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Old 07-25-2007, 04:51 PM
 
Location: San Fernando Valley, CA
1,719 posts, read 6,140,692 times
Reputation: 787

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As I continue to get older ( currently 25 ) I find myself less and less, if any, interested in the "cool" car or the fixed up car over the more boring practical car. So I have come to a crossroad.

Like I said I am 25 and over the next 3-4 years I will be working FT and going to college at night. That will be my life. I find myself less concerned about working on my car, 1996 Caprice, that I have loved. I just don't have the passion to deal with it like I once had. My passion is to learn now and experience other things....Trying to keep this intro short.

Since July 2001 I have owned three cars outright ( including my current car ) and was buying a SUV ( which I grew tired of the payments/gas and was able to find someone to buy me out plus $500 towards my current car ), but I had already invested $4k down and another $4500 in payments over 15 months.

I have calcuated costs for vehicle purchases, modifications ( lots ), and repairs etc....excluding gas and insurance.

$35k over the last 7 years and I own an 11 year old car I am not fully satisfied with.

The current car has cost me $2500 to purchase, at least $4500 in repairs (new engine, brakes) and at least $2000 in mods ( which I am not continuing )
I've driven this car for about 20 months so I figure I've been paying at least $400-450 per month to drive it. Plus it costs me about $70 to fill up 2.5-3 times a month. So thats $640/mo to drive this car.

So.........I either drive a car that I know will break down sooner or later with a tranny problem as the car has over 100k and drop another $2500 for sure into it, or lease a new car.

I say lease because since I will be done with schooling in 3 years the 36 month term will be up and I can start fresh with buying a new car since my BA should bump my paygrade up and I will probably be moving to another state and can purchase there, seeing as my girlfriend has a reliable 05 Corolla.

Im tempted to lease the Jetta for 199 and LOTS of nice features. I will sell my car for 4-5k hopefully and put the required 2k or so down for the lease.
I drive very little...based on my annual reports I do for myself...I drive around 8-10k/year over the last 7 years. So thats not a problem.

The increased gas mileage will help, but the increased insurance probably will not. I have liability only, but I am under my dads coverage who is maxed because he is a homeowner, so I still pay 150/mo for liability. I am thinking since I am 25 insurance should be relatively cheaper for me now to get a plan on my own.

This is already overwhelming so I will stop. Hopefully I get some hits.
What I am looking for is advice as to whether it would be better to keep my car for 3-4 years to balance out the costs. Or cut my losses now and be happy in a newer car with nice AC ( which I lack ) and other ammeneties.
Could always sell and buy a decent 2002 car I guess, but the light lease payments dont bother me since I am basically paying anyways for this Caprice.
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Old 07-25-2007, 05:14 PM
 
Location: South Florida
564 posts, read 1,732,429 times
Reputation: 253
As many will likely agree, the only thing worse than financing a new car is leasing it instead.

Cars are a terrible investment, as you undoubtedly have realized by your past experience. If you are asking this from a strictly monetary stance, keeping your current vehicle will be much less expensive.

When leasing a car, a few things happen, first will be your car insurance. My leasing company (from a previous car, I now know better) required very high limits on my comprehensive and collision to protect "their" interests, but I had to pay for it.

Secondly, you gain very little equity in the car and that's only if you decide to buy it at the end, if you decide not to, then you have $0 equity towards your next vehicle.

Thirdly, IF your circumstances change, leasing may end up being a problem. What IF you get that great job with a long commute and need to put excessive miles on the car? Leasing companies will kill you on the mileage

Fourthly, leasing companies heavily penalize you for dings, scratches, blemishes, and/or poorly kept maintenance records.

I'm sure there's more, but my mind is cloudy at the moment. In short, DON'T LEASE!
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Old 07-25-2007, 06:58 PM
 
2,775 posts, read 2,840,265 times
Reputation: 2980
Leasing = bad idea - financially one of the worst things you can do to yourself right now.

Keeping your current car = good idea since you've already replaced most of the expensive components. All that is left is the transmission - which you could probably get rebuilt when it needs it.

I don't know that anything written here will change your behavior as the leasing idea which you seem ready to jump into really is so terrible, it's almost inexcusable that you have seriously contemplated doing it.

Cars are the worst waste of money for you (read the thread "why am I poor" - people have outlined all the reasons). I find it astonishing that you've spent as much money as you have in 7 years at your relatively young age on automobiles and don't just have a very nice 7 year old Jetta, Audi, or Honda to show for it ($35,000 can buy a lot of automobile, even today).

