Author Topic: The dreaded car question. Advice on a dilemma  (Read 4849 times)

Red Beard

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The dreaded car question. Advice on a dilemma
« on: April 19, 2014, 08:46:28 AM »
Long time listener, first time caller.

My SO and I will be moving from an area with a very high cost of living to one that, while still high, is much more reasonable. With this move we anticipate our housing expenses will be cut in half our time outdoors will be doubled and we will be able to continue our path to FI.  The one negative to this move comes in the fact that for the first time in three years we will have to own a high speed statistical death trap. While we plan on living in a central location and biking as much as possible, we have determined a car  is a necessity and have begun working through the purchase process.

We are currently weighing buying a new hybrid vs. a higher mileage used car. The used car would get 25-30 mpg and would cost $9,000 which we would pay in cash. The new car, getting 50 mpg, would cost around $24,000 but qualifies for both a $6,000 tax credit and 0% financing for up to 48 months. We would also put $9,000 in cash down leaving our monthly payments at roughly $300 a month and would invest the tax credit.

Right now I am leaning (albeit slightly) to the new car with the thought of driving it into the ground over the next 15 years. Any thoughts on if that would be a face-punchable offence or other alternatives we might have?

CarDude

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Re: The dreaded car question. Advice on a dilemma
« Reply #1 on: April 19, 2014, 09:00:35 AM »
Welcome to the forum. First of all, which cars are you considering?

Second, I never recommend buying a car unless you buy it in cash. Lots of folks here are on the end of taking out long mortgages and investing the extra cash, and it looks like you're thinking of doing that on a car-sized scale, but I've always found that approach to be too risky of a proposition.

Red Beard

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Re: The dreaded car question. Advice on a dilemma
« Reply #2 on: April 19, 2014, 09:14:06 AM »
Right now we are comparing a 2014 Ford Fusion Hybrid to either an older (2008-ish) Ford Fusion or Hyundai Elantra with around 80,000. We aren't particularly tied to those models if we go the used route however.

warfreak2

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Re: The dreaded car question. Advice on a dilemma
« Reply #3 on: April 19, 2014, 09:19:51 AM »
If you can certainly pay off the car loan completely within 48 months, so that you pay no interest, and you'd be willing to buy it in cash anyway, then it's OK. I wouldn't punch you in the face. But make sure you have enough money in your emergency fund to cover the 0% loan before the interest kicks in. Also check the conditions of the loan, make sure there's no early payment penalty, and that it's not one of those scams where once the interest rate goes up, it's retroactively applied back to the opening date of the loan.

jpo

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Re: The dreaded car question. Advice on a dilemma
« Reply #4 on: April 19, 2014, 09:23:48 AM »
Why not get a used hybrid instead? Used Prius should be close to your price range.

$24k is more than I would spend on a car.

http://www.mrmoneymustache.com/tag/cars/

CarDude

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Re: The dreaded car question. Advice on a dilemma
« Reply #5 on: April 19, 2014, 09:26:39 AM »
Ahh...keep in mind that unless you're a dedicated hypermiler with a great route, you're not going to get a 50 mpg average from a 2014 Fusion hybrid. The Fuelly average is 38 over 77 drivers, with modes at 37, 39, and 41.

http://www.fuelly.com/car/ford/fusion%20hybrid/2014

That said, in your shoes, I'd go with a used '07+ Camry hybrid, Camry, or '08+ Accord. If you were set on buying new, the Fusion hybrid's not a bad choice. However, I still wouldn't buy it unless I could buy it in cash, as you're going to pay full coverage on that Fusion until it's completely yours, and that extra insurance on a brand new car will take a large chunk out of whatever profits you might make from investments.

To be completely honest, I don't ever think it's a good idea to buy a car you can't buy in cash, unless it's a life or death emergency or you're capable of paying it off in full in a couple of months. This doesn't sound remotely like an emergency, and it sounds like you might have 4 years of car payments and unnecessarily high insurance premiums if you do this.

daverobev

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Re: The dreaded car question. Advice on a dilemma
« Reply #6 on: April 19, 2014, 10:46:08 AM »
How much driving, and what kind of driving will you be doing?

Hybrid = stop and go traffic. Diesel = all highway. Matrix, Vibe = mixture. Buick = low mileage (cheap to insure.. at least where I am).

