Need some Mustachian Car Advice

[Dice]

Hello all, long time listener first time caller!

I first came to MMM 3 years ago when ERE recommended the blog and it has helped me pay off over $120,000 in student loans in 3 years (which just happened a month ago yay!).  I downgraded cars 2 1/2 years ago and bought a 2001 Honda Insight for $4,000 and it has been great for me but I have a new problem I could use your help working through.

My wife and I are expecting a baby (another yay!) within the next few months and we need a car with 4 seats for the baby now that our family is growing.  We plan on using whatever car until it dies in 300k+ miles or 20+ years from now.  I would LOVE to not have any commute, but we live in the Bay Area and I have a job in Oakland and my wife works in Los Altos.  The cost of our place in Oakland is $700/mo but in Los Altos an apartment would cost $2500/mo and surrounding areas where it would be walkable/bikable to work aren't much cheaper, so we need a car and we'll stay in Oakland.

Considering myself somewhat of a mustachian I of course looked first at used cars on craigslist with my criteria being good gas mileage and a good deal.  So when I did calculations on cars I have been adding the cost of 200k miles of gas (assuming $3.50/gal) to the initial sticker price.  The best car I have come with by a large margin is the Prius C, which gets 53 MPG, when I add the sticker price and the cost of 200k miles of gas.

First I would love any other ideas for cars on those criteria that I could look at (I have a whole spreadsheet where I have done the math on over a dozen cars), but maybe I'm missing something.

Second, the Prius C has only been on the market since 2012 so the used market cars are typically $15,000 (with non salvage titles and under 50k miles) whereas a new one is $19,540.  Plus there are $2,250 in manufacturers rebates and 0% financing for 60 months, plus whatever I can haggle down, which makes the new car a few thousand dollars more expensive than a used car.

I do not want to get too high mileage on a Prius because my Honda Insight's Hybrid batteries went out and the cost to replace them is $4000!!! So I just disconnected the hybrid battery on my 2001 insight and get around 45 mpg now instead of 60mpg.

I need help desperately enough that I actually posted on the forums!  Tell me what you guys see, because everything I have ever been told, and my own instincts are, are that buying a new car is just dumb, but the way I am looking at it is telling me its not be as dumb as I thought in this instance.

Thanks!

-Dice

[paddedhat]

We were in a similar situation a while back. The wife wanted a CRV, and unfortunately, depreciate seemed to be an abstract concept to used Honda buyers, as they are dumb enough to gladly pay 80% of the cost of a new one, for a three year old car with 50K miles. Since there were no rebates, or special financing, I negotiated down to $500 below invoice and paid cash for it. There is no reason to think that it won't last 250-300K miles, and it's about as reliable as an anvil. I think that there are plenty of us on this forum that have no issue with a well bought, high quality car that can be used for decades. If you were shopping for a Tahoe or a BMW, maybe your on the wrong forum, but a Corolla, Prius, Fit or similar, it's tough to pass on a great deal for a new one, when it's 10-20% more that a decent used one.

[MayDay]

My only question is, do you plan to have more than one kid? If so, you won't be wanting to road trip or camp in a prius c with 2 teenagers in the back seat.

Just something to consider if you want to own the car for 20 years.

[RelaxedGal]

My only question is, do you plan to have more than one kid? If so, you won't be wanting to road trip or camp in a prius c with 2 teenagers in the back seat.

Just something to consider if you want to own the car for 20 years.

In a similar vein, you might want to try a carseat in the back.  I had a 2005 Scion xA when my daughter was born and promptly demanded a new car because the baby bucket takes up so much space.  The xA is about the same size as the Yaris and Prius C. In the end I didn't get a new car;we had the infant seat in the middle where it interfered less with the front seats.  Once we switched from the removable infant seat to the more upright "convertible" seat it stopped being an issue because the car seat didn't touch the front seats.  We kept the car seat in the center for safety; I don't remember if it would have fit behind the passenger seat and kept my husband comfortable or not.

Translation: infant seats take up space.  Convertible seats take up less space.  If you and your spouse are average height or less the three of you will be fine in a Prius C.

Congratulations on paying off the debt, and getting on a good course!

[kendallf]

I would look for a (relatively) low mile 2nd gen Prius (04-09).  We have 3 now, between my daughter, my wife and I.  I recently paid $4900 for my 2004 with 169k miles.  It had some very minor cosmetic issues and I've changed the low voltage battery ($100 on CL) but it's running beautifully.

Toyota did a better job on the battery management than Honda did on the Insights.  I have a friend with a couple of the Insights and he too has had to replace cells.  BTW, you can buy individual sticks, a plug in charger, etc. for the Insight.. it's much cheaper than $4k to fix the hybrid battery.

