply #2 on: August 12, 2013, 04:54:02 PM »
Agreed :(

Lans Holman

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Re: Advice on Unmustachian New Car Purchase
« Reply #3 on: August 12, 2013, 04:54:50 PM »
Assuming you the $480 doesn't mess up your monthly budget, I would think you would want to just invest the 10k.  1.6% is really cheap, I'd be pretty surprised if you can't beat that.

Christof

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Re: Advice on Unmustachian New Car Purchase
« Reply #4 on: August 12, 2013, 10:50:48 PM »
Would you change your insurance if you owned the car completely? If yes, then I'd add the difference to the 1.6% you have to beat by investing.

Jamesqf

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Re: Advice on Unmustachian New Car Purchase
« Reply #5 on: August 12, 2013, 11:18:38 PM »
Face Punch!

Double face punch.  One for the new car, one for thinking that the original thought of buying a 2-3 year old car was all that much smarter. :-)

bjclifto

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Re: Advice on Unmustachian New Car Purchase
« Reply #6 on: August 13, 2013, 09:38:04 AM »
Yea, these comments are well-deserved...

So a couple takeaways:
  - Punch myself in the face repeatedly
  - Punch myself just a couple more times
  - Just pay the $480/mo if it's within the budget over next 3 years
  - Pay off early if it will affect insurance
  - Invest the remaining $10k in something that will obviously gain more than the 1.6% loan
  - Pray my VW Jetta lasts an eternity

Numbers Man

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Re: Advice on Unmustachian New Car Purchase
« Reply #7 on: August 13, 2013, 12:17:43 PM »
@bjclifto - You have a great sense of humor and made me laugh. Take the insurance money and pay down the principle and keep making those payments until you're close enough to pay off the whole thing from savings.

Mr.Macinstache

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Re: Advice on Unmustachian New Car Purchase
« Reply #8 on: August 13, 2013, 12:42:11 PM »
Lets look at the big picture, you took on some debt a 1.6%. Not the worst thing in the world to have ONE car payment along with a mortgage. If that is the worst of it, you are fine assuming your living well under your means.