I don't really want a new car, but I think I should buy one. Tell me if I am thinking clearly.

Miscellaneous and Personal Stuff I Must Share
1

I drive a 2007 vehicle with 130,000 miles on it that I purchased new 12 years ago. I maintain it well and it’s never given me significant trouble. I am totally happy driving it and I consider it perfect for my needs.

But here’s the deal.

I don’t expect it to be the last car I’ll ever own. At some point it will have to be replaced. Because my date of retirement is 5 years away, I am thinking it would be smart to trade it in now for a new vehicle. Thus, the payoff of the car I buy now will coincide with my retirement. If I wait a year or two, I’ll have 1-2 more years of car payments facing me as I retire.

I suppose I could bank the “car payment” for a year or two, then make the purchase in 2020 or 2021 with that much more to put down (and then get a 3 or 4 year loan instead of 5).

Does anyone see a clear advantage to either strategy? I’m leaning toward just buying it now.

FWIW I can put down a nice down payment and the monthly payments will not be a hardship.

Thanks!

2

Why not wait a year or three and in the meantime save what you would have put towards car payments? If and when you do decide to buy a car, you’ll have less to finance.

3

That’s certainly the smart move. But,… life isn’t just about being smart. Chew it over for a month or two. If it still seems like a good idea, proceed and drive happy.

4

It’s a pretty good time to take out a loan, chances are good interest is going to be low for a few more years at least. There are even banks in Europe that offer negative interest right now, so you’ll end up paying back less than you borrowed. I assume they probably make it back in fees and increased market shares, but it still seems a bit topsy-turvy to me.

5

What age are you planning to retire at? How long do you keep on planning to drive? Assuming your eyes and reflexes stay sharp, you’ll probably be driving (at least around town) into your 80s. Even if you retire at 70, you may find this won’t be your last car.

I’m in that gray area between being retired, but nowhere near ready to wind down my driving. If it were my money, I’d keep the current car for as long as I could, bank the payments, then put more down/take a shorter loan when I actually need to get another car.

6

Any reason you need a new car? A three year old car can be had for 30-50% off the cost of a new car.

7

Heck, if you start banking car payments now, within a few years you’ll have enough to buy this year’s model used without any financing at all. For the “cost” of driving your current car a few years you’ll save thousands.

8

Keep your old car until you retire. Starting now, bank what car payment you would make plus maybe $50 more each month until then. Treat yourself with a cash-bought brand new car as a retirement gift to yourself.

9

Keep driving it till it blows up.

10

That’s always worked for us. Then we pay cash (or a percentage-back charge card) for a well-maintained year-old rental with its issues ironed out. New vehicles depreciate drastically when they leave the sales lot; get it later when it’s cheaper and debugged.

11

You win the thread, this is the correct answer, why pay interest on a depreciating asset?

12

Because a car is not an investment. Unless its some kind of show car, a vehicle is not an asset, and purchasing one is not comparable to purchasing things like real estate, stocks, etc. A new car is a luxury item that people buy because of comfort, entertainment, joy, visual appeal, etc.
I think it’s more equivalent to using a credit card to fund a vacation. You don’t need the vacation, and you’re going to pay interest on it, but you do it because it brings you joy; not because it’s a smart financial decision.
MMM should just go test drive a new car. If the available features and comfort of the new car are enough to improve the quality of his commute sufficiently to add enjoyment to his life each day, then get it! If it doesn’t do anything for him, then just wait. Or go look at something nicer.

If people only treated car purchases as investments, we’d never buy them! There’s almost no way to come out on top.

13

Thanks to everyone for responding, but this answer is striking a chord with me. It has info I had not considered.

14

I’m already retired, but from a financial POV, there’s absolutely no way that throwing money to a car manufacturer when you have a perfectly good and reliable car makes any sense. It only works to the extent that you value and are willing to pay for the features in a new car in terms of luxuries. Which is fine if you have lots of money and are going to enjoy the new frills and that famous “new car smell”, but not if the main concern is basic transportation.

I’ve had the same sorts of thoughts about a new car, which is always enticing, but the one I have which is nearly 15 years old simply refuses to stop being reliable. Power windows and door locks and trunk lock? Work just fine. Engine runs smoothly. Power driver’s seat? Perfect. A lot of those things broke on the previous car, but not on this one. I was disappointed the other day to see the “check engine” light come on, but I re-tightened the gas filler cap and after a day or two of driving the light went off. It’s a trivial problem that will trigger an EVAP fault code. I now recall that I was in a hurry and probably didn’t screw down the gas cap properly. Anyway, this is a car that just won’t give up. Chrysler Sebring, believe it or not, statistically probably one of the less reliable cars out there, with some particularly disastrous model years. But not this one.

Back in years gone by, I used to think that after a few years virtually every car has at least a few things broken and that’s just the way it is, and you live with it. Everything is fine on this one after nearly a decade and a half. Why would I spend money to replace it? This one is a keeper. I have better things to do with the money I save. The next new car will happen when – and only when – a major problem develops with this one that, to me, is not worth the cost of repair.

