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Is it a good time to get rid of my used car
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We have a 2005 Chevy Impala with 105,000 miles that we purchased in 2011. We have made many repairs such as replacing the transmission, repairing the radiator, heating and AC system, thermostat, belt, rotors and brake pads, alternator, gaskets, and we are now facing an $800 repair for the fuel tank.
The average cost of repair has been about $1470 per year since the beginning of 2015 if I include the pending $800 cost to repair the fuel tank. The transmission disproportionately weighted the average since it cost $2000.
Since we have a good credit rating, at a cost of about $1470 per year for repairs for this car, does it make sense to get rid of this car and either buy or lease a new comparable car? I am asking about this from a cost perspective and ignoring any other advantages that a new car may offer.
car
edited 2 hours ago
Bob Baerker
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agblt
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up vote
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We have a 2005 Chevy Impala with 105,000 miles that we purchased in 2011. We have made many repairs such as replacing the transmission, repairing the radiator, heating and AC system, thermostat, belt, rotors and brake pads, alternator, gaskets, and we are now facing an $800 repair for the fuel tank.
The average cost of repair has been about $1470 per year since the beginning of 2015 if I include the pending $800 cost to repair the fuel tank. The transmission disproportionately weighted the average since it cost $2000.
Since we have a good credit rating, at a cost of about $1470 per year for repairs for this car, does it make sense to get rid of this car and either buy or lease a new comparable car? I am asking about this from a cost perspective and ignoring any other advantages that a new car may offer.
car
edited 2 hours ago
Bob Baerker
11.3k11643
asked 3 hours ago
agblt
162
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agblt is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
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1
Do you still owe anything on the Impala? If so, what are the payments?
– JohnFx♦
2 hours ago
There are no payments
– agblt
2 hours ago
has the car left you stranded? even if it didn't leave you stranded was the loss of use of the car during the repair a major impact on your transportation.
– mhoran_psprep
2 hours ago
It has been inconvenient at times, but luckily most repairs were quick as we have a good mobile mechanic who comes to our house, and we do not use it for very long distances, so I would not say it has had a major impact
– agblt
2 hours ago
I'm not sure "average cost" is a good measure here - that's useful if the costs sometimes go up and sometimes come down, but tend to hover around the mean. With old cars, the curve tends to look exponential - it just goes up.
– Lawrence
2 hours ago
add a comment |Â
up vote
3
down vote
favorite
up vote
3
down vote
favorite
We have a 2005 Chevy Impala with 105,000 miles that we purchased in 2011. We have made many repairs such as replacing the transmission, repairing the radiator, heating and AC system, thermostat, belt, rotors and brake pads, alternator, gaskets, and we are now facing an $800 repair for the fuel tank.
The average cost of repair has been about $1470 per year since the beginning of 2015 if I include the pending $800 cost to repair the fuel tank. The transmission disproportionately weighted the average since it cost $2000.
Since we have a good credit rating, at a cost of about $1470 per year for repairs for this car, does it make sense to get rid of this car and either buy or lease a new comparable car? I am asking about this from a cost perspective and ignoring any other advantages that a new car may offer.
car
edited 2 hours ago
Bob Baerker
11.3k11643
asked 3 hours ago
agblt
162
New contributor
agblt is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
We have a 2005 Chevy Impala with 105,000 miles that we purchased in 2011. We have made many repairs such as replacing the transmission, repairing the radiator, heating and AC system, thermostat, belt, rotors and brake pads, alternator, gaskets, and we are now facing an $800 repair for the fuel tank.
The average cost of repair has been about $1470 per year since the beginning of 2015 if I include the pending $800 cost to repair the fuel tank. The transmission disproportionately weighted the average since it cost $2000.
Since we have a good credit rating, at a cost of about $1470 per year for repairs for this car, does it make sense to get rid of this car and either buy or lease a new comparable car? I am asking about this from a cost perspective and ignoring any other advantages that a new car may offer.
car
car
edited 2 hours ago
Bob Baerker
11.3k11643
asked 3 hours ago
agblt
162
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agblt is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
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edited 2 hours ago
Bob Baerker
11.3k11643
asked 3 hours ago
agblt
162
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agblt is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
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edited 2 hours ago
Bob Baerker
11.3k11643
edited 2 hours ago
Bob Baerker
11.3k11643
edited 2 hours ago
Bob Baerker
11.3k11643
11.3k11643
asked 3 hours ago
agblt
162
New contributor
agblt is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
asked 3 hours ago
agblt
162
asked 3 hours ago
agblt
162
162
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agblt is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
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New contributor
agblt is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
agblt is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
1
Do you still owe anything on the Impala? If so, what are the payments?
– JohnFx♦
2 hours ago
There are no payments
– agblt
2 hours ago
has the car left you stranded? even if it didn't leave you stranded was the loss of use of the car during the repair a major impact on your transportation.
– mhoran_psprep
2 hours ago
It has been inconvenient at times, but luckily most repairs were quick as we have a good mobile mechanic who comes to our house, and we do not use it for very long distances, so I would not say it has had a major impact
– agblt
2 hours ago
I'm not sure "average cost" is a good measure here - that's useful if the costs sometimes go up and sometimes come down, but tend to hover around the mean. With old cars, the curve tends to look exponential - it just goes up.
– Lawrence
2 hours ago
add a comment |Â
1
Do you still owe anything on the Impala? If so, what are the payments?
– JohnFx♦
2 hours ago
There are no payments
– agblt
2 hours ago
has the car left you stranded? even if it didn't leave you stranded was the loss of use of the car during the repair a major impact on your transportation.
– mhoran_psprep
2 hours ago
It has been inconvenient at times, but luckily most repairs were quick as we have a good mobile mechanic who comes to our house, and we do not use it for very long distances, so I would not say it has had a major impact
– agblt
2 hours ago
I'm not sure "average cost" is a good measure here - that's useful if the costs sometimes go up and sometimes come down, but tend to hover around the mean. With old cars, the curve tends to look exponential - it just goes up.
