Author Topic: Keep Used Car or 'Upgrade'?  (Read 5455 times)

Ottawa

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Keep Used Car or 'Upgrade'?
« on: September 17, 2012, 08:17:52 AM »
Everyone who has (and needs) a used car has to consider when to sell said car and optimize their car cost by buying another.  Most people will be different in this regard, as the combination of current car age/type/condition and car needs will differ.  The most frugal option in my mind is to 'trade up' at no net cost to myself. 

I use myself as an example.  I currently own a 2003 VW 1.8T Jetta (manual/gas)/sedan.  I purchased this vehicle (used) in 2005 at a total cost of 24,000 cash.  This I admit, in retrospect, is not Mustachian.  I estimate I can currently sell this excellent condition car for $7000.  I have had no expenses with this vehicle other than very routine maintenance.  Based on research, I appear to be fairly lucky in this regard, as VW's of this era are not known for reliability.  I currently feel that I would like to offload the latent stress of 'potential' upcoming repairs to someone else.  I would then purchase a much more Mustachian - fuel efficient/manual/hatchback with the proceeds and possibly extra cash with total purchase cost of NO MORE than $10,000 (i.e $3000 cash addition).  Although the average useage has been 20K kms per year (including some very extensive travelling vacations!) - I estimate that our current Mustachian ways will require 10K kms per year.  This car averages 8.5L/100kms over a year.  Fuel costs at 10K kms would be around $1100 per year ($1.30 CAD).  Our current car sits unused during the work week (as we BIKE to work).  I estimate useage will be 40/60 'city' and 'vacation'. 

I am toying with the idea of obtaining a 2005 hybrid Prius for under 10K.  This will save me at least $500 per year in fuel.  On the other hand, insurance will be about $250 more.  Net tangible gain is $250/year.  I believe the additional savings to be had (which are somewhat unknown) relate to the upkeep cost differential.

I need help!  Is this a frugal line of thought!?  Who else wrestles with this dilemma?  Does anyone have a handy-dandy objective decision matrix on this?

AJ

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Re: Keep Used Car or 'Upgrade'?
« Reply #1 on: September 17, 2012, 11:30:07 AM »
If you have a car that you have maintained well, that is not giving you any mechanical issues, I'm not totally clear on why you would want to sell it. Fear of "potential" repairs sounds silly. A 2005 hybrid is going to have at least as many "potential" repairs, and you won't have the benefit of knowing how it was maintained. Gas savings is a good reason, but by your calculation even a Prius (nearly the most fuel-efficient vehicle out there) would only save you net $250 a year. And the less you drive it, the less it saves you, with the added unknown of how well it has been maintained.

I do love Priuses, but in this case I say keep the VW.


velocistar237

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Re: Keep Used Car or 'Upgrade'?
« Reply #2 on: September 17, 2012, 11:34:00 AM »
Typed this while AJ replied:

I would say that at an annual mileage of 10K km, a hybrid would be overkill; the additional vehicle cost would outweigh the gas savings. At that level, get something like a 2003 Toyota Matrix. Come to think of it, your Jetta is similar, just not as statistically reliable. However, given that it has been reliable so far, it might not be a bad choice to keep it and avoid the transaction costs of a new car, especially if you drive it so little going forward.

It's a toss-up. If I were you, I would expend my Mustache energy on something with a bigger payoff and come back to this later.

etamme

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Re: Keep Used Car or 'Upgrade'?
« Reply #3 on: September 17, 2012, 11:47:19 AM »
If you have a 1.8L engine in this manual VW, and it is causing you no issues, I think getting a new car, even a hybrid would be foolish as  I  suspect that you will incur greater maintenance costs with the prius... certainly greater POTENTIAL maintenance costs.  The Prius has an 8 year warranty on the hybrid system (so you only have 1 year left on a 2k5 model) then replacing the batteries would cost you near $2500-3500 as I do not know if you can replace them yourself or if it requires dealer tools.

What are these potential repairs that foresee with your VW?  Quick searching does not show much: water pump, mass airflow sensor ... strut mounts.  If you replaced all of these, you could do so for $1000 - $1500 USD i suspect, at which point you should have many thousands of miles of worry free operation.

Maybe you can further explain your apprehension about upcoming repairs.


AJ

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Re: Keep Used Car or 'Upgrade'?
« Reply #4 on: September 17, 2012, 11:58:47 AM »
...then replacing the batteries would cost you near $2500-3500 as I do not know if you can replace them yourself or if it requires dealer tools.

Though it is only a tangent, I can field this one since we went through this rather recently. We had to have a new battery put in our 1st gen Prius after DH drove over a median and all the dash lights went crazy. We paid $2800, of which $2500 was the cost of the battery and $300 was labor. I have read about people changing them themselves, but it doesn't save much. The mechanic said they can often rebuild the battery by just replacing the dead cells, but ours was too far gone for that. It would have been $1500 vs. $2800 to just rebuild it.

