New economy car dilemma

Serendipity

heiney9 wrote: »

Then the security of knowing the car is new will cost you a lot in the first two years becuase of depreciation. The depreciation hit will be substantially more than the costs of a few typical repair or maintenance items on a 2-3 year old car.

Just so you realize by buying a brand new car vs. 2-3 used car you aren't saving anything unless you happen to buy a complete used Lemon.

Any purchase is about managing risk levels, the less perceived risk, the more the initial cost. Your assumption you will save money by purchasing a brand new car simply isn't true in most cases.

H9

Yes, I agree from a financial perspective. A used car definitely costs less because of the initial depreciation hit the first owner takes.

That being said, this is something that I can afford and don't mind the extra cost to buy a new car.

tommyt21

Hyundai Elantra or Accent, I have owned two Elantras Amazing cars that dont get enough credit.

BlueFox

Depreciation depends on the car, with some doing better than others. I too appreciate the piece of mind that comes with buying a new car, and knowing how it has been driven since day 1. My previous car (el cheapo 87 VW blue Fox )lasted 17 years, and I suspect the driving history was a good reason why that occurred, since the car was bascially an "expensive" Yugo made in Brazil.

For my current car, I paid an even 20K in October 2004 for a 2005 Mazda3 5-speed. Although I wanted a stripped down cheapo like the OP, all they had on the lot were with the extras; sunroof, power windows/locks/mirrors, AC, 6 CD changer, ABS, air bags all around, 160HP engine. At first I wasn't crazy about all that, but now I love it. I call it a little Lexus. Anyway, the point is I checked the value a few weeks ago, and it goes for a little over 10K on the used market. As gas goes higher, it should hold its value even longer.

Serendipity

tommyt21 wrote: »

Hyundai Elantra or Accent, I have owned two Elantras Amazing cars that dont get enough credit.

Good idea. Have to take a look at the new Elantra. Supposedly redesigned and gets 40MPG highway.

heiney9

BlueFox wrote: »

Depreciation depends on the car, with some doing better than others. I too appreciate the piece of mind that comes with buying a new car, and knowing how it has been driven since day 1. My previous car (el cheapo 87 VW blue Fox )lasted 17 years, and I suspect the driving history was a good reason why that occurred, since the car was bascially an "expensive" Yugo made in Brazil.

For my current car, I paid an even 20K in October 2004 for a 2005 Mazda3 5-speed. Although I wanted a stripped down cheapo like the OP, all they had on the lot were with the extras; sunroof, power windows/locks/mirrors, AC, 6 CD changer, ABS, air bags all around, 160HP engine. At first I wasn't crazy about all that, but now I love it. I call it a little Lexus. Anyway, the point is I checked the value a few weeks ago, and it goes for a little over 10K on the used market. As gas goes higher, it should hold its value even longer.

Every brand new car depreciates when you drive it off the lot, unless it's an expensive limited ed model that is extremely desirable. You are correct some do a little better than others, but the type he's looking for will probably depreciate even more because most people aren't looking to buy a stripped down no frills car when he will be ready to sell it. He will loose more than the same car that has power everything, sunroof, etc.

H9

Serendipity

heiney9 wrote: »

Also with interest rates so low I would think you could invest the $17K and make the money work harder than using it for a depreciating asset. Not sure paying in cash is best financial move, especially when so many manufacturer's are offering low, low or zero interest loans.

H9

I really don't understand financing to be honest with you. Bank fees, this and that, just gets my head spinning when the dealer starts talking about financing. I simply tell them that I want to pay cash. I've never financed anything in my life, just like audio gear I've always saved up and bought stuff that I could afford.

Again, not trying to argue just don't know enough about financing to understand.

Buying a car is a significant purchase, but knowing we have a family history of driving cars until they cannot be driven anymore, I feel that is "getting your money's worth" if you buy a car and drive it say 20 years until it needs to be hauled away to the junkyard.

heiney9

Very poor to use cash for large purchases if you can make that large chunk of money work for you, and it's not difficult to understand at all.