– Lawrence
2 hours ago
1
1
Do you still owe anything on the Impala? If so, what are the payments?
– JohnFx♦
2 hours ago
Do you still owe anything on the Impala? If so, what are the payments?
– JohnFx♦
2 hours ago
There are no payments
– agblt
2 hours ago
There are no payments
– agblt
2 hours ago
has the car left you stranded? even if it didn't leave you stranded was the loss of use of the car during the repair a major impact on your transportation.
– mhoran_psprep
2 hours ago
has the car left you stranded? even if it didn't leave you stranded was the loss of use of the car during the repair a major impact on your transportation.
– mhoran_psprep
2 hours ago
It has been inconvenient at times, but luckily most repairs were quick as we have a good mobile mechanic who comes to our house, and we do not use it for very long distances, so I would not say it has had a major impact
– agblt
2 hours ago
It has been inconvenient at times, but luckily most repairs were quick as we have a good mobile mechanic who comes to our house, and we do not use it for very long distances, so I would not say it has had a major impact
– agblt
2 hours ago
I'm not sure "average cost" is a good measure here - that's useful if the costs sometimes go up and sometimes come down, but tend to hover around the mean. With old cars, the curve tends to look exponential - it just goes up.
– Lawrence
2 hours ago
I'm not sure "average cost" is a good measure here - that's useful if the costs sometimes go up and sometimes come down, but tend to hover around the mean. With old cars, the curve tends to look exponential - it just goes up.
– Lawrence
2 hours ago
add a comment |Â
5 Answers
5
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up vote
4
down vote
While ultimately this is a matter of opinion, the major factors in this decision are the cost of what you'll replace it with and how important reliable transportation is to you.
$1470/year is not an incredible sum to keep a car on the road. Any newer car will also have maintenance and repair costs, higher insurance cost (most likely) and either require a significant cash outlay or new monthly car payments.
You've also hit one of the biggest repairs in the transmission, a rebuilt transmission should last at least 30k miles. So barring complete engine failure you could have a few more years of relatively low total cost of ownership. I'd probably have a mechanic inspect it and give you an idea of how much you might have to spend in the near future or how likely the car is to last you a while longer.
Then it's just a matter of deciding if the extra costs of something newer are worth it at this point, or if it makes sense to keep your paid off car kicking along.
Leasing is typically not a great option financially, buying a 2-3 year old used car tends to be the sweet spot, many of which still have time left on the manufacturers warranty which doesn't cover everything typically but can help with the big ticket items.
answered 1 hour ago
Hart CO
22.2k15267
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up vote
3
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Here's one option - figure out how much of a car payment you can afford, and start saving that today. Take your repair costs out of that fund. Continue saving until you have enough to and buy a used car with cash.
I would not lease. Leasing is a way to make expensive cars affordable for a short period of time, but you get nothing else in return (it is essentially renting the car).
answered 2 hours ago
D Stanley
46.7k7142151
But how do I know that any other used car won't have the same issues I am having now? Meaning, why would it be an advantage to get another used car over the used car I have now?
– agblt
2 hours ago
@agbit You get a mechanic to check it out before buying it.
– Lawrence
2 hours ago
So then I guess the question would be, what kind of used car would I get (in terms of mileage and age), that I could reasonably assume that these types of issues would not start happening to me right away, and how long would it take for these types of issues to crop up?
– agblt
1 hour ago
My experience is that a 2-3 year old car with average mileage (30-60k) gives you the best balance of affordability and reliability.
– D Stanley
1 hour ago
You can deduct a portion of the lease cost if you use it for business. It's technical, but there is that minor return.
– Kai Qing
25 mins ago
 |Â
show 2 more comments
up vote
3
down vote
Cars are certainly a money suck, but sometimes the cost to the individual is well hidden. The most common and costly example of this is the loss of value when one purchases a new car. One can expect to lose about 5k per year (minimum) when one purchases a new car. More would be lost if that purchase is financed. In comparison, 1500/year is "small potatoes".
IMHO it is foolish to buy a new car without significant assets. The growth of those assets counteract the depreciation one experiences when owning a new car. A decent rule of thumb would be a 500K in invested assets to buy a fairly common car like a Corolla or Accord.
IMHO it is also foolish to obtain a loan for a car. Sure some people play the interest arbitrage game where they could pay cash but opt to finance because of a low teaser rate. If you have the full amount in savings and can earn more than the car loan, I guess I am okay with it, but that situation is mostly uncommon.
So how much money do you have to buy a different car? That would really dictate the answer. If you have 10K saved, I would fix your car for the $800, sell it and buy something newer. If you have less, then I would be tempted to keep your current car. Buying something for less may cause you to inherit a different set of problems. You might come across a really good deal for something less and in that case I might purchase that car. However, as a general rule, I would want to move up in quality, save some more, and then repeat the process.
And as others have said, leasing is an even more costly way to own a car then just buying new with a loan. Again it is just a way to disguise the cost of driving something fancy.
You could be normal and just go out and get yourself a car loan and a car. However, remember that normal is broke. Most people do not have money. One of those reasons is the financing of new or nearly new cars.
answered 1 hour ago
Pete B.
46.6k1098146
"A decent rule of thumb would be a 500K in invested assets to buy a fairly common car like a Corolla or Accord." I don't think it's necessary to have a half million dollars in assets to purchase one of the top ten bestselling vehicles in the US.
– Our_Benefactors
48 mins ago
@Our_Benefactors the majority of people would agree with you.
– Pete B.
