New Car

[y2kitty]

My car is 8 years old. It is in ok condition and all paid for. I have never had an accident in it and my boyfriend's father is a mechanic and if anything serious came up he could help me repair it. I live 6 miles from my job, and if I did not have a car I could bike to it. My mother thinks I should by a new car because inflation will make new cars expensive. So my question is, should I buy a new car now?

It seems to me the line of thinking that "I need to buy it now because prices are going up" is part of what fueled the housing mess in our country.

 

[soocool]

I have held onto cars for 10 - 12 years. It depends on how many miles you have on it.

You can look at it 2 ways:

1. How much can you get for your 8 year old car if you were to sell it (this offsets the cost of the new car)? If you don't think you would get any takers, you could always trade it in, thus reducing the cost of the new car and the sales tax as well. Some car dealers offer great financing (my sister's son bought a Nizzan Z with 0% financing for 3 years). Depending on the car you get, your insurance rates could get quite high.

2. By holding onto your current car you can continue to save for a new car (also saving by not paying for additional insurance). But for each year you hold onto your car you lose more in resale value (but I think at 8 years you would not get as much as your would if the car were let's say 5 years old).

What I would do, is hold onto the car if it works well (and you access to a mechanic if necessary). At some point in time it is good to drop the collision coverage on your car if the Blue Book value is low enough- (don't know if you need to contact the insurance company of they do this automatically). Save your money untill you need it...especially if you will not be lost without a car.

But then again, if there is a car you have been eyeing and it is a leftover or the dealer needs to make his/her numbers, you never know what great deals may be out there. So hold onto your car until you either need a new car or can get the absolute best deal out there.

(I know big purchases always make me worry if I am doing the right thing or not.)

 

[NewEnglandLady]

Your car is paid off, it's not having any major problems, your insurance is probably relatively low because your car is 8 years old...I don't see any reason at all to dump a bunch of money into a depreciating asset right now.

 

[luv2sparkle]

I have held onto cars for 10 - 12 years. It depends on how many miles you have on it.

You can look at it 2 ways:

1. How much can you get for your 8 year old car if you were to sell it (this offsets the cost of the new car)? If you don't think you would get any takers, you could always trade it in, thus reducing the cost of the new car and the sales tax as well. Some car dealers offer great financing (my sister's son bought a Nizzan Z with 0% financing for 3 years). Depending on the car you get, your insurance rates could get quite high.

2. By holding onto your current car you can continue to save for a new car (also saving by not paying for additional insurance). But for each year you hold onto your car you lose more in resale value (but I think at 8 years you would not get as much as your would if the car were let's say 5 years old).

What I would do, is hold onto the car if it works well (and you access to a mechanic if necessary). At some point in time it is good to drop the collision coverage on your car if the Blue Book value is low enough- (don't know if you need to contact the insurance company of they do this automatically). Save your money untill you need it...especially if you will not be lost without a car.

But then again, if there is a car you have been eyeing and it is a leftover or the dealer needs to make his/her numbers, you never know what great deals may be out there. So hold onto your car until you either need a new car or can get the absolute best deal out there.

(I know big purchases always make me worry if I am doing the right thing or not.)

Totally agree.

 

[Miss Sparkly]

Eight years old is still very young for a car. I got my first car when it was 15 years old, sold it to another teenager for her first car and it's still going strong with 200,000 + miles on it and being 21 years old. I'm of the school of thought that unless it's unsafe to drive, run it into the ground! I also disagree that inflation (which is going to happen no matter what) is a good reason to buy. Brands such as Kia, Hyundai and Ford have really been stepping up to the plate and producing top rated vehicles for good and competitive prices. In a few years the base model may very well look like today's mid to upper range model of car.

 

[vc10um]

Something else to think about, if you (and not just your mother) are actually really interested in buying a car, is waiting until the end of the 2011 model year. When the 2012s start coming out, dealers will need space on their lots for the new models and will be cutting great deals on the 2011s still in the inventory. This should give you plenty of time to monitor how your current vehicle is doing and whether or not you really WANT (or need, as the case may be) a new vehicle.

 

[VRBeauty]

There are a lot of reasons to consider getting a new (or newer) car -- safety or convenience features, frequency of repairs, or even that you're lusting after a particular car or bored with your current car. Personally, I think your mother's argument falls into the "very creative rationale" category! Makes me kinda curious why she's trying to persuade you to do this...

Anyhow, from what you've told us, it sounds like your car is probably fairly low mileage and in good shape, and you don't have a particular desire to buy another car. If I were you I'd hold on to the car and start building a "next car" fund for when it is time to trade move on.

