Author Topic: Is buying this car a good Mustachian choice?  (Read 1604 times)

intlstacher

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Is buying this car a good Mustachian choice?
« on: April 30, 2016, 06:05:50 AM »
I've been going back and forth on whether or not I am making a good choice with the new-to-me car purchase that we are planning to do. I feel like it has many mustachian aspects, but then I feel like overall, it's still too much spending. 

A little info on my situation - I live in Saudi Arabia - so my resources are not the same as they would be if I lived in a Western country...

Current situation:
We own a 2006 Volvo S40. We bought it last year for $3000. In just over 1 year, we have spent about $1600 in maintenance and repairs (about half the price we spent to purchase it). It has been causing us more trouble lately and we think it has some serious computer/electrical issues going on, as well as, some transmission issues.

Where we live, there is not a Volvo dealership, so there is no place to buy Volvo parts. We found an exclusive Volvo mechanic who has tons of old/broken Volvos and he uses those for parts to fix broken cars. So we usually get 2nd hand parts because it is a huge difference in price.


Here is the plan for buying a new car:
We found a 2014 Hyundai Tuscon. It costs $11600 (about $3000 under what KBB says it's worth).
There are Hyundai dealerships here, but also it's nearly a brand new car, so hopefully wouldn't require any repairs any time soon.
We can not afford to pay the $11600 in one lump sum, but my employer is going to give me an 8mo interest free loan to pay for the car. It must be paid in the 8 mo.
We plan to stay in Saudi for 2 more years, and after 2 years, we will sell this car and we can probably still be able to sell it for about the same as what we will pay for it, so it should be about a 90% return.
We can probably only sell our Volvo for maybe $1500 because of the condition it is presently in - but we would put that straight towards the loan.

Would you consider this a Mustachian purchase? Or is it still frivolous because we cannot buy it straight out?

alsoknownasDean

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Re: Is buying this car a good Mustachian choice?
« Reply #1 on: April 30, 2016, 06:25:02 AM »
Not really.

It'll drop in value, and surely you'll get something reliable for less than $11600.

MattC

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Re: Is buying this car a good Mustachian choice?
« Reply #2 on: April 30, 2016, 09:01:44 PM »
I'd stick with cheap vehicles; maybe the Volvo (milk what use you can out of it before it dies; then sell to your mechanic) or a $2k-5k Honda or Toyota.  First, newer vehicles aren't necessarily cheaper to maintain.  Sure, some years they will require nothing, but if the AC dies or they get a door ding, etc, you have to shell out the $ to fix it since you don't want your $10k asset to lose too much value.  And you'll be shelling out more money since there isn't a ready supply of used/aftermarket parts.  Repair cost is effectively capped on a cheap car since you would never spend more than it's worth.  Secondly, tying up that much cash in a vehicle means you can't invest it.  If you can get 8% in the market, $10k extra in cars is $800 a year compounding that you're losing out on.  Thirdly, insurance will probably be more for the more valuable vehicle. 

intlstacher

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Re: Is buying this car a good Mustachian choice?
« Reply #3 on: May 01, 2016, 03:54:40 AM »
I see the points made. I think we could probably find something that is closer to 6-7k and would be a car. H is very set on buying an SUV. 1) Because if you've ever googled traffic in the ME - or even Saudi, you will see that it is crazy and he just wants something that might be a bit more safe. 2) Everyone here wants SUVs so he thinks that when it would come time for resale, it would be much easier for us to sell the SUV than it would be to see the car (I think he is right) 3) We have possible plans to start having kids in the next two years, and he thinks it would be easier/safe with the SUV than with a car.

Points made:
- Insurance is not more expensive because here it is one flat rate for everyone for the whole year. (REALLY CHEAP)
- Repairs could be more expensive since it is newer - but there would be much more of a market of mechanics for us. There are not many mechanics here who will work on Volvos, but there are lots who will work on American or Asian cars.
- Again, back to the traffic - it's nearly impossible for cars here to not have a door ding or scratches here, so small things like that we would not spend money on repairs. The car already has many dings on it as is and people don't made big deals over that because that's just how things are here.
- Used cars here hold value for longer than they might in the US. A friend of ours bought their car 4 years ago for 50000SAR and just sold it now because he is leaving for 47000sar. So we feel confident that we could sell it at about what we have bought it for.
- I forgot to mention that we will both be taking up extra side jobs in order to pay for the car, instead of pulling from our existing budget.

dagagad

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Re: Is buying this car a good Mustachian choice?
« Reply #4 on: May 01, 2016, 07:58:05 AM »
It isn't Mustachian but my Dad swore by buying 3-5 year old used cars (almost always toyotas) and keeping them for about 8-10 years and then repeating the process. We had like one breakdown in my lifetime at home. That was probably a Toyota + my dad knows how to look after a car thing.

So, not the worst idea but you could probably do better with an older car. I've heard mid 2000s Hyundais are good deals as that was before their reputation upticked.