Get your priorities straight and end this absolutely wasteful pattern of buying cars, trading up or enhancing them, and then losing money - money which for all intents and purposes represents your life which you've given up at work the past few years.

You're 25, and going to night school for the next 3 years. After which time I'll make the assumption that you'll want to look to move to wherever your new employment takes you and eventually you'll want to buy a place to live, perhaps find a significant other, and someday perhaps start a family. To achieve these greater goals you cannot have a car and high insurance payment right now.

Instead, start saving money responsibly. In your position I would put excess income right into an account with Ameritrade or one of the other online brokerages. I'd invest in energy stocks and or mutual funds as well as those of companies based in emerging economies such as Brazil, Costa Rica, China and India. Seriously, if you do this you'll actually see your net worth grow rather than stay the same or decline. In 3 years you won't be at zero net worth with a new degree. Instead, if you put the conservatively estimated 300.00 per month you planned to use on a lease into this investment strategy, you'll have about $11,000.00 in stocks + whatever you earn on your investment (I would bet it would end up being well beyond a 10% a year return and more in the ballpark of 15-25% annually giving you a final stock balance of more like $15,000.00). After 3 years I can think of a lot of cool things you could do with the $15,000.... how about using that in combination with whatever else you have at that time as a down payment on a duplex that you could rent out a side for to completely pay for the mortgage? Then you'll build real cashflow and be on your way to serious wealth my friend. If you play your cards right and stick to this gameplan, you'll probably still be driving your "old clunker" or perhaps another one - but you'll be smiling because you'll have a lot of net worth and a lot fewer financial worries than most Americans today.

Just some food for thought. Good luck with whatever you do :-)

Last edited by belovenow; 07-25-2007 at 07:47 PM..
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Old 07-25-2007, 11:44 PM
 
Location: Jax
8,204 posts, read 32,212,809 times
Reputation: 3397
Quote:
Originally Posted by kgee View Post

Im tempted to lease the Jetta
Great advice above from the previous posters, so I'll only add this:

Don't buy a Volkswagon - they're notoriously unreliable.

Since you're getting sensible in your older years , pick up a Consumer Reports car guide - it can help you to avoid a potential problem car (whenever you DO decide to buy one, that is ).
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Old 07-26-2007, 12:12 AM
 
Location: Tuxedo Park, NY
419 posts, read 2,059,239 times
Reputation: 260
Not too much to add to the thread except a funny story about a "clunker". The story is, a lot of the guys I work with like their cars new, fast, and for lack of a better word, sexy. A couple guys have Porsches, one has a new GTO(which is funny because he actually lives in Manhattan and hasn't even got it up to 4000 rpm yet after driving the car for 3 months), and I've got a year old Audi. Tom, a guy I work with, has a 1998 Saturn he got for 400 dollars with around 160k miles on it. Right now, the car has over 200k miles on it, and he has put a little over 300 more dollars in for a little transmission flaw. Now, this is funny because you calculate the price per mile to drive your car and personally, I'm at around $0.64 per mile with 50k on my car, at what I paid for it; $79,000. This guy is driving for about 3 cents a mile. Incredible.
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Old 07-26-2007, 12:24 AM
 
Location: San Fernando Valley, CA
1,719 posts, read 6,140,692 times
Reputation: 787
Thanks for the advice.

The lease idea isnt the best...but I thought maybe it would be ok for my position. Either way I am throwing money away.

In case it was missed, the main priority is to get something that uses less gas and if I can achieve that by getting a new car (which will bring me happiness with AC, better steering etc) and still cost about the same....by the time I am done buying a new(er) car I will have a 04 in 2011 and not a 1996 in 2011 and it will be worth more.
As of right now my car goes for about 2-3k. I am asking 5k because of all the new parts.

Ie done the # crunching and I easily spend about $2000/year on gas...and plus money on repairs...so if I get a payment for 250 and $3000/year for a new car it should be worth it. I am spending the same either way.
My car gets 14mpg.

Oh and I invest in stocks already and have a nice portfolio worth 7k and a 5% online savings with 4k....as well as a CD with $3k. So Im not lacking there. Definetly growing.

Last edited by Hungry For Cheese; 07-26-2007 at 12:38 AM..
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Old 07-26-2007, 04:31 AM
 
2,775 posts, read 2,840,265 times
Reputation: 2980
Quote:
Originally Posted by kgee View Post
Thanks for the advice.
The lease idea isnt the best...but I thought maybe it would be ok for my position. Either way I am throwing money away.