 

[movie zombie]

Your car is paid off, it's not having any major problems, your insurance is probably relatively low because your car is 8 years old...I don't see any reason at all to dump a bunch of money into a depreciating asset right now.

and repairs on a car that has proven reliable is cheaper than payments.

MoZo

ps i no longer buy new cars. i buy used only. a car is transport only. its going to go down in value, not up. i'd rather have the $ to spend on my home, jewelry, travel and our vet bills for the cats.

 

[mary poppins]

Your mom's rationale that you should buy a new car now based on fear of inflation indicates that you should also be stocking up on many other items including food, paper towels, laundry detergent and beauty supplies. You should also be hoarding gas because the price of gas will likely increase given the current climate in the Middle East. But you're probably not doing that, nor are you going to. It sounds like you don't need a new car. You hardly use your car, it works, and if it doesn't then you have a reliable and trustworthy person to fix it. I'm always a fan of NO car payments rather than NEW car payments. In addition, new cars are usually associated with higher insurance premiums. So do you want a new car? Do you want car payments and likely, higher insurance payments? Or would you instead rather be saving a few hundred dollars a month or spending the money on something other than a car?

If you decide you want a new car, I agree with a prior poster that now is not necessarily the best time to get one unless you need one. Better times are during the fall after new models start coming out in August and September (buy the prior year model at a discount because dealers don't want them on the lot), at the end of the year and at the end of the month when salespeople are trying to make their quotas.

The car and housing markets are not comparable for many, many reasons. However, one commonality is that if you can't afford it, you shouldn't buy it.

 

[Efe]

Your car is paid off, it's not having any major problems, your insurance is probably relatively low because your car is 8 years old...I don't see any reason at all to dump a bunch of money into a depreciating asset right now.

What she said!

 

[megumic]

I'm a big believer in not purchasing a new car until you need one. If you don't need one, it's just money out the door. A car's value depreciates 30% when you drive off the lot, so I just don't see the sense in purchasing a new car based on your mother's reasoning.

 

[kenny]

It may be a good time to get a car that gets better gas mileage or even a full electric.

 

[Jennifer W]

Your car is paid off, it's not having any major problems, your insurance is probably relatively low because your car is 8 years old...I don't see any reason at all to dump a bunch of money into a depreciating asset right now.

What she said!

I agree with this too.

 

[JulieN]

It depends if you have cash to buy a new car now or not. If you need to take out a loan, then no...

 

[Dancing Fire]

My car is 8 years old. It is in ok condition and all paid for. I have never had an accident in it and my boyfriend's father is a mechanic and if anything serious came up he could help me repair it. I live 6 miles from my job, and if I did not have a car I could bike to it. My mother thinks I should by a new car because inflation will make new cars expensive. So my question is, should I buy a new car now?
It seems to me the line of thinking that "I need to buy it now because prices are going up" is part of what fueled the housing mess in our country.

you wanna buy my 4 dr 2001 Toyota truck with only 58k miles?..

 

[Skippy123]

Your car is paid off, it's not having any major problems, your insurance is probably relatively low because your car is 8 years old...I don't see any reason at all to dump a bunch of money into a depreciating asset right now.

ditto all of the above. I would save for a down payment when the car decides to break down. I think that is awesome your car is going strong at 8 yrs old!!!! woohoo for no car pmt!

 

[meresal]

Heck NO!!!!!

Eta: I just traded in my 9 yr old car, 125k miles, and fully paid off sine 2005. I cried my eyes out. Not having a car payment is the best gift in the world... Never give that up, unless you or your family are in danger when riding in your vehicle.

 

[Miss Sparkly]

It may be a good time to get a car that gets better gas mileage or even a full electric.

Unless you live in an area where it snows regularly or is very cold. My dad's coworker bought a hybrid and was pissed that it sucks gas like any other car in the winter. The electric engine alone isn't enough to keep the car warm.

 

[iLander]

I believe your mother's premise that inflation is coming is correct.

I don't think it's any reason to buy a brand new car, though. The rate of depreciation that comes from buying a new car far exceeds the expected rate of inflation.

If you decide to buy a used car, though, this is how you do it:

1) Look up your car on http://www.kbb.com/.. This is the Kelley Blue Book site, the standard that car dealers use when dealing with each other and is based on car sales prices all over the U.S.

2) Figure out what your trade in is worth on the kbb site.

3) Look up the car you want to buy on ebay, your local dealer's website and on kbb.com. Come up with your maximum price. Contact your bank or credit union. Get your best deal on a car loan if you are not paying cash. Some dealers and some ebay sellers will have a Carfax report right on the website. Click on it to check out the car's odometer reading, accident record, repair record and number of owners.