Since the battery life has more to do with age than mileage, getting a low-mileage older car doesn't buy you much. We bought ours knowing it would need a new battery, and factored the cost in accordingly. But we live in the country, and so drive a lot of miles. If we drove less, it really wouldn't have been worth it.

SugarMountain

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Re: Keep Used Car or 'Upgrade'?
« Reply #5 on: September 17, 2012, 01:56:31 PM »
I had to convert to normal units :-P , but I think you're saying that you got about 27.6 MPG.  It looks like Priuses (Priuii?) from 2005 average about 45 mpg, so I think you'd only save about 1/3rd of your $1100 current bill, or $366, not $500.  The other thing to consider is if a lot of your driving is vacation driving the hybrids really aren't that much better on the highway than a regular car, since there is so little regenerative braking going on.  They shine in city mileage comparisons.

AJ

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Re: Keep Used Car or 'Upgrade'?
« Reply #6 on: September 17, 2012, 02:07:07 PM »
The other thing to consider is if a lot of your driving is vacation driving the hybrids really aren't that much better on the highway than a regular car, since there is so little regenerative braking going on.  They shine in city mileage comparisons.

This isn't exactly correct. Hybrids (unlike conventional cars) don't do better on the highway than themselves in the city, though they still do better than conventional cars, even on the highway. 2005 Prius gets 45 mpg hwy, which still beats most (all?) conventional cars, but is not as good as itself in the city (which is 48mpg). Regenerative braking is helpful, but it only recoups some of the energy lost through braking. It is still better never to have to brake at all.

paddedhat

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Re: Keep Used Car or 'Upgrade'?
« Reply #7 on: September 17, 2012, 03:00:26 PM »
If you have a 1.8L engine in this manual VW, and it is causing you no issues, I think getting a new car, even a hybrid would be foolish as  I  suspect that you will incur greater maintenance costs with the prius... certainly greater POTENTIAL maintenance costs.  The Prius has an 8 year warranty on the hybrid system (so you only have 1 year left on a 2k5 model) then replacing the batteries would cost you near $2500-3500 as I do not know if you can replace them yourself or if it requires dealer tools.

What are these potential repairs that foresee with your VW?  Quick searching does not show much: water pump, mass airflow sensor ... strut mounts.  If you replaced all of these, you could do so for $1000 - $1500 USD i suspect, at which point you should have many thousands of miles of worry free operation.

Maybe you can further explain your apprehension about upcoming repairs.

Apprehension on this issue is based on the very real possibility that this car will soon require 3-4K in repairs, depending on mileage and condition. I buckled to the pressure and bought a Passat for my son. The car is the same year with the exact same drivetrain. Our mechanic is a personal friend, and a world class wrench. Said mechanic made it very clear that I was making a mistake that I would later deeply regret. Two years later, he has been spot on. I have been wrenching on cars for 33 years now, and did a lot of repairs to this epic piece of shit. It is simply the most over-engineered, underbuilt, disgrace I have even seen. I bought the thing for $6000. It was in great shape and still looks excellent. However, it has required $4k in repairs so far, and there is no end in sight.  Until you own a VW that is at the age where all the typical failure points begin to rear their ugly heads, it's really hard to wrap your head around how truely awful these cars are. Unless you are a skilled, higher level "shade tree mechanic" with a good set of tools, a desire to spend a ton of time on enthusiast's websites, and are willing to tackle all repairs yourself, these cars will chew a hole in your wallet like a pit bull on crack.
the list of failure points on this car is endless. A few highlights might help to clarify my experiences though.

#1 timing belt. No biggy, lots of cars have them, however many manufacturers got rid of them previously, or never used them in the first place. On the Passat the ENTIRE FRONT END of the car is pulled forward, (or to make it easier, removed)to change the belt. By the time you do the water pump, replace the proprietary coolant at $12/liter and get the car back together, you have a long weekend shot, or a bill well north of a grand, from a mechanic.
#2  Dual mass flywheel. This is almost stunning, the stupidity of this design is nearly incomprehensible. A dual mass flywheel is a poorly built piece of shit made of stamped sheet steel, and filled with rotating "dampers", to make the car feel a wee bit smoother on idle. One of these days the OP's flywheel with disinegrate and start sounding like there is a can of nuts and bolts flying about the clutch housing. If you go to a dealer, or a less than savvy independent garage, the parts to remedy this mess are going to run well over a grand, and another grand or so in labor. ( the factory flywheel is only available from VW and is $777)  I used an aftermarket kit to install normal parts and saved about $1.5K on that mess.
#3 coil packs. VW used coil on plug ignition units on this engine. They are defective and fail continuiously. They were supposed to warranty them to 100K, per a settlement with the feds. The issue as most owners can attest, is that VW has the worst dealer network on the planet. Our passat was covered under warranty. The dealer said that, according to the VIN# the coil packs were "checked". Now they are all failure prone trash, that VW agreed to replace, but then refused do so, as they were "checked". Imagine my shock to discover that I was being lied to, and screwed by VW?  Who knew?