11 mins ago
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Spreading out the cost of a car is a good idea, because most of us don't get paid the cost of a vehicle in a single paycheck. However, paying interest on a depreciating asset isn't a good move from a financial perspective. Leasing generally only makes sense for businesses who can get some tax advantages and smooth out their costs, though a lease is not a good value for the leasee.
The best way to buy a car from where you are today, is to make payments to a car fund now. This fund is your car budget. You save until you can afford the car you need or want. The reason this makes sense is most visible when you do the math.
Car loan scenario:
- Car: 3 year old sedan with low miles in excellent condition
- Cost: $15,000
- Down: $0
- Term: 5 years
- Interest: 5%
- Payment: $283.07
- Total Cost: $16984.11
Car savings scenario:
- Start: $0
- Monthly: $283.07
- Term: 5 years
- Interest: 1%
- Total Value: $17,408.54
There will probably be comments about inflation and in the loan scenario you are driving a nicer car sooner and for longer and you can get more for your current car now, etc. Those points have some validity. You can partially offset inflation with an investment other than a simple savings account. The first 5 years are actually the hardest and least beneficial. The larger value of the savings approach is seen when applied over a lifetime rather than just a 5 year period. Once you complete the first cycle, you're selling a 7-8 year old car and buying a 2-3 year old car every 5 years for about $2500 less each cycle.
What also shouldn't be overlooked is the greatest value of the savings approach: life will happen during the next 5 years. What are the chances that the average individual will face some type of financial reversal, such as a job loss, need a major home repair, suffer a temporary disability or have significant medical expenses in any given 5 year period? If you are saving, you can simply put that on hold until the situation is resolved. Worst case, you can draw on those funds to resolve the crisis. If you are making payments, you will probably have to sell the car or have it repossessed. The car savings insulates you to a degree from financial misfortune, which means you are more financially stable and have greater peace of mind.
answered 24 mins ago
DSway
957413
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up vote
0
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Call your insurance agent and see what Total Loss Claim would pay out.
If the vehicle is worth more than the yearly cost of repairs (in your case $1470) suck it up, pay for the repair, and start saving for a new car.
If your insurance company can't give you a firm number of a Total Loss claim, The Kelly Blue Book value of the vehicle is likely a decent estimate (but no promises).
If it is not worth at least $1470 to the insurance company, then you will need to buy another car. The reason you should buy/lease/finance another car is simple. If you total your current car in an accident on the way home from the repair shop, and the insurance company doesn't settle your claim at $1470 or more, then you are now $1470 - settlement dollars poorer and car-less.
Always make sure yearly repair cost are not close to or more than the value of your car
P.S.
$1470 sounds a bit high for average yearly repairs. Being car-less also cost in either convince (i.e you and your SO have to carpool to and from work), or actual cost of renting a car. Be sure to factor these cost into the $1470 number. Especially if your job requires frequent travel by car, it might be time to buy a more reliable car for that reason alone.
answered 29 mins ago
sevensevens
1444
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5 Answers
5
active
oldest
votes
5 Answers
5
active
oldest
votes
active
oldest
votes
active
oldest
votes
up vote
4
down vote
While ultimately this is a matter of opinion, the major factors in this decision are the cost of what you'll replace it with and how important reliable transportation is to you.
$1470/year is not an incredible sum to keep a car on the road. Any newer car will also have maintenance and repair costs, higher insurance cost (most likely) and either require a significant cash outlay or new monthly car payments.
You've also hit one of the biggest repairs in the transmission, a rebuilt transmission should last at least 30k miles. So barring complete engine failure you could have a few more years of relatively low total cost of ownership. I'd probably have a mechanic inspect it and give you an idea of how much you might have to spend in the near future or how likely the car is to last you a while longer.
Then it's just a matter of deciding if the extra costs of something newer are worth it at this point, or if it makes sense to keep your paid off car kicking along.
Leasing is typically not a great option financially, buying a 2-3 year old used car tends to be the sweet spot, many of which still have time left on the manufacturers warranty which doesn't cover everything typically but can help with the big ticket items.
answered 1 hour ago
Hart CO
22.2k15267
add a comment |Â
up vote
4
down vote
While ultimately this is a matter of opinion, the major factors in this decision are the cost of what you'll replace it with and how important reliable transportation is to you.
$1470/year is not an incredible sum to keep a car on the road. Any newer car will also have maintenance and repair costs, higher insurance cost (most likely) and either require a significant cash outlay or new monthly car payments.
You've also hit one of the biggest repairs in the transmission, a rebuilt transmission should last at least 30k miles. So barring complete engine failure you could have a few more years of relatively low total cost of ownership. I'd probably have a mechanic inspect it and give you an idea of how much you might have to spend in the near future or how likely the car is to last you a while longer.
Then it's just a matter of deciding if the extra costs of something newer are worth it at this point, or if it makes sense to keep your paid off car kicking along.
Leasing is typically not a great option financially, buying a 2-3 year old used car tends to be the sweet spot, many of which still have time left on the manufacturers warranty which doesn't cover everything typically but can help with the big ticket items.
answered 1 hour ago
Hart CO
22.2k15267
add a comment |Â
up vote
4
down vote
up vote
4
down vote
While ultimately this is a matter of opinion, the major factors in this decision are the cost of what you'll replace it with and how important reliable transportation is to you.
$1470/year is not an incredible sum to keep a car on the road. Any newer car will also have maintenance and repair costs, higher insurance cost (most likely) and either require a significant cash outlay or new monthly car payments.
You've also hit one of the biggest repairs in the transmission, a rebuilt transmission should last at least 30k miles. So barring complete engine failure you could have a few more years of relatively low total cost of ownership. I'd probably have a mechanic inspect it and give you an idea of how much you might have to spend in the near future or how likely the car is to last you a while longer.
Then it's just a matter of deciding if the extra costs of something newer are worth it at this point, or if it makes sense to keep your paid off car kicking along.