15

If it’s not giving you any guff now, I wouldn’t think about replacing it until it starts to look like it’ll cost you more per month to keep fixing it than a car payment. My truck has 140k and even with minor repairs here and there I plan to have it for at least another year.

16

Mr. Athena and I tend to buy new cars. Well, “tend” in that we’ve purchased 3 new cars since 1999. One of them is still in the garage.

Five years ago, we made the sad decision to replace our main driver - a smallish SUV. The tailgate had rusted completely through (you could see light through the holes), the shocks were shot, and it had a multitude of other small things going on. We loved that vehicle, but it was time. We looked around some, considered used cars, and then, given our propensity for driving a car until it completely died and the crazy low interest rates on new car loans, we ended up buying new. That way, we got exactly what we wanted, we had a nice warranty for the first few years at least, and we had a reasonable expectation that we will not have to buy another car for many, many years.

A young family member insisted on buying the old vehicle. We reluctantly sold it to him; we knew it was on its way out, were very up front about that, but he still wanted it. 3 months later it threw a timing belt or some such thing and killed the engine. I’d say we timed that one pretty much perfectly. Young family member wasn’t upset, either - he looked at it as the 3 months he had it at the price we sold it was cheaper than a car loan would have been.

So that’s our story and our reasoning around buying new.

17

My mindset about cars has changed over the years…

My first “car” was an ‘88 Ford Escort Pony (stripped down base model), it was the typical “parents bought it for me” car, used with 10k on the odometer, I was responsible for everything else, registration, maintenance, repairs, insurance, gas…

My next few cars were all new entry level base models that were financed
(Dodge Shadow, two Neons, Saturn Ion)
I kept them until the end of the warranty and then traded out, they were 4-5 year loans

Then another used car financed, 07 VW Rabbit, this one kept for 8 years (5 year financed)

The last two were cash sales, ‘11 Honda Element that sadly died in a car crash, funds from the insurance check were used to purchase the current daily, ‘12 VW Golf TDI

Cars are so good now that I see no point in getting into a car loan, if you shop strategically, you can get a great, reliable car for much cheaper than a new financed car

The Golf TDI was the second least expensive car I’ve owned, the cheapest was the escort

‘88 Escort; $5000 with 10,000 miles on it (it was an unreliable piece of crap though)
‘12 VW Golf TDI; $9000 with 50k on it, so far, utterly reliable

I tend to “drive the wheels off it”, but I’m not married to it, if the repairs begin to exceed the car’s value, it’s time for replacement

I’d love it if the TDI goes to 400,000+ miles, but if the DSG transmission starts acting up or something goes wrong with the emissions system outside of warranty, I’ll have no issues dumping it for something more reliable (probably some form of small manual transmission hatchback like an old Toyota Matrix, as my “fun” vehicle is now my ‘99 Yamaha VStar 650 Classic, manual and rear wheel drive, as the Flying Spaghetti Monster intended)

18

Car shopping is hell if you haven’t done any research and your car dies and you need one tomorrow.

But, if you’ve got a year or two for no-stress “shopping”… ahhh, bliss.

I was in the first situation last year. Car got totaled right in the middle of a busy crunch at work. So I was biking and bussing while I put in late nights looking at cars online. Bought a cheap “short term” car, and started researching what I want for my next car.

Damn, this is a blast! It lets me dream, over-analyze, all with zero pressure. And I can pick out a new car that’s too expensive now, but I know in a year or two it’ll be in my price range. And, I’ve warned the wife, if I find an incredible never-to-be-seen-again deal, I can jump on it. Though in a year, I’ve only found repeating great deals (like “Oh, here’s another 370Z/BRZ/124 Spider/Miata for $10-15k, just like a month ago.”). But now I know they pop up every month or so, and it’s comforting that when my el cheapo ride is about to die, I’ll be able to find something.

And now, thanks to this thread, I’ll stop feeling sorry for myself that I’m driving an old beater. Instead, I’ll think of all the money I’m saving up toward the next car.

19

Most people look at car ownership as an essential for commuting to work, shopping for food and other needed items etc. If you don’t have reliable transportation those necessities are in jeopardy.

It may not be a good idea to assume that since an aging car hasn’t given you much trouble to date, it’s going to keep rolling along indefinitely (or even another year or two) without needing major repairs. It’s sort of like thinking that since you hardly ever get sick and feel great, you don’t need health insurance.

20

If you buy a new car now, you’ll have a 5-year old car when you retire.

If instead, you take that money and save it every month, in 5 years you’ll have more than enough money to buy an equivalent 5-year old used car. Because you won’t pay for the depreciation of the car, someone else will. Plus you won’t pay interest on your loan, you actually get interest on your saving. Your current car would depreciate too, but much less than a new car would.

The only way this won’t work out is if your current car ends up costing a lot in maintenance or repairs. But you can always buy a new (or used) car when your car breaks down and actually needs an expensive repair, not before.