I could go on with issues # 4-10, or even 20, but you get the point. Currently the car needs another coil pack, it's third cat. converter, a few ball joints and a front engine mount. I'll drop another $500-600 into it over the next few weeks then sell it privately. I tried to trade it in recently, but dealers aren't dumb. The lowest online trade value I could find was in the high $3K range. Dealers offered $1700-$2500 for it. One big used car place near me won't even accept VWs as trade ins, as they got tired of losing their shirts on repairs costs during their six month/six thousand mile warranty period.

Back to the OP's original question. If somebody offered my $7K for that car, I would jump at it. If it runs well, and doesn't have a check engine light glowing on the dash, it's doing better that 75% of the other VWs of that era, so bail while you can. Seriously,  get out before it's too late. Good luck

Ottawa

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Re: Keep Used Car or 'Upgrade'?
« Reply #8 on: September 19, 2012, 07:20:28 AM »
Thanks everyone! I appreciate all the advice and discussion.  According to canadianblackbook.com the average asking price for the car is $6,854.  The balance of opinions by you folks on the forum is about where my mind was on selling vs keeping.  Yes, it has been very reliable for me.  However, past performance is no predictor of future performance.  I have had the coils, exhaust done under warranty - so I missed out on having to pay that!  Paddedhat - this would have cost me at least $1600 dollars!  The timing belt was done as part of maintenance.  So, while some of the common stuff that goes wrong has been dealt with...

I think the main question is:  If I get $7000 - I can probably get a much more reliable kick-ass frugal car for no additional cash.  Basically I'd be trading in a 'luxury' car for a frugal one.  BTW - by trade in I mean sell and by privately.  According to MMM here: http://www.mrmoneymustache.com/2012/03/19/top-10-cars-for-smart-people/
we can now pair down the options to the "Most Likely to be Reliable".  Craigslist is not that popular in the area, but Kijiji.ca is!  It also has great filtering as you can see here:
http://ottawa.kijiji.ca/f-cars-vehicles-cars-trucks-Owner-Manual-W0QQAQ5fCarBodyTypeZhtchbckQ2cothrbdytypQ2cwagonQQAQ5fCarMakeZhondaQ2chyundaiQ2csuzukiQ2ctoyotaQQAQ5fCarModelZechoQ2csx4Q2cyarisQQAQ5fCarTransmissionZ1QQAQ5fForSaleByZownrQQAdTypeZ2QQAddressLatitudeZ45Q2e421501QQAddressLongitudeZQ2d75Q2e691887QQCatIdZ174QQMapAddressZOttawaQ20Q2fQ20GatineauQ20AreaQQSortZ3QQdistanceZ150QQmaxPriceZ7Q2c000QQminPriceZ5Q2c000

Most of the options that pop up today are the Yaris and Echo!  It looks like the 6-7K range will 'upgrade' me from a 2003 car to a 2007/2008 model!  Of course, we could expand the search (distance-wise) to include more potential vehicles - but then we have to calculate savings vs fuel and time to get to see the vehicle! 
« Last Edit: September 19, 2012, 07:28:25 AM by Ottawa »

paddedhat

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Re: Keep Used Car or 'Upgrade'?
« Reply #9 on: September 20, 2012, 04:13:39 AM »
Sounds like a good plan, but...... and there is always a but. I would set a bottom line price that you are willing to take, then attempt to sell it. I hope you return with great news. Unfortunately, here in the Northeast states, the online value information is wildly inflated. Once I patch this POS up, I have a marketing plan based on the local market here. There is a small, but suitably deluded fan base for these cars. It consist mostly of young males who absolutely LOVE these things and have web sites, club meetings and local VW only car shows. One local used car dealer wanted my Passat real bad, but we couldn't come to terms. He said that a clean MANUAL trans. VW is the fastest moving thing he handles, and is usually gone in a few days. The buyer is always a late teens, early 20s guy. In this case the dealer was looking pay me $2500, and flip it
(without spend a dime) for a bit over $4K. I'm pretty confident that I can do the same thing on CL.
Your research, and intuition regarding the future reliablity are spot on. Getting through the next few years without replacing a flywheel, drive axles, ball joints, front engine mount, O2 sensors and a turbo, is pretty unlikely. I can easily see the next 3-4 years costing more that you would spend on a 2005-07 Focus or Yaris.  In the last few weeks I bought two 2007 Focuses. Both are in excellent shape, with decent miles 64K and 85K. Both one owner, full maintenance, and damage free. CL finds that were $5300 and $6500. Roughly 2/3rd of dealer prices.
Good luck on your adventure.