Leasing is typically not a great option financially, buying a 2-3 year old used car tends to be the sweet spot, many of which still have time left on the manufacturers warranty which doesn't cover everything typically but can help with the big ticket items.
answered 1 hour ago
Hart CO
22.2k15267
While ultimately this is a matter of opinion, the major factors in this decision are the cost of what you'll replace it with and how important reliable transportation is to you.
$1470/year is not an incredible sum to keep a car on the road. Any newer car will also have maintenance and repair costs, higher insurance cost (most likely) and either require a significant cash outlay or new monthly car payments.
You've also hit one of the biggest repairs in the transmission, a rebuilt transmission should last at least 30k miles. So barring complete engine failure you could have a few more years of relatively low total cost of ownership. I'd probably have a mechanic inspect it and give you an idea of how much you might have to spend in the near future or how likely the car is to last you a while longer.
Then it's just a matter of deciding if the extra costs of something newer are worth it at this point, or if it makes sense to keep your paid off car kicking along.
Leasing is typically not a great option financially, buying a 2-3 year old used car tends to be the sweet spot, many of which still have time left on the manufacturers warranty which doesn't cover everything typically but can help with the big ticket items.
answered 1 hour ago
Hart CO
22.2k15267
edited 1 hour ago
answered 1 hour ago
Hart CO
22.2k15267
answered 1 hour ago
Hart CO
22.2k15267
answered 1 hour ago
Hart CO
22.2k15267
22.2k15267
add a comment |Â
add a comment |Â
up vote
3
down vote
Here's one option - figure out how much of a car payment you can afford, and start saving that today. Take your repair costs out of that fund. Continue saving until you have enough to and buy a used car with cash.
I would not lease. Leasing is a way to make expensive cars affordable for a short period of time, but you get nothing else in return (it is essentially renting the car).
answered 2 hours ago
D Stanley
46.7k7142151
But how do I know that any other used car won't have the same issues I am having now? Meaning, why would it be an advantage to get another used car over the used car I have now?
– agblt
2 hours ago
@agbit You get a mechanic to check it out before buying it.
– Lawrence
2 hours ago
So then I guess the question would be, what kind of used car would I get (in terms of mileage and age), that I could reasonably assume that these types of issues would not start happening to me right away, and how long would it take for these types of issues to crop up?
– agblt
1 hour ago
My experience is that a 2-3 year old car with average mileage (30-60k) gives you the best balance of affordability and reliability.
– D Stanley
1 hour ago
You can deduct a portion of the lease cost if you use it for business. It's technical, but there is that minor return.
– Kai Qing
25 mins ago
 |Â
show 2 more comments
up vote
3
down vote
Here's one option - figure out how much of a car payment you can afford, and start saving that today. Take your repair costs out of that fund. Continue saving until you have enough to and buy a used car with cash.
I would not lease. Leasing is a way to make expensive cars affordable for a short period of time, but you get nothing else in return (it is essentially renting the car).
answered 2 hours ago
D Stanley
46.7k7142151
But how do I know that any other used car won't have the same issues I am having now? Meaning, why would it be an advantage to get another used car over the used car I have now?
– agblt
2 hours ago
@agbit You get a mechanic to check it out before buying it.
– Lawrence
2 hours ago
So then I guess the question would be, what kind of used car would I get (in terms of mileage and age), that I could reasonably assume that these types of issues would not start happening to me right away, and how long would it take for these types of issues to crop up?
– agblt
1 hour ago
My experience is that a 2-3 year old car with average mileage (30-60k) gives you the best balance of affordability and reliability.
– D Stanley
1 hour ago
You can deduct a portion of the lease cost if you use it for business. It's technical, but there is that minor return.
– Kai Qing
25 mins ago
 |Â
show 2 more comments
up vote
3
down vote
up vote
3
down vote
Here's one option - figure out how much of a car payment you can afford, and start saving that today. Take your repair costs out of that fund. Continue saving until you have enough to and buy a used car with cash.
I would not lease. Leasing is a way to make expensive cars affordable for a short period of time, but you get nothing else in return (it is essentially renting the car).
answered 2 hours ago
D Stanley
46.7k7142151
Here's one option - figure out how much of a car payment you can afford, and start saving that today. Take your repair costs out of that fund. Continue saving until you have enough to and buy a used car with cash.
I would not lease. Leasing is a way to make expensive cars affordable for a short period of time, but you get nothing else in return (it is essentially renting the car).
answered 2 hours ago
D Stanley
46.7k7142151
answered 2 hours ago
D Stanley
46.7k7142151
answered 2 hours ago
D Stanley
46.7k7142151
answered 2 hours ago
D Stanley
46.7k7142151
46.7k7142151
But how do I know that any other used car won't have the same issues I am having now? Meaning, why would it be an advantage to get another used car over the used car I have now?
– agblt
2 hours ago
@agbit You get a mechanic to check it out before buying it.
– Lawrence
2 hours ago
So then I guess the question would be, what kind of used car would I get (in terms of mileage and age), that I could reasonably assume that these types of issues would not start happening to me right away, and how long would it take for these types of issues to crop up?
– agblt
1 hour ago
My experience is that a 2-3 year old car with average mileage (30-60k) gives you the best balance of affordability and reliability.
– D Stanley
1 hour ago
You can deduct a portion of the lease cost if you use it for business. It's technical, but there is that minor return.
– Kai Qing
25 mins ago
 |Â
show 2 more comments
But how do I know that any other used car won't have the same issues I am having now? Meaning, why would it be an advantage to get another used car over the used car I have now?
– agblt
2 hours ago
@agbit You get a mechanic to check it out before buying it.
– Lawrence
2 hours ago
So then I guess the question would be, what kind of used car would I get (in terms of mileage and age), that I could reasonably assume that these types of issues would not start happening to me right away, and how long would it take for these types of issues to crop up?