Why would you pay cash for a depreciating asset if the money could conservately earn 5-7% for you with little to no risk and you could borrow the money for say 1.9%.

You end up netting 3-5% in earnings a year. I'm just saying if you are buying new there are some great rates out there and you'd be stupid not to take the cash and invest it and finance the car at a low or zero interest rate. It's not rocket science.

Anyway that's my advise if you can get a really good interest rate on new car. I see them advertising like crazy right now.

H9

mhardy6647

We do as you do in terms of cars - we buy typically one fairly nice one and one cheap one - new, cash, and run 'em until the maintenance costs start to increase without bound. We have also, on occasion, bought used and (as mentioned above) bought off-lease (a great deal that a former employer had for their off-lease sales rep vehicles).

We then usually donate 'em to charity or otherwise give them away when the time comes. We actually passed my last vehicle (2000 Ford Focus ZX3 5-speed) along to our son-in-law and & daughter when I got the Fiesta (fall 2010). They've put tires and brakes on it, but it is still giving good service and returning ca. 35 mpg at age 12 with a hair over 200,000 miles on it.





The rule at our house - as long as it is possible, we won't buy a new car that cost more than our first house ($41,000 in 1982)!

financial notes - some of us abhor debt, full stop. There aren't any low-risk investment options returning consistent 5 to 7 percent in this day and age that I (or our financial planners) are aware of. Well, I'll rephrase that - we've got specific investments returning that, or better, but I don't think it's possible to net that sort of return across a truly diversified portfolio. Best game in town for borrowing money is to borrow from oneself (i.e., against one's own capital). The net interest is very low - but with the current rates, most loans are pretty cheap, indeed.

Serendipity

Where could I see 5-7% today, in this economy besides the stock/bond market? I've seen CDs which seem like a safer bet, but I don't know much about this stuff so I basically question everything lol.

A car is a means of getting from point A to B, at least to me, of course it's a depreciating asset! Yes I agree with you on that. I just don't know why (maybe being conditioned from friends and family) I always thought it's best to buy in cash. Houses, cars, etc. We buy everything in cash.

Again, pardon my ignorance. I'm an electrical engineer. Finance and economics just goes over my head.

mhardy6647

There are real, Federally-insured banks giving 3 to 4 percent on CDs? Not around here (at least not for anything like reasonable terms)...

Serendipity

That's why I'm skeptical. Banks that I have not heard of and from foreign countries, etc.

heiney9

Cash was true when interest rates were much higher. To me and my thought process it seems silly to pay cash when you can borrow at such a riducolusly low rate or no interest at all and invest the cash where it can work for you.

I am not going to give investment advice, if you were to sit down with a financial planner you would easily see what I'm talking about. You either want to educate youself on this type of stuff or continue on with your conditioning. The path of least resistance for you is just pay with cash and be done with it. You have always seem to be a very meticulous person when posting and thinking things out well in advance, but when it comes to large purchases in real life you don't seem to want venture out of your cocoon.

Again, this is just my advice and because you are asking for discussion about it.

H9

shawn474

FWIW, my mother has a versa and loves it.

heiney9

Again if you are going to question everything before even doing any sort of research, then I don't know why you keep asking for advice. Everytime someone tries to say something you have an answer as to why you can't or won't do that. You always seem to have your mind made up before you post anything on a subject.

There are professional financial planners that are very good and have your interest at heart, but until you go out and talk with a few of them and do some research, etc you'll just be making assumptions.

H9

Serendipity

heiney9 wrote: »

Again, this is just my advice and because you are asking for discussion about it.

H9

I agree that speaking to a financial planner would be my best bet.

Danny Tse

Serendipity wrote: »

Good idea. Have to take a look at the new Elantra. Supposedly redesigned and gets 40MPG highway.