4) Call your local dealer and offer him about $1,500-$2,000 BELOW your price on the phone. Do not tell him that you have a trade. Tell him to call you back after he talks to his manager.

5) Expect to go back and forth on the phone over a few days. The point is you must NOT care if you actually get the car. Otherwise, you will go over your maximum.

6) After you have struck a verbal deal, go to the lot and check out the car. Then when the offer paperwork starts, tell him that you are trading your car in, and give him the kbb.com printout of the value. Subtract that from your car's price.

7) Haggle some more. Stick to your guns.

I actually bought a van once, completely over the phone. I had two dealers bidding against each other, and I ended up saving $4,000. The winning dealer drove it to my office.

Remember, most used car dealers make $3,000 to $5,000 on a used car deal. Don't feel sorry for them. Ignore the dealer transport, prep, undercoating, etc. These are nonsense charges. August and December are the worst months for car dealers, with the least amount of deals done. These are your best months for dealing. You will find your best deals on cars that are extremely common, like a Toyota Camry. They are also cheapest to repair and keep.

For a twist, I like to buy high-end luxury vehicles used. The owners usually take very good care of them since they just spent $60K or more on the car. They trade in with 20- 30,000 miles on them, and that's where I come in. I usually pay less than half of the first owner and I get a gorgeous car. But this game has it's drawback; if you do need a repair, you will pay big time. Expensive cars are expensive to repair. So check Consumer Reports (spend a few dollars at a book store for the paperback book) Auto Buying Guide for reliability. Even Mercedes has some clunkers.

Consumer Reports is good to check for all cars, actually.
If you are buying from a private party, have him supply you with the VIN number of the car and spend $25 to get the Carfax yourself.(carfax.com) It's worth it to avoid buying a car with a bent frame or other issues from an accident.

I've learned all this the hard way. My DH and I counted up the other day, and between the two of us, we have owned 11 cars in our lives.
And I'm thinking of getting another one. . .

 

[y2kitty]

I want to thank you all for your input. Ilander put into words what I couldn't verbalize. The depreciation of a new car will be more than inflation.

 

[PinkTower]

What age are you? I am wondering if it would be practical for you to hold on to the car for a child, if you have one who is a preteen, for example. We had two children, nine years apart, and got new cars for ourselves when they needed a car. The first child got the same car we brought him home in as a newborn. The second child had a similar story. My husband is still driving the same car he bought new in 1988. Cars are huge investments. We buy exactly what we want in German luxury cars when we purchase, and we hold onto them. It works for us. Why have a car payment if there is a way around it?

 

[y2kitty]

I'm 31 and I have no children and plan to have no children.

 

[Shoopy]

I vote no. While I do understand everyone's concern over inflation and rising prices, there's no reason for you to buy a new car or even finance one down the line. You could always find another car for sale by owner that will do the job.

 

[PinkTower]

And, may I just add, your avatar is gorgeous.

 

[basil]

No. Put your money into your retirement accounts instead or save up to pay cash for a new car when yours dies.

I just traded in my 1999 Beetle this past August. I paid cash for it back in 2001, so I had gotten my money's worth. We were about to start a family and wanted something bigger and safer (my husband's car is a Civic). We also wanted AWD for the winter. We ended up buying a new Subaru Outback (with cash again) and we will drive it til it dies - or until our baby starts driving in 17 years! We looked at used, but the savings on a low mileage used car were not that great when averaged out over the 10+ years we plan to own the car. If you keep your cars for less time, it makes more sense though.

But it doesn't make sense to spend a lot of money without the proper impetus - i.e. something is unworkable for your current situation for some reason or another. I apply this to all big depreciating purchases with limited lifespans (computers, cameras, cars, tvs, etc.).

 

[chemgirl]

I don't think you should buy a car because of inflation. Its funny, I'm in the same position right now with buying a house and I'm not taking my own advice. Anyway, I think if your car is working fine, then there is no pressing reason to get a new one. I would only consider it if the car needed a lot of repairs. If you're going to have to sink more than a thousand in to it for any reason, look up its blue book value and decide if its really worth it. Not having a car payment is great, but if you do decide on a new car, its fairly easy to find low monthly rates with very low interest rates. Expensive repairs and car rental fees could go towards several months payment on a new car.

I know a lot of people prefer to pay cash for a new car, but personally I don't (I do see the appeal though). For my current car (purchased in October), the interest rate is 1.2%. I see a higher return on my low risk investments so its not worth it for me to tie up the money in a car. My dad usually buys jeeps and they will generally have 0% interest if you choose a 6 year term. As previously mentioned, buying in the fall is great because the new models are just coming out. When I purchased, the dealership refused to move from sticker price on any of the 2011's. They were willing to make a deal on one of their few remaining 2010's. With my particular car, there is very little difference between the 2010 and 2011 model (seriously, just an ipod dock...where mine has an sd card reader and aux port). If you have the opportunity, check out an auto show to be able to really compare different interiors before going for test drives. You can get a good idea of build quality when you're jumping from one car to the next. Sometimes its pretty surprising. Plus its fun to see all of the super fancy concept cars!