– agblt
1 hour ago
My experience is that a 2-3 year old car with average mileage (30-60k) gives you the best balance of affordability and reliability.
– D Stanley
1 hour ago
You can deduct a portion of the lease cost if you use it for business. It's technical, but there is that minor return.
– Kai Qing
25 mins ago
But how do I know that any other used car won't have the same issues I am having now? Meaning, why would it be an advantage to get another used car over the used car I have now?
– agblt
2 hours ago
But how do I know that any other used car won't have the same issues I am having now? Meaning, why would it be an advantage to get another used car over the used car I have now?
– agblt
2 hours ago
@agbit You get a mechanic to check it out before buying it.
– Lawrence
2 hours ago
@agbit You get a mechanic to check it out before buying it.
– Lawrence
2 hours ago
So then I guess the question would be, what kind of used car would I get (in terms of mileage and age), that I could reasonably assume that these types of issues would not start happening to me right away, and how long would it take for these types of issues to crop up?
– agblt
1 hour ago
So then I guess the question would be, what kind of used car would I get (in terms of mileage and age), that I could reasonably assume that these types of issues would not start happening to me right away, and how long would it take for these types of issues to crop up?
– agblt
1 hour ago
My experience is that a 2-3 year old car with average mileage (30-60k) gives you the best balance of affordability and reliability.
– D Stanley
1 hour ago
My experience is that a 2-3 year old car with average mileage (30-60k) gives you the best balance of affordability and reliability.
– D Stanley
1 hour ago
You can deduct a portion of the lease cost if you use it for business. It's technical, but there is that minor return.
– Kai Qing
25 mins ago
You can deduct a portion of the lease cost if you use it for business. It's technical, but there is that minor return.
– Kai Qing
25 mins ago
 |Â
show 2 more comments
up vote
3
down vote
Cars are certainly a money suck, but sometimes the cost to the individual is well hidden. The most common and costly example of this is the loss of value when one purchases a new car. One can expect to lose about 5k per year (minimum) when one purchases a new car. More would be lost if that purchase is financed. In comparison, 1500/year is "small potatoes".
IMHO it is foolish to buy a new car without significant assets. The growth of those assets counteract the depreciation one experiences when owning a new car. A decent rule of thumb would be a 500K in invested assets to buy a fairly common car like a Corolla or Accord.
IMHO it is also foolish to obtain a loan for a car. Sure some people play the interest arbitrage game where they could pay cash but opt to finance because of a low teaser rate. If you have the full amount in savings and can earn more than the car loan, I guess I am okay with it, but that situation is mostly uncommon.
So how much money do you have to buy a different car? That would really dictate the answer. If you have 10K saved, I would fix your car for the $800, sell it and buy something newer. If you have less, then I would be tempted to keep your current car. Buying something for less may cause you to inherit a different set of problems. You might come across a really good deal for something less and in that case I might purchase that car. However, as a general rule, I would want to move up in quality, save some more, and then repeat the process.
And as others have said, leasing is an even more costly way to own a car then just buying new with a loan. Again it is just a way to disguise the cost of driving something fancy.
You could be normal and just go out and get yourself a car loan and a car. However, remember that normal is broke. Most people do not have money. One of those reasons is the financing of new or nearly new cars.
answered 1 hour ago
Pete B.
46.6k1098146
"A decent rule of thumb would be a 500K in invested assets to buy a fairly common car like a Corolla or Accord." I don't think it's necessary to have a half million dollars in assets to purchase one of the top ten bestselling vehicles in the US.
– Our_Benefactors
48 mins ago
@Our_Benefactors the majority of people would agree with you.
– Pete B.
11 mins ago
add a comment |Â
up vote
3
down vote
Cars are certainly a money suck, but sometimes the cost to the individual is well hidden. The most common and costly example of this is the loss of value when one purchases a new car. One can expect to lose about 5k per year (minimum) when one purchases a new car. More would be lost if that purchase is financed. In comparison, 1500/year is "small potatoes".
IMHO it is foolish to buy a new car without significant assets. The growth of those assets counteract the depreciation one experiences when owning a new car. A decent rule of thumb would be a 500K in invested assets to buy a fairly common car like a Corolla or Accord.
IMHO it is also foolish to obtain a loan for a car. Sure some people play the interest arbitrage game where they could pay cash but opt to finance because of a low teaser rate. If you have the full amount in savings and can earn more than the car loan, I guess I am okay with it, but that situation is mostly uncommon.
So how much money do you have to buy a different car? That would really dictate the answer. If you have 10K saved, I would fix your car for the $800, sell it and buy something newer. If you have less, then I would be tempted to keep your current car. Buying something for less may cause you to inherit a different set of problems. You might come across a really good deal for something less and in that case I might purchase that car. However, as a general rule, I would want to move up in quality, save some more, and then repeat the process.
And as others have said, leasing is an even more costly way to own a car then just buying new with a loan. Again it is just a way to disguise the cost of driving something fancy.
You could be normal and just go out and get yourself a car loan and a car. However, remember that normal is broke. Most people do not have money. One of those reasons is the financing of new or nearly new cars.
answered 1 hour ago
Pete B.
46.6k1098146
"A decent rule of thumb would be a 500K in invested assets to buy a fairly common car like a Corolla or Accord." I don't think it's necessary to have a half million dollars in assets to purchase one of the top ten bestselling vehicles in the US.
– Our_Benefactors
48 mins ago
@Our_Benefactors the majority of people would agree with you.
– Pete B.
11 mins ago
add a comment |Â
up vote
3
down vote
up vote
3
down vote
Cars are certainly a money suck, but sometimes the cost to the individual is well hidden. The most common and costly example of this is the loss of value when one purchases a new car. One can expect to lose about 5k per year (minimum) when one purchases a new car. More would be lost if that purchase is financed. In comparison, 1500/year is "small potatoes".