There are many people with ~200k on the Prius HV battery and remanufactured batteries are ~$1k; individual cells are available for it also.  The rest of the Prius mechanicals seem to be quite reliable.  You should be able to get a 2nd gen with under 100k miles for less than $10k easily.

[alsoknownasDean]

Have a read of this:

http://www.mrmoneymustache.com/2011/11/28/new-cars-and-auto-financing-stupid-or-sensible/

As to whether a Prius C is worth it, it depends on a few things.

1) How many miles per year you do.
2) Will it continue to meet your needs longer term (eg: additional children)
3) Your current financial situation (hair's no longer on fire)

I agree with kendallf's suggestion for the second gen Prius. A mate of mine has one, and they seem a very spacious car.

The other deal is the opportunity cost of the money spent. If you spend $20,000 on a car as opposed to $10,000, you've also sacrificed the income that that extra $10,000 would have produced.

[Vorpal]

We were in a similar situation a while back. The wife wanted a CRV, and unfortunately, depreciate seemed to be an abstract concept to used Honda buyers, as they are dumb enough to gladly pay 80% of the cost of a new one, for a three year old car with 50K miles.

  LOL, yep, those dumb old Honda buyers. Why would they do that?

There is no reason to think that it won't last 250-300K miles, and it's about as reliable as an anvil.

Oh yeah, that's why.

[PeachFuzzInVA]

We were in a similar situation a while back. The wife wanted a CRV, and unfortunately, depreciate seemed to be an abstract concept to used Honda buyers, as they are dumb enough to gladly pay 80% of the cost of a new one, for a three year old car with 50K miles.

  LOL, yep, those dumb old Honda buyers. Why would they do that?

There is no reason to think that it won't last 250-300K miles, and it's about as reliable as an anvil.

Oh yeah, that's why.

353k and going strong in my Civic.

[paddedhat]

We were in a similar situation a while back. The wife wanted a CRV, and unfortunately, depreciate seemed to be an abstract concept to used Honda buyers, as they are dumb enough to gladly pay 80% of the cost of a new one, for a three year old car with 50K miles.

  LOL, yep, those dumb old Honda buyers. Why would they do that?

There is no reason to think that it won't last 250-300K miles, and it's about as reliable as an anvil.

Oh yeah, that's why.

So, by your logic, it's actually BETTER to spend $18K on a three year old vehicle, with 50K+ on the ODO, and ZERO idea if, and how, it has been maintained, and/or abused, rather than a few thousand more for one that's new and properly operated and maintained by you?  If I works for you, great, I'll pass. My dealer had to give us a loaner for a week. It was a new CRV with 12K on it. It looked and felt to be in far worse shape than my typical personal vehicle does at 5-7 years old, and 100k miles.  Including small dents and significant scratches all the way around, cigarette stench, and a cigarette burn in the passenger seat. The best part was that the computer showed a rolling average of 13 MPG, when I picked it up. Now mine never drops below 25, and typically it's in the 28+ range, so the previous driver was literally flogging the shit out of the thing to burn that much fuel. Yea, sign me up for that peach when it hits the lot for 15-20% less than a new one. I'm sure it will last as long as my newly bought, well loved one will, and be just as reliable........

[Vorpal]

So, by your logic, it's actually BETTER to spend $18K on a three year old vehicle, with 50K+ on the ODO, and ZERO idea if, and how, it has been maintained, and/or abused, rather than a few thousand more for one that's new and properly operated and maintained by you?

In general, yes. We were talking percentages, not numbers, though, so I don't know how $18k stacks up against the new car price. I do know that 50k/250k=20%, which matches the 80% figure you quoted. I'd probably angle for a slightly higher discount, but that figure might fly for an exceptionally clean car. Also, I usually have a pretty good idea of how a car was treated just by driving it and checking a few things. I understand that not everyone has that expertise, though. Cars happen to be a major hobby of mine, and I've literally bought dozens in my 37 years (I'm mustachian now, though :)).

My dealer had to give us a loaner for a week. It was a new CRV with 12K on it. It looked and felt to be in far worse shape than my typical personal vehicle does at 5-7 years old, and 100k miles.  Including small dents and significant scratches all the way around, cigarette stench, and a cigarette burn in the passenger seat. The best part was that the computer showed a rolling average of 13 MPG, when I picked it up. Now mine never drops below 25, and typically it's in the 28+ range, so the previous driver was literally flogging the shit out of the thing to burn that much fuel. Yea, sign me up for that peach when it hits the lot for 15-20% less than a new one. I'm sure it will last as long as my newly bought, well loved one will, and be just as reliable........