The current Hyundai Elantra send Honda back to the drawing board in just 2 years for its Civic. If you're buying new, the 10 year/100,000 mile Hyundai factory powertrain warranty (5 year/60,000 mile bumper-to-bumper) may be an important factor for you. Also, a new hatchback version is coming....if that's important to you. In fact, if a hatchback is what you are looking for, then the outgoing version, called Elantra Touring, may be another option since it will be heavily discounted.

I am not sure, but resale value of Hyundai's is still on low side when compared to Honda and Toyota.

Given all the advancements in this segment of the market, it's shocking that Toyota's Corolla is soooo out of the competition.

heiney9

Serendipity wrote: »

I agree that speaking to a financial planner would be my best bet.

Atleast you'll get a big picture idea and some education about what you can do. No one says you have to jump right in, but atleast you can see what's available.

obieone

I was doing research on the new VW's, and found a link to the TDI fuel intakes having a recall, but that was on the older Jetta's and Golfs I believe.
The Passats weren't listed.

Serendipity

Danny Tse wrote: »

I am not sure, but resale value of Hyundai's is still on low side when compared to Honda and Toyota.

My motto is kinda like mhardy6647's - drive it until the wheels fall off LOL.

Seriously, lots of helpful advice in this thread, doing my research...

michael1947

Get yourself a used Toyota Carolla, good mileage and they just won't break. You can probably get an '09 for that money and get an automatic as they are more reliable and you won'tget any better mileage except maybe a touch on the highway, but likely not 1 mpg. You can probably manage a first generation Prius for that money, I have a Camry Hybrid, and I know lots of folks with well over 200k without a breakdown. Good luck.

Jstas

I'm tellin' ya, that Pacer is lookin' better and better!

mhardy6647

I've rented a couple of Corollas in my travels the last year or so - I know they're inexpensive and dependable... but they've got to be the most boring cars on the planet (and I am pretty tolerant of boring cars; note that we've owned two minivans!). Not terribly economical,either (at least with automatic transmission), my recollection of the ones I rented - in North Carolina - was mileage in the high 20s.

Interesting to see the Camry Hybrid invoked. I really like the Prius, and usually rent one when I am in the DC metro area - they consistently return 55-ish mpg in the kind of driving I do in Baltimore/DC. Since I want a little more passenger space next time I am down there, I just reserved a Camry hybrid for my next trip - it'll be interesting to see what it is like.

A little free advice on financial planners. When interviewing a prospective financial planner; ask him o r her if he/she is a (registered) fiduciary. If so, then s/he is required to actually help you, i.e., to provide advice in your best interests. If not, s/he is fundamentally a salesperson.

Serendipity

mhardy6647 wrote: »

A little free advice on financial planners. When interviewing a prospective financial planner; ask him o r her if he/she is a (registered) fiduciary. If so, then s/he is required to actually help you, i.e., to provide advice in your best interests. If not, s/he is fundamentally a salesperson.

Thanks!!

mhardy6647

Jstas wrote: »

I'm tellin' ya, that Pacer is lookin' better and better!

Best advice yet! The Gremlins are getting harder and harder to find...

EDIT: Our own financial planners fall under the "salesperson" category, I'm afraid :-P They're OK, but a true fiduciary would be better - especially when one has significant net worth and unless one knows oneself how to manage it (I am like the OP, financial stuff is hardly my forte).

Danny Tse

mhardy6647 wrote: »

I've rented a couple of Corollas in my travels the last year or so - I know they're inexpensive and dependable... but they've got to be the most boring cars on the planet (and I am pretty tolerant of boring cars; note that we've owned two minivans!). Not terribly economical,either (at least with automatic transmission), my recollection of the ones I rented - in North Carolina - was mileage in the high 20s.

In case you may be considering '08/'09 Toyota Corolla and Honda Civic....