IMHO it is foolish to buy a new car without significant assets. The growth of those assets counteract the depreciation one experiences when owning a new car. A decent rule of thumb would be a 500K in invested assets to buy a fairly common car like a Corolla or Accord.
IMHO it is also foolish to obtain a loan for a car. Sure some people play the interest arbitrage game where they could pay cash but opt to finance because of a low teaser rate. If you have the full amount in savings and can earn more than the car loan, I guess I am okay with it, but that situation is mostly uncommon.
So how much money do you have to buy a different car? That would really dictate the answer. If you have 10K saved, I would fix your car for the $800, sell it and buy something newer. If you have less, then I would be tempted to keep your current car. Buying something for less may cause you to inherit a different set of problems. You might come across a really good deal for something less and in that case I might purchase that car. However, as a general rule, I would want to move up in quality, save some more, and then repeat the process.
And as others have said, leasing is an even more costly way to own a car then just buying new with a loan. Again it is just a way to disguise the cost of driving something fancy.
You could be normal and just go out and get yourself a car loan and a car. However, remember that normal is broke. Most people do not have money. One of those reasons is the financing of new or nearly new cars.
answered 1 hour ago
Pete B.
46.6k1098146
Cars are certainly a money suck, but sometimes the cost to the individual is well hidden. The most common and costly example of this is the loss of value when one purchases a new car. One can expect to lose about 5k per year (minimum) when one purchases a new car. More would be lost if that purchase is financed. In comparison, 1500/year is "small potatoes".
IMHO it is foolish to buy a new car without significant assets. The growth of those assets counteract the depreciation one experiences when owning a new car. A decent rule of thumb would be a 500K in invested assets to buy a fairly common car like a Corolla or Accord.
IMHO it is also foolish to obtain a loan for a car. Sure some people play the interest arbitrage game where they could pay cash but opt to finance because of a low teaser rate. If you have the full amount in savings and can earn more than the car loan, I guess I am okay with it, but that situation is mostly uncommon.
So how much money do you have to buy a different car? That would really dictate the answer. If you have 10K saved, I would fix your car for the $800, sell it and buy something newer. If you have less, then I would be tempted to keep your current car. Buying something for less may cause you to inherit a different set of problems. You might come across a really good deal for something less and in that case I might purchase that car. However, as a general rule, I would want to move up in quality, save some more, and then repeat the process.
And as others have said, leasing is an even more costly way to own a car then just buying new with a loan. Again it is just a way to disguise the cost of driving something fancy.
You could be normal and just go out and get yourself a car loan and a car. However, remember that normal is broke. Most people do not have money. One of those reasons is the financing of new or nearly new cars.
answered 1 hour ago
Pete B.
46.6k1098146
edited 1 hour ago
answered 1 hour ago
Pete B.
46.6k1098146
answered 1 hour ago
Pete B.
46.6k1098146
answered 1 hour ago
Pete B.
46.6k1098146
46.6k1098146
"A decent rule of thumb would be a 500K in invested assets to buy a fairly common car like a Corolla or Accord." I don't think it's necessary to have a half million dollars in assets to purchase one of the top ten bestselling vehicles in the US.
– Our_Benefactors
48 mins ago
@Our_Benefactors the majority of people would agree with you.
– Pete B.
11 mins ago
add a comment |Â
"A decent rule of thumb would be a 500K in invested assets to buy a fairly common car like a Corolla or Accord." I don't think it's necessary to have a half million dollars in assets to purchase one of the top ten bestselling vehicles in the US.
– Our_Benefactors
48 mins ago
@Our_Benefactors the majority of people would agree with you.
– Pete B.
11 mins ago
"A decent rule of thumb would be a 500K in invested assets to buy a fairly common car like a Corolla or Accord." I don't think it's necessary to have a half million dollars in assets to purchase one of the top ten bestselling vehicles in the US.
– Our_Benefactors
48 mins ago
"A decent rule of thumb would be a 500K in invested assets to buy a fairly common car like a Corolla or Accord." I don't think it's necessary to have a half million dollars in assets to purchase one of the top ten bestselling vehicles in the US.
– Our_Benefactors
48 mins ago
@Our_Benefactors the majority of people would agree with you.
– Pete B.
11 mins ago
@Our_Benefactors the majority of people would agree with you.
– Pete B.
11 mins ago
add a comment |Â
up vote
0
down vote
Spreading out the cost of a car is a good idea, because most of us don't get paid the cost of a vehicle in a single paycheck. However, paying interest on a depreciating asset isn't a good move from a financial perspective. Leasing generally only makes sense for businesses who can get some tax advantages and smooth out their costs, though a lease is not a good value for the leasee.
The best way to buy a car from where you are today, is to make payments to a car fund now. This fund is your car budget. You save until you can afford the car you need or want. The reason this makes sense is most visible when you do the math.
Car loan scenario:
- Car: 3 year old sedan with low miles in excellent condition
- Cost: $15,000
- Down: $0
- Term: 5 years
- Interest: 5%
- Payment: $283.07
- Total Cost: $16984.11
Car savings scenario:
- Start: $0
- Monthly: $283.07
- Term: 5 years
- Interest: 1%
- Total Value: $17,408.54
There will probably be comments about inflation and in the loan scenario you are driving a nicer car sooner and for longer and you can get more for your current car now, etc. Those points have some validity. You can partially offset inflation with an investment other than a simple savings account. The first 5 years are actually the hardest and least beneficial. The larger value of the savings approach is seen when applied over a lifetime rather than just a 5 year period. Once you complete the first cycle, you're selling a 7-8 year old car and buying a 2-3 year old car every 5 years for about $2500 less each cycle.