 

[chemgirl]

What age are you? I am wondering if it would be practical for you to hold on to the car for a child, if you have one who is a preteen, for example. We had two children, nine years apart, and got new cars for ourselves when they needed a car. The first child got the same car we brought him home in as a newborn. The second child had a similar story. My husband is still driving the same car he bought new in 1988. Cars are huge investments. We buy exactly what we want in German luxury cars when we purchase, and we hold onto them. It works for us. Why have a car payment if there is a way around it?

German luxury cars last forever! Well nearly.

Eight years old would be nothing for a German luxury car, but I can see it being an issue if she's driving something that's not built to last.

 

[PumpkinPie]

Your car is paid off, it's not having any major problems, your insurance is probably relatively low because your car is 8 years old...I don't see any reason at all to dump a bunch of money into a depreciating asset right now.

What she said!

ditto
I just got my first car - a hand me down 11 year old Civic from my mother-in-law. I plan to drive it until it dies

 

[iLander]

I don't think you should buy a car because of inflation. Its funny, I'm in the same position right now with buying a house and I'm not taking my own advice. Anyway, I think if your car is working fine, then there is no pressing reason to get a new one. I would only consider it if the car needed a lot of repairs. If you're going to have to sink more than a thousand in to it for any reason, look up its blue book value and decide if its really worth it. Not having a car payment is great, but if you do decide on a new car, its fairly easy to find low monthly rates with very low interest rates. Expensive repairs and car rental fees could go towards several months payment on a new car.

I know a lot of people prefer to pay cash for a new car, but personally I don't (I do see the appeal though). For my current car (purchased in October), the interest rate is 1.2%. I see a higher return on my low risk investments so its not worth it for me to tie up the money in a car. My dad usually buys jeeps and they will generally have 0% interest if you choose a 6 year term. As previously mentioned, buying in the fall is great because the new models are just coming out. When I purchased, the dealership refused to move from sticker price on any of the 2011's. They were willing to make a deal on one of their few remaining 2010's. With my particular car, there is very little difference between the 2010 and 2011 model (seriously, just an ipod dock...where mine has an sd card reader and aux port). If you have the opportunity, check out an auto show to be able to really compare different interiors before going for test drives. You can get a good idea of build quality when you're jumping from one car to the next. Sometimes its pretty surprising. Plus its fun to see all of the super fancy concept cars!

What the heck are these investments, ChemGirl? I am getting nothing in CD's or savings accounts!

 

[chemgirl]

I don't think you should buy a car because of inflation. Its funny, I'm in the same position right now with buying a house and I'm not taking my own advice. Anyway, I think if your car is working fine, then there is no pressing reason to get a new one. I would only consider it if the car needed a lot of repairs. If you're going to have to sink more than a thousand in to it for any reason, look up its blue book value and decide if its really worth it. Not having a car payment is great, but if you do decide on a new car, its fairly easy to find low monthly rates with very low interest rates. Expensive repairs and car rental fees could go towards several months payment on a new car.

I know a lot of people prefer to pay cash for a new car, but personally I don't (I do see the appeal though). For my current car (purchased in October), the interest rate is 1.2%. I see a higher return on my low risk investments so its not worth it for me to tie up the money in a car. My dad usually buys jeeps and they will generally have 0% interest if you choose a 6 year term. As previously mentioned, buying in the fall is great because the new models are just coming out. When I purchased, the dealership refused to move from sticker price on any of the 2011's. They were willing to make a deal on one of their few remaining 2010's. With my particular car, there is very little difference between the 2010 and 2011 model (seriously, just an ipod dock...where mine has an sd card reader and aux port). If you have the opportunity, check out an auto show to be able to really compare different interiors before going for test drives. You can get a good idea of build quality when you're jumping from one car to the next. Sometimes its pretty surprising. Plus its fun to see all of the super fancy concept cars!

What the heck are these investments, ChemGirl? I am getting nothing in CD's or savings accounts!

I had a big explanation of everything, but it felt like a threadjack. Bassically my financial planner's package of "low risk" companies. As the market recovers, it gains a few percent a year. Also some properties because my area is still jumping like crazy. I'm looking to move and I can't find a detached 3 bedroom home in a nice (ie no murders) area under 400k.

At least its easy to argue that even a bank is better than a 0% finance rate.