Considering a new car...

[HydroJim]

I'll try to keep this short. Looking for input on my decision making process.

I've been mulling over this decision for 3 weeks. I'm mainly considering upgrading because I'm still in college and I anticipate to be moving all over for the next decade. Last year's internship was 10 hours from home and this year's internship is 24 hours from home. This year, I'll be in AZ for the summer and it's going to be hot. My current 1993 Geo Metro doesn't have A/C and it's questionable if it'll even make it out to AZ in one piece. I make frequent long trips to see my girlfriend and it would really be nice to travel more comfortably. I really like my current car in terms of driving experience, it just sucks for road trips. Especially in 90+ degree weather. Also, parts are probably going to start becoming hard to find and it's somewhat of a death trap relative to modern vehicles.

I planned on someday purchasing a used mirage to replace my current geo metro but these recent rebates are enticing. From my point of view, I'm seeing a new car for $10k vs some other used car for $5k with 100,000 miles on the clock.

Basically, Mitsubishi is offering $3,500 rebates on their 2015 mirages to make room for the 2017 version.

This means I can walk away with the bottom of the line trim(manual transmission, no cruise control basically) for $8900+tax&tags.
I can walk away with the top of the line trim(CVT and cruise control among some other fancy stuff) for 10,600+tax&tags.
My insurance would probably increase a lot from the current $600/yr to something like $1200/yr?

I can get financing through my credit union at 3% for 72 months or 2.5% for 60 months.

My overall financial picture:
$9500 in my Roth IRA
$4200 in savings
no debt

I've projected my net worth to be $30k when I graduate from college. Purchasing a new car would make that number closer to $20k. I've been having trouble determining if that's worth it or not. I certainly don't need a new car. Just considering if I really want a new car.

I don't currently see a point to purchasing a $3k-$6k used car because then I'll still be on the hook for maintenance like I am with my current geo. I like working on cars, but it's not something I have a ton of time for these days.

Let me know what you think.

Thanks.

[neo von retorch]

No debt

Continue to not be in debt! Don't overestimate maintenance. Worst case scenario on a used car is an engine, which is like $3k. If you're spending $3k on a car, you could replace 3 engines before you approach the cost of a new Mitsubishi (especially since tax, titles, tags and insurance are real expenses, and insurance is a big, ugly recurring expense!)

Insurance will be a lot more because you're talking about taking out a loan, and lenders require collision insurance, which you don't really need for a $3-5k car. $600 / year is a huge increase over your current expenses, and that's your estimate. Get actual quotes to see what the numbers really are.

Build a spreadsheet projecting the difference in your income, expenses and savings over the next 10 years.

[HydroJim]

No debt

Continue to not be in debt! Don't overestimate maintenance. Worst case scenario on a used car is an engine, which is like $3k. If you're spending $3k on a car, you could replace 3 engines before you approach the cost of a new Mitsubishi (especially since tax, titles, tags and insurance are real expenses, and insurance is a big, ugly recurring expense!)

Insurance will be a lot more because you're talking about taking out a loan, and lenders require collision insurance, which you don't really need for a $3-5k car. $600 / year is a huge increase over your current expenses, and that's your estimate. Get actual quotes to see what the numbers really are.

Build a spreadsheet projecting the difference in your income, expenses and savings over the next 10 years.

I do all my own work so maintenance is not really a problem. I've recently rebuilt and reinstalled my engine so it's good to go for another 100,000 miles. There really is nothing wrong with my car, it just has the occasional problem that pops up. Last summer, some corroded wires kept my car from starting and recently, I've developed a leaky gas tank. It can be a hassle sometimes.

I did the projection and came out to about $20,000 over a 15 year period to get the new car.

I know it's not the best financial decision in the world. I've just been considering making the leap for greater comfort.

I was leaning away from the new car purchase because I love money so much. I just wanted to hear what some mustachians have to say.

[Tetsuya Hondo]

Have you consider any other alternatives? I would rather spend $7-8k on a used Accord/Camry/Mazda 6/anything else Japanese than $10k (which will be more like $11-12k to drive off the lot) on a brand new Mirage.

[Uturn]

I'm 46.  I started broke, made a ton, went broke, and clawed my way to the top again.  Through all that, the best decision I ever made was 10 years ago I decided to never borrow money again.  I'm not against new cars, but I am very against financing a car.  I don't care what the car is or how much it cost or how many repairs your current car needs, you will not come out ahead by financing your cars.  Yes, I know your cousin's neighbor found a 1962 XKE with 10k miles for $12k and took out a loan, but that is not part of this conversation.  (this last statement is intended to be troll repellent)

[RWD]

My opinion is that the Mirage is a poor excuse for a car and you can find better for ~$9k or less. For example, this 2015 Nissan Versa Note with 4k miles.

I wouldn't be too afraid of financing if you can get such a low rate. But definitely consider used cars as you'll save money and/or get a much better car.

[2Birds1Stone]

As someone who is mechanically inclined why not scoop up a NICE used car for $3-5k and enjoy it until you graduate college?

In your neck of the woods I am sure there are a lot of higher mileage rust free examples.

[Scandium]

yeah why not get a nice used Yaris or Fit something? From my research the reliability of Mitsubishi is not great. What does paying a few thousand more for those first 20-30k miles get you?

And if you're driving long distances I'd go for cruise control. I didn't know they made cars without that anymore! My 1981 chevy van had it.. Keeps me from speeding, consider it a cost saver in speeding tickets.

[tobitonic]

No no no. Don't get a financed car. Get a used, paid in cash car. A Honda or a Toyota. Fit or Yaris if subcompact, Civic or Corolla if compact, Accord or Camry if mid-sized.

Any of these vehicles will last you 200,000 miles with very little maintenance.

Your housing and transportation are two of the biggest financial outlays you will have in the next 50 years; don't make the mistake of buying more than you need with either.