What also shouldn't be overlooked is the greatest value of the savings approach: life will happen during the next 5 years. What are the chances that the average individual will face some type of financial reversal, such as a job loss, need a major home repair, suffer a temporary disability or have significant medical expenses in any given 5 year period? If you are saving, you can simply put that on hold until the situation is resolved. Worst case, you can draw on those funds to resolve the crisis. If you are making payments, you will probably have to sell the car or have it repossessed. The car savings insulates you to a degree from financial misfortune, which means you are more financially stable and have greater peace of mind.
answered 24 mins ago
DSway
957413
add a comment |Â
up vote
0
down vote
Spreading out the cost of a car is a good idea, because most of us don't get paid the cost of a vehicle in a single paycheck. However, paying interest on a depreciating asset isn't a good move from a financial perspective. Leasing generally only makes sense for businesses who can get some tax advantages and smooth out their costs, though a lease is not a good value for the leasee.
The best way to buy a car from where you are today, is to make payments to a car fund now. This fund is your car budget. You save until you can afford the car you need or want. The reason this makes sense is most visible when you do the math.
Car loan scenario:
- Car: 3 year old sedan with low miles in excellent condition
- Cost: $15,000
- Down: $0
- Term: 5 years
- Interest: 5%
- Payment: $283.07
- Total Cost: $16984.11
Car savings scenario:
- Start: $0
- Monthly: $283.07
- Term: 5 years
- Interest: 1%
- Total Value: $17,408.54
There will probably be comments about inflation and in the loan scenario you are driving a nicer car sooner and for longer and you can get more for your current car now, etc. Those points have some validity. You can partially offset inflation with an investment other than a simple savings account. The first 5 years are actually the hardest and least beneficial. The larger value of the savings approach is seen when applied over a lifetime rather than just a 5 year period. Once you complete the first cycle, you're selling a 7-8 year old car and buying a 2-3 year old car every 5 years for about $2500 less each cycle.
What also shouldn't be overlooked is the greatest value of the savings approach: life will happen during the next 5 years. What are the chances that the average individual will face some type of financial reversal, such as a job loss, need a major home repair, suffer a temporary disability or have significant medical expenses in any given 5 year period? If you are saving, you can simply put that on hold until the situation is resolved. Worst case, you can draw on those funds to resolve the crisis. If you are making payments, you will probably have to sell the car or have it repossessed. The car savings insulates you to a degree from financial misfortune, which means you are more financially stable and have greater peace of mind.
answered 24 mins ago
DSway
957413
add a comment |Â
up vote
0
down vote
up vote
0
down vote
Spreading out the cost of a car is a good idea, because most of us don't get paid the cost of a vehicle in a single paycheck. However, paying interest on a depreciating asset isn't a good move from a financial perspective. Leasing generally only makes sense for businesses who can get some tax advantages and smooth out their costs, though a lease is not a good value for the leasee.
The best way to buy a car from where you are today, is to make payments to a car fund now. This fund is your car budget. You save until you can afford the car you need or want. The reason this makes sense is most visible when you do the math.
Car loan scenario:
- Car: 3 year old sedan with low miles in excellent condition
- Cost: $15,000
- Down: $0
- Term: 5 years
- Interest: 5%
- Payment: $283.07
- Total Cost: $16984.11
Car savings scenario:
- Start: $0
- Monthly: $283.07
- Term: 5 years
- Interest: 1%
- Total Value: $17,408.54
There will probably be comments about inflation and in the loan scenario you are driving a nicer car sooner and for longer and you can get more for your current car now, etc. Those points have some validity. You can partially offset inflation with an investment other than a simple savings account. The first 5 years are actually the hardest and least beneficial. The larger value of the savings approach is seen when applied over a lifetime rather than just a 5 year period. Once you complete the first cycle, you're selling a 7-8 year old car and buying a 2-3 year old car every 5 years for about $2500 less each cycle.
What also shouldn't be overlooked is the greatest value of the savings approach: life will happen during the next 5 years. What are the chances that the average individual will face some type of financial reversal, such as a job loss, need a major home repair, suffer a temporary disability or have significant medical expenses in any given 5 year period? If you are saving, you can simply put that on hold until the situation is resolved. Worst case, you can draw on those funds to resolve the crisis. If you are making payments, you will probably have to sell the car or have it repossessed. The car savings insulates you to a degree from financial misfortune, which means you are more financially stable and have greater peace of mind.
answered 24 mins ago
DSway
957413
Spreading out the cost of a car is a good idea, because most of us don't get paid the cost of a vehicle in a single paycheck. However, paying interest on a depreciating asset isn't a good move from a financial perspective. Leasing generally only makes sense for businesses who can get some tax advantages and smooth out their costs, though a lease is not a good value for the leasee.
The best way to buy a car from where you are today, is to make payments to a car fund now. This fund is your car budget. You save until you can afford the car you need or want. The reason this makes sense is most visible when you do the math.
Car loan scenario:
- Car: 3 year old sedan with low miles in excellent condition
- Cost: $15,000
- Down: $0
- Term: 5 years
- Interest: 5%
- Payment: $283.07
- Total Cost: $16984.11
Car savings scenario:
- Start: $0
- Monthly: $283.07
- Term: 5 years
- Interest: 1%
- Total Value: $17,408.54
There will probably be comments about inflation and in the loan scenario you are driving a nicer car sooner and for longer and you can get more for your current car now, etc. Those points have some validity. You can partially offset inflation with an investment other than a simple savings account. The first 5 years are actually the hardest and least beneficial. The larger value of the savings approach is seen when applied over a lifetime rather than just a 5 year period. Once you complete the first cycle, you're selling a 7-8 year old car and buying a 2-3 year old car every 5 years for about $2500 less each cycle.
