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renniekins
renniekins
Changes and Moving On
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pi3832 From: pi3832 Date: January 19th, 2007 12:49 pm (UTC) (Link)

Kibbitzing like a fiend

There are advantages to both, and I guess it really comes down to how much money I want to spend.

I hope you don't find it rude of me to ask, but if you were to buy, for example, a $17,000 car, how would you get the extra $8,500? There's a big difference, in my opinion, between shelling out that kind of cash from savings, and taking out a loan to cover it.

The price of a loan can be even higher than it seems. For example:
  • Loan for $8,500
  • 3.4% APR interest
  • 36 months
  • $250 per month
  • $450 interest paid over life of loan
BUT, if you were to save that money:
  • $250 per month
  • 36 months
  • 4.5% APR interest (really)
  • $9650 at end of three years
So what you actually pay, including opportunity costs, for the $8,500 loan is $1,600! That's almost 20%!

So, if you would have to finance part of the price of a new car, I'd say go used. If you can afford to pay cash for a new car, then the issue is more debateable. Then it's a question of the hassle-factor, IMO. (New cars are less of a hassle than used cars. I'll probably babble about this more in a later entry.)
renniekins From: renniekins Date: January 19th, 2007 01:32 pm (UTC) (Link)

Re: Kibbitzing like a fiend

I could afford to pay cash if I wanted to (depending on how pricey the car actually was...)

The funny thing is that I was at the Saturn dealership yesterday, telling them to quote me a price for cash. They told me they are offering 0% apr incentive right now. Or $500 cash. I told them I wanted the cash, but they pointed out to me that by keeping my money and investing it, I could actually make MORE than they were offering.

It was weird to me, that taking out a loan could save me money. I have an old-fashioned mindset. Only buy what I can afford, avoid credit. But there you have it.
pi3832 From: pi3832 Date: January 19th, 2007 02:06 pm (UTC) (Link)

Re: Kibbitzing like a fiend

I have an old-fashioned mindset. Only buy what I can afford, avoid credit.

Put that on a badge and wear it with pride.

Now, the promised additional babbling:

Any car, as it garners miles and years, will take more repairs than a new car. Things like brakes and alternators and clutches (if the car has one) just wear out over time and have to be replaced/repaired.

However, in general, the costs of those repairs is less than the cost of a new car. BUT there is the aforementioned "hassle-factor."

Getting your car repaired, or repairing it yourself, is a hassle. Find a mechanic, or finding the parts, scheduling the time, being without the car, etcetcetc, can be a royal PITA. This is why I traded in my Jeep and got my Corolla--the Jeep was requiring more and more repair, and while they were typically fairly cheap, the hassle of doing them or getting them done was more than I was willing to deal with.

Based on that experience, I guesstimate that most cars hassle-factors become significant after 8-10 years.

Since you can pay cash ("Good on yer!"), the financial question of new v. used is less significant. I think the more important question is the hassle-factor. If you have a high tolerance for hassle, then buy used. If you don't, then buy either new, or recently used (less than 3 years old).

Of course, since you get the Detroit Discount on new cars, a two-year-old used car is not going to be much of a bargain over new.

Anyway, to 'splain--no, there is too much. Let me sum up:

New car
  • Higher price
  • More depreciation
  • Low initial hassle
  • Longer time until hassle
  • Timely features (e.g., CD player that plays MP3s)
  • Less overall features, though
  • Detroit Discount increases value
  • Better selection
  • Warranty (though, how often do you really need that?)
Used car
  • Lower price
  • Less depreciation
  • Higher hassle
  • More features (by getting an older, more depreciated car)
  • Better performance and/or comfort (by getting older...)
  • Less selection
  • Established reputation for reliability (or not)
(Have I mentioned how much I enjoy all this? If my kibbitizing starts to bug you, just ignore me, or tell me to stop. I understand.)

Anyway, so what are your priorities? How important are features, the hassle-factor and selection compared to price?
pi3832 From: pi3832 Date: January 19th, 2007 02:41 pm (UTC) (Link)

Re: Kibbitzing like a fiend

I was at the Saturn dealership yesterday

Have you checked out the Ford Focus yet? Specifically the 2007 Ford Focus ZX3 SE 2dr Hatchback? (The hatchback is soo much cuter than the other models, IMO.) Comparing the specs of that and the Ion on Edmunds.com, the Focus looks like the winner.

Better gas mileage, less overall emissions, and more features. The Ford will cost more to get an automatic transmission, but will get you:
  • variable intermittent wipers (trust me--this matters)
  • Remote power door locks
  • Power outside mirrors
  • Power windows
  • Standard AC
  • Driver seat-height adjustment
Assuming you want a new car. That's still up in the air, as far as I know.
From: writerwench Date: January 19th, 2007 03:31 pm (UTC) (Link)

Re: Kibbitzing like a fiend

My mum has a Focus automatic, four years old. It's ... okay. Well equipped, works fine, nice driving position, yadda yadda, CD and aircon and stuff... nothing actually WRONG with it, but I had to drive it for a while last summer and it BORED me. It was a YAWN car. Especially compared to my Renault 5!

A Focus estate with a proper roofrack, now. That might appeal. But that's my personal preference - I haul a lot of stuff around from time to time.
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