30mpg is *bad*. I mean - it's not terrible, but if you don't need a large crap heavy autotragic, you can get a Civic or whatever that will do 35 or 40 without the extra expense of going hybrid.

Don't get me wrong, I'm all for better technology, and the Prius is cool and everything, but it is NOT a good choice for most people from a purely financial perspective.

Flaneur

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Re: The dreaded car question. Advice on a dilemma
« Reply #7 on: April 19, 2014, 11:10:42 AM »
the Prius is cool and everything, but it is NOT a good choice for most people from a purely financial perspective.

Compared to which vehicle? If we are comparing a 2000 Civic manual with an automatic 2007 Prius then you may be right. A Prius is cheaper to own than a standard model Civic of the same year of manufacture, and there are plenty of calculators on the web to verify it.

AccidentalMiser

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Re: The dreaded car question. Advice on a dilemma
« Reply #8 on: April 19, 2014, 11:16:19 AM »
We bought a 13 Ford Focus with a 5-speed manual tranny.  I consistently get 35 mpg.  My cost with sales tax was 15k.  That included a lifetime power train warranty.

No freaking way I would spend 24k on a car.

jpo

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Re: The dreaded car question. Advice on a dilemma
« Reply #9 on: April 19, 2014, 12:48:53 PM »
Don't get me wrong, I'm all for better technology, and the Prius is cool and everything, but it is NOT a good choice for most people from a purely financial perspective.
Actually, when I was car shopping 6 months ago, comparing used Prius prices against other used vehicles consistently gave a lower cost per mile in favor of the Prii.

Can't speak to new.

Gin1984

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Re: The dreaded car question. Advice on a dilemma
« Reply #10 on: April 19, 2014, 12:51:26 PM »
Welcome to the forum. First of all, which cars are you considering?

Second, I never recommend buying a car unless you buy it in cash. Lots of folks here are on the end of taking out long mortgages and investing the extra cash, and it looks like you're thinking of doing that on a car-sized scale, but I've always found that approach to be too risky of a proposition.
LOL, I have student loans, I'd rather pay 1% on my car loan and use the excess to pay down the student loans, then pay the minimums on the SLs and have a paid off car.  It depends on where you are in life.

Emg03063

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Re: The dreaded car question. Advice on a dilemma
« Reply #11 on: April 19, 2014, 01:54:44 PM »
Used Prius ('03 or later).  Convert to a PHEV.  http://www.enginer.us/

daverobev

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Re: The dreaded car question. Advice on a dilemma
« Reply #12 on: April 19, 2014, 06:53:03 PM »
the Prius is cool and everything, but it is NOT a good choice for most people from a purely financial perspective.

Compared to which vehicle? If we are comparing a 2000 Civic manual with an automatic 2007 Prius then you may be right. A Prius is cheaper to own than a standard model Civic of the same year of manufacture, and there are plenty of calculators on the web to verify it.

Depending on many factors. If you're doing mostly city driving, and a decent amount of it, sure. If you're doing highway, not so much.

To be fair, one issue with the Civic is its popularity - ie, lack of depreciation.

Cheaper to own - again, sure. But over what timespan? And at what purchase price? If you're spending $1k a year on gas with a Civic, $750 with a Prius, but the former costs $6k and the latter $9k you won't make the difference back.

Red Beard

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Re: The dreaded car question. Advice on a dilemma
« Reply #13 on: April 20, 2014, 08:15:16 AM »
Thank you for all the suggestions! In doing a little more research I discovered that a used car might be eligible for a tax credit if has never been registered in state before. With that in mind, paired with the fact a majority of our driving will be stop-and-go, I've found a few local 2008 Camry Hybrids in both our mileage and price range that might do the trick

CarDude

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Re: The dreaded car question. Advice on a dilemma
« Reply #14 on: April 20, 2014, 08:46:59 AM »
Thank you for all the suggestions! In doing a little more research I discovered that a used car might be eligible for a tax credit if has never been registered in state before. With that in mind, paired with the fact a majority of our driving will be stop-and-go, I've found a few local 2008 Camry Hybrids in both our mileage and price range that might do the trick

Great! Yes, you can get Ford Fusion hybrid numbers with the Camry hybrid but for much less since they're older. Good on you for doing your research...