What also shouldn't be overlooked is the greatest value of the savings approach: life will happen during the next 5 years. What are the chances that the average individual will face some type of financial reversal, such as a job loss, need a major home repair, suffer a temporary disability or have significant medical expenses in any given 5 year period? If you are saving, you can simply put that on hold until the situation is resolved. Worst case, you can draw on those funds to resolve the crisis. If you are making payments, you will probably have to sell the car or have it repossessed. The car savings insulates you to a degree from financial misfortune, which means you are more financially stable and have greater peace of mind.
answered 24 mins ago
DSway
957413
answered 24 mins ago
DSway
957413
answered 24 mins ago
DSway
957413
answered 24 mins ago
DSway
957413
957413
add a comment |Â
add a comment |Â
up vote
0
down vote
Call your insurance agent and see what Total Loss Claim would pay out.
If the vehicle is worth more than the yearly cost of repairs (in your case $1470) suck it up, pay for the repair, and start saving for a new car.
If your insurance company can't give you a firm number of a Total Loss claim, The Kelly Blue Book value of the vehicle is likely a decent estimate (but no promises).
If it is not worth at least $1470 to the insurance company, then you will need to buy another car. The reason you should buy/lease/finance another car is simple. If you total your current car in an accident on the way home from the repair shop, and the insurance company doesn't settle your claim at $1470 or more, then you are now $1470 - settlement dollars poorer and car-less.
Always make sure yearly repair cost are not close to or more than the value of your car
P.S.
$1470 sounds a bit high for average yearly repairs. Being car-less also cost in either convince (i.e you and your SO have to carpool to and from work), or actual cost of renting a car. Be sure to factor these cost into the $1470 number. Especially if your job requires frequent travel by car, it might be time to buy a more reliable car for that reason alone.
answered 29 mins ago
sevensevens
1444
add a comment |Â
up vote
0
down vote
Call your insurance agent and see what Total Loss Claim would pay out.
If the vehicle is worth more than the yearly cost of repairs (in your case $1470) suck it up, pay for the repair, and start saving for a new car.
If your insurance company can't give you a firm number of a Total Loss claim, The Kelly Blue Book value of the vehicle is likely a decent estimate (but no promises).
If it is not worth at least $1470 to the insurance company, then you will need to buy another car. The reason you should buy/lease/finance another car is simple. If you total your current car in an accident on the way home from the repair shop, and the insurance company doesn't settle your claim at $1470 or more, then you are now $1470 - settlement dollars poorer and car-less.
Always make sure yearly repair cost are not close to or more than the value of your car
P.S.
$1470 sounds a bit high for average yearly repairs. Being car-less also cost in either convince (i.e you and your SO have to carpool to and from work), or actual cost of renting a car. Be sure to factor these cost into the $1470 number. Especially if your job requires frequent travel by car, it might be time to buy a more reliable car for that reason alone.
answered 29 mins ago
sevensevens
1444
add a comment |Â
up vote
0
down vote
up vote
0
down vote
Call your insurance agent and see what Total Loss Claim would pay out.
If the vehicle is worth more than the yearly cost of repairs (in your case $1470) suck it up, pay for the repair, and start saving for a new car.
If your insurance company can't give you a firm number of a Total Loss claim, The Kelly Blue Book value of the vehicle is likely a decent estimate (but no promises).
If it is not worth at least $1470 to the insurance company, then you will need to buy another car. The reason you should buy/lease/finance another car is simple. If you total your current car in an accident on the way home from the repair shop, and the insurance company doesn't settle your claim at $1470 or more, then you are now $1470 - settlement dollars poorer and car-less.
Always make sure yearly repair cost are not close to or more than the value of your car
P.S.
$1470 sounds a bit high for average yearly repairs. Being car-less also cost in either convince (i.e you and your SO have to carpool to and from work), or actual cost of renting a car. Be sure to factor these cost into the $1470 number. Especially if your job requires frequent travel by car, it might be time to buy a more reliable car for that reason alone.
answered 29 mins ago
sevensevens
1444
Call your insurance agent and see what Total Loss Claim would pay out.
If the vehicle is worth more than the yearly cost of repairs (in your case $1470) suck it up, pay for the repair, and start saving for a new car.
If your insurance company can't give you a firm number of a Total Loss claim, The Kelly Blue Book value of the vehicle is likely a decent estimate (but no promises).
If it is not worth at least $1470 to the insurance company, then you will need to buy another car. The reason you should buy/lease/finance another car is simple. If you total your current car in an accident on the way home from the repair shop, and the insurance company doesn't settle your claim at $1470 or more, then you are now $1470 - settlement dollars poorer and car-less.
Always make sure yearly repair cost are not close to or more than the value of your car
P.S.
$1470 sounds a bit high for average yearly repairs. Being car-less also cost in either convince (i.e you and your SO have to carpool to and from work), or actual cost of renting a car. Be sure to factor these cost into the $1470 number. Especially if your job requires frequent travel by car, it might be time to buy a more reliable car for that reason alone.
answered 29 mins ago
sevensevens
1444
edited 23 mins ago
answered 29 mins ago
sevensevens
1444
answered 29 mins ago
sevensevens
1444
answered 29 mins ago
sevensevens
1444
1444
add a comment |Â
add a comment |Â
agblt is a new contributor. Be nice, and check out our Code of Conduct.
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1
Do you still owe anything on the Impala? If so, what are the payments?
– JohnFx♦
2 hours ago
There are no payments
– agblt
2 hours ago
has the car left you stranded? even if it didn't leave you stranded was the loss of use of the car during the repair a major impact on your transportation.
– mhoran_psprep
2 hours ago
It has been inconvenient at times, but luckily most repairs were quick as we have a good mobile mechanic who comes to our house, and we do not use it for very long distances, so I would not say it has had a major impact
– agblt
2 hours ago
I'm not sure "average cost" is a good measure here - that's useful if the costs sometimes go up and sometimes come down, but tend to hover around the mean. With old cars, the curve tends to look exponential - it just goes up.
– Lawrence
2 hours ago