Yes, clearly I was advocating the purchase of an obvious shitbox. Nice straw man argument, though. Look, if you're more comfortable with a new car, then that's fine. Just don't try to justify it by bashing those that might choose to purchase a used version instead. It can be done in a way that makes sense -- even a Honda.

[paddedhat]

So, by your logic, it's actually BETTER to spend $18K on a three year old vehicle, with 50K+ on the ODO, and ZERO idea if, and how, it has been maintained, and/or abused, rather than a few thousand more for one that's new and properly operated and maintained by you?

In general, yes. We were talking percentages, not numbers, though, so I don't know how $18k stacks up against the new car price. I do know that 50k/250k=20%, which matches the 80% figure you quoted. I'd probably angle for a slightly higher discount, but that figure might fly for an exceptionally clean car. Also, I usually have a pretty good idea of how a car was treated just by driving it and checking a few things. I understand that not everyone has that expertise, though. Cars happen to be a major hobby of mine, and I've literally bought dozens in my 37 years (I'm mustachian now, though :)).

My dealer had to give us a loaner for a week. It was a new CRV with 12K on it. It looked and felt to be in far worse shape than my typical personal vehicle does at 5-7 years old, and 100k miles.  Including small dents and significant scratches all the way around, cigarette stench, and a cigarette burn in the passenger seat. The best part was that the computer showed a rolling average of 13 MPG, when I picked it up. Now mine never drops below 25, and typically it's in the 28+ range, so the previous driver was literally flogging the shit out of the thing to burn that much fuel. Yea, sign me up for that peach when it hits the lot for 15-20% less than a new one. I'm sure it will last as long as my newly bought, well loved one will, and be just as reliable........

Yes, clearly I was advocating the purchase of an obvious shitbox. Nice straw man argument, though. Look, if you're more comfortable with a new car, then that's fine. Just don't try to justify it by bashing those that might choose to purchase a used version instead. It can be done in a way that makes sense -- even a Honda.

Nothing to do with a straw man argument, but your reply is clearly indicative of somebody who is ripe for a screwing by a dealer who has a "nearly new vehicle" for a few bucks off of original invoice. First, by the time that loaner hits the lot for resale it will look like anything but an "obvious shitbox" to the vast majority of the buying public. In fact, all the issues I discussed will be papered over in the "reconditioning" process.  Second, if somebody managed to damage every panel if the exterior, ruin a seat cover, AND somehow beat it so fucking badly that it was averaging 13MPG, over a few hundred miles on the trip ODO, the car may possibly be trashed and the damage could very well take years to surface. Damage like a trans. or motor that is shot before 100K.  I have purchased somewhere north of sixty vehicles so far, in my driving career, and I have a tiny bit of a clue. I also have spent time picking through units before they get reconditioned and patched up for the lot. Once you see the reality of how the dark side of the business works, "saving" 20% on a car with 50K miles of totally unknown history is viewed in a whole different light. If you get the chance to talk to a used car dealership buyer, they will easily confirm that the average short term owner, or lease holder, views a vehicle as a disposable product that only gets the absolute minimum care. Typically that means fuel and an oil change every 10K, or so. They often end up as lease returns, or trades, with two bald tires on the front, since nobody rotates a thing, very little maintenance history, and a backlog of repairs and maintenance. You may view it differently, but IMHE, it's a pretty good thing to stay away from at that point. Now in a normal market where the car should sell for 30-50% less than new, it's a whole different calculation. But, saving a few grand, and taking a big risk, doesn't add up. Just because it's a brand know for reliability doesn't mean that it will weather several years, and tens of thousands of miles of abuse, better than anything else on the road.

[sisto]

Personally I think you would be best off with a Toyota Corolla. Still gets decent gas mileage, lasts a really long time, and much cheaper than the other models you mentioned.

[ysette9]

This is just my personal experience/opinion here:

I have driven Corollas as rental cars in the past and I find that they are pretty dreadful cars. Handling is really poor, they are underpowered, loud etc. There are much better cars out there for similar price/quality/MPG. We went with the Golf TDI for our family car. I also recommend the convertible car seat. I chose the Combi Coccoro which is the smallest convertible carseat out there: http://www.amazon.com/gp/product/B00IL5IK9Y/ref=pd_lpo_sbs_dp_ss_1?pf_rd_p=1944687502&pf_rd_s=lpo-top-stripe-1&pf_rd_t=201&pf_rd_i=B001RADXRE&pf_rd_m=ATVPDKIKX0DER&pf_rd_r=0G0XT1080R6NVE5GQ9P4.

We are able to fit two adults in the back seat of the Golf with that carseat. Gas (diesel) mileage is 42+ for us with a lot of driving on city streets (for the 6-speed manual).