In case it was missed, the main priority is to get something that uses less gas and if I can achieve that by getting a new car (which will bring me happiness with AC, better steering etc) and still cost about the same....by the time I am done buying a new(er) car I will have a 04 in 2011 and not a 1996 in 2011 and it will be worth more.
Ie done the # crunching and I easily spend about $2000/year on gas...and plus money on repairs...so if I get a payment for 250 and $3000/year for a new car it should be worth it. I am spending the same either way.
My car gets 14mpg.
Selling your current car because you don't like it AND because you don't trust its reliability is sound reasoning. If you do that then I recommend buying a used car (which you can afford to pay for in cash) with the features you want.

Stay away from an auto loan or lease. It simply would not be good for your financial situation (it isn't for most everybody). Without an auto loan you will be able to afford any repairs or other life-altering financial-impacting surprises which come up quite easily, your insurance cost will be a fraction of a car you owe money on, and you won't be working to afford your car -you'll be using your car to go to work so that you can afford things which have the real potential to bring happiness.

All that said - I wish you well in your decision whatever it is.
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Old 07-26-2007, 05:21 AM
 
Location: Stuck on the East Coast, hoping to head West
3,785 posts, read 9,232,718 times
Reputation: 7362
Default A little different bit of advice

I'm definitely going against the grain here, but I buy new if I can. Heres my reasoning: I have cash for a car, and right now I'm earning about 5.5 % apr on it. If I can find a car loan (new or used) for less than that, I make payments and let my cash earn interest. Lots of times the new car deals can beat used so I'll go with that. But if I have to take a loan, I'm going for the one with the most reliable car and the best rates, be it used or new.

Quote:
by the time I am done buying a new(er) car I will have a 04 in 2011 and not a 1996 in 2011 and it will be worth more.
Exactly. I never trade cars before they're paid off and I always keep them for at least 7 years. Right now I have a 95 truck that I bought new and have taken very good care of--I'm a stickler for doing the routine maintenance and this has always served me well. I do my research before I buy and go with something that will last a long time. If you're planning to keep this vehicle for awhile, I'd seriously consider buying (not leasing) new. When you buy new you usually have quite a few nonmaintenance (other than routine) years. When you buy used, someone else got to enjoy those years. Personally, I really enjoy those years

I have bought a few used vehicles, but when I do, I'll go for a high end, reliable, safe car. And if I decide to finance, I always go through a credit union (there are several that are easy to join) b/c I've usually found the best interest rates.

I think the real problems start when people trade in cars before the loan is paid off. I know so many people that have upside down loans on new vehicles. Wow. Scary.

I guess the bottom line is really how long do you plan to keep the car? Which vehicles have a reputation for lasting that long? What can you afford? From there you could choose the year and make that fits and go shopping.

Good luck!
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Old 07-26-2007, 07:41 AM
 
Location: Grafton, Ohio
286 posts, read 1,478,952 times
Reputation: 164
Default Great advice all the way around

I'm a cash buyer, don't have any room for car payments. Would rather spend the money on retirement and investments. I purchased my Honda Civic for $1000. It was a cheap mode of transportation and a reliable brand, definitely not pretty by an stretch of imagination. I purchased in 2005, as of today she is over 230K. I put close to 50K a year on my car. I have only replaced tires (due for a new set again), brakes, 1 wheel bearing, and a pulley that controlled the cooling belt (which would not have had to be replaced if the previous person hadnt put it on wrong when they did engine work). Altogether, I have spent less than $1000 in maintenance while still utilizing the 45 mpg and saving a TON on gas. I keep full coverage on it because I don't want the replacement cost to come out of my pocket, and full coverage is in my best interest for that; I pay $70 per month for this car with state of MI full coverage, which also includes roadside and car rental.

The previous poster had excellent points about buying new; if you can come across a really good deal and you know you can make the payments and keep the car at least 7 years, it would be worth your time. Especially since your average driving is low, so in 7 years you'll have a low mileage vehicle should you choose to sell. However, I personally would do my homework and get the best, most practical car for the money when it comes to reliability, warranty, gas mileage, AND value retention. Toyotas and Hondas are notorious for keeping a high market value, where Fords and others in need of huge part replacement and can't keep their value at that point.

Agreeing with all others... lease is not in your best interest.
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Old 07-26-2007, 08:32 AM
 
531 posts, read 1,114,173 times
Reputation: 138
If you are concerned about having a solid net worth, don't waste money on a car. It's an asset that depreciates. Put money in assets that appreciate. Cars are investments that go down in value. Put your money in investments that go up in value.
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