I had to sell my '09 Corolla S (with automatic transmission) and '08 Civic LX 4 door (also with automatic transmission) due to changes in living situation. With the Corolla, if you drive mostly on the freeway, 31-33 mpg is definitely doable. However, its now-ancient 4-speed automatic is holding it back (even the cheapest Hyundai now has 6-speed automatic). The Corolla is very quiet on the road (despite its engine revving higher at higher rpm when doing the same speed as the Civic) and is sort of a mini-Camry. The Corolla is also easier to get in and out of. The Civic had better (mor precise) handling and is more fuel efficient; I never got lower than 30 mpg driving in San Francisco commute hour traffic (likely due to its 5-speed automatic). However, there's more road noise in the Civic, along with a stiffer ride and because of its lower height, harder to get in and out of. Higher quality material can be found in the interior of the Civic as well, and in my opinion, better workmanship as well. Toyota's workmanship and quality of material in its interiors are "iffy" in recent years.

mhardy6647

Both of the current Camry and Corolla interiors are pretty cheezy, I'd opine (not that I have much room to talk, given the Flash Gordon meets Transformers look of the Fiesta)...



I'd consider 30 mpg not so hot in a car like the Corolla; last Camry I rented (which must've been a 4-cyl, I presume) got close to 40 in mostly freeway driving. The Corollas both got about 29. I'm liking the low-40s of the admittedly teensy-weensy Fiesta...

heiney9

30 mpg hwy in an economy car is not very good.

I can eek out 29 mpg on the highway in a heavily modded '97 GTi VR6 if I don't goose the throttle when passing etc. That's a V6 motor with a manual tranny that isn't really geared fro cruising. I get about 22-24 in the city if I'm really easy on the throttle. But even the slightest bit of spirited driving and it suffers.

H9

BeefJerky

mhardy6647 wrote: »

I've rented a couple of Corollas in my travels the last year or so - I know they're inexpensive and dependable... but they've got to be the most boring cars on the planet (and I am pretty tolerant of boring cars; note that we've owned two minivans!). Not terribly economical,either (at least with automatic transmission), my recollection of the ones I rented - in North Carolina - was mileage in the high 20s.

Danny Tse wrote: »

With the Corolla, if you drive mostly on the freeway, 31-33 mpg is definitely doable. However, its now-ancient 4-speed automatic is holding it back (even the cheapest Hyundai now has 6-speed automatic).

heiney9 wrote: »

30 mpg hwy in an economy car is not very good.

+1. That is not good for a car like that. I can easily get 30-31MPG on the highway in my 08 CR-V. For a 50/50 city/highway mix, I get 27-30 depending on the season. For full city driving, figure around 24-26. Winter gas is of course at the lower end of the those spectrums. Even in the summer with the A/C on full blast, I can hit 29-30MPH with a 50/50 mix of driving. Again, this is in a CR-V, which is quite a bit larger, taller and heavier than the Corolla. Plus, it has a larger engine to boot.

mhardy6647

BeefJerky wrote: »

+1. That is not good for a car like that. I can easily get 30-31MPG on the highway in my 08 CR-V. For a 50/50 city/highway mix, I get 27-30 depending on the season. For full city driving, figure around 24-26. Winter gas is of course at the lower end of the those spectrums. Even in the summer with the A/C on full blast, I can hit 29-30MPH with a 50/50 mix of driving. Again, this is in a CR-V, which is quite a bit larger, taller and heavier than the Corolla. Plus, it has a larger engine to boot.

Out of curiosity, is that CR-V FWD or is it AWD or 4WD? I ask because Mrs. H's Escape Hybrid (with what Ford classifies as "4WD") returns barely 35 mpg in the summer, and is at 30.4 mpg as I type this (better than normal at this time of year for her, 'cause it has been so fricking mild in New England this winter!).

Syndil

My 1990 Kawasaki Ninja 600R can do 50 mpg if I keep my head below the windscreen, and I am not capable of riding it slow. Just sayin'.