Yet another car question

[el_beardo]

Last year I finally gave up on our 1997 Altima with 240k miles on it and got a new 2012 Hyundai Sonata financed 100% @ 2.49.

I bought the Altima in 2002 with 97k miles. I had a couple of bad experiences with the car just stalling in traffic and the mechanic had a really tough time figuring out the problem ( it ended up being the oxygen sensor I think )

After those headaches my idea with buying new was to go for reliability with the 10 year/100,000 warranty plus the 35mpg highway. I commute 25 miles each way all highway ( 15k miles a year ) and grew weary of the 'unknown' problems lurking in used cars ( even though I practically drove the Altima into the ground )

So now it's a year later and after becoming more educated on FI and setting my own goals I'm thinking about the car. I still owe 20k on it and would be lucky to sell it for $17k. If I bought used I would probably get another Altima or Camry with 100k miles for around $8000.

So I would be having to potentially pay $11,000 ( 8,000 + 3,000) to get out of the 20k sonata debt. I'm not convinced it's worth it. I'm hoping I can get a good 12 years ( 200k miles ) out of the sonata + I don't plan on commuting 25 miles each way forever.

With buying used I would end up paying half but also getting half the miles out of it.

Makes sense to keep the new car at this point ?

[James]

I would say it makes sense to sell and down grade.  How much are your payments currently?  You have to remember that sunk costs are sunk, but all the costs of that 2012 vehicle are not sunk yet!  You haven't spent that $17,000, you have only spent what you have paid in payments.  So you can go ahead and spend that $20,000 you have left on this vehicle, or you can make a change and spend less.

[reverend]

With buying used I would end up paying half but also getting half the miles out of it.

Well, you still have the full warranty and good mileage which is what you wanted. It's not cheap, but one could argue that you are making payments up front for maintenance payments that a used car would need on the back-end.  It's not necessarily cheaper, it's just another way of looking at your payments.


I don't think that you'd get half the miles out of a used vehicle unless it was a serious POS.
For instance, I picked up my 1996 Volvo 960 wagon for $4000 in San Francisco back in 2008. It had 142K miles on it. I now have 206K miles on it and the only required things I've done were shocks, timingbelt (+the pulleys and water pump related to the timingbelt) and tires. I've also done some other upgrades to it, but the *necessary* maintenance has been extremely low and I've actually spent far more in gas on it than I spent buying it.
It gets 23.5mpg average right now, but gas is not only cheap, it's far cheaper than a more expensive car that gets 35mpg. It would take a long time for the added money of a more fuel efficient car to pay itself off.

Here are the results of the oil analysis I just had done at 205000 miles on the Volvo;
http://www.robdiesel.com/wpblog/?p=925 - there's also my mileage log since 2008 to show you the cost of ownership.

I tend to work on my own cars too, so that's a benefit, but I don't see why a Hyundai Sonata, Kia Optima or anything else Asian and reliably couldn't be had for far less than you're paying now and be from 2005ish or so and still provide you with many years of reliable service.

The key is to keep up on the service. Change the oil every 10K, change the timing belt as needed, lubricate joints and shafts etc.  Many cars these days die of neglect more than substandard quality.

[el_beardo]

I pay $420 a month - not to mention the higher insurance premium.

And you're right, I am prepaying those maintenance costs.

The thing that scared me is that $420 is almost half my mortgage payment.

My plan is to:
- ditch the car payment
- get out of the $150 cell phone contract and go prepaid
- stop buying stuff

and start putting it towards my mortgage debt. Looking at my budget the $420 is a huge eyesore.

[reverend]

A $4000 car is paid for in less than 10 months at that rate. :)  What cars can you find for $4000 that are decent on gas, comfortable enough and reliable enough to be driven to 200K without anything other than routine maintenance?

Subarus were non-interference in several models until '98, but with AWD the mileage suffers a bit. Volvo 940s are bulletproof and get 25ish mpg like the Subarus. The redblock engines in them were non-interference too, and with a turbo could move nicely.

Another option that some mustachians might frown upon is having TWO $2000 cars. One you commute in and one spare if/when the first one breaks.

Not only in the insurance higher on a new(er) car, but you also pay registration fees that can be pretty high.

For the cell phone, I.P. Daley has a great write-up somewhere here on the site about cell phones.  Personally I have T-Mobile's $49.99 plan with unlimited everything (though after 2GB data the speeds drop from 4G to something slower)

[James]

My plan is to:
- ditch the car payment
- get out of the $150 cell phone contract and go prepaid
- stop buying stuff

Sounds perfect!