MapleLeaf Auto Talk...

Michael Hardner · October 23, 2015

As stated previously, I rented a Wrangler for 3 weeks this summer and was jazzed but I am NOT a "car person". Bought my first vehicle at age 40.

I particularly don't understand why anyone would buy a car that's less than 5 years old. I generally buy them at end of life and spend about $2K/year on the outside for maintenance and depreciation.

Cars.

What are your thoughts dear MLWers ?

Edited October 23, 2015 by Michael Hardner
derision by senior MLW member

Hydraboss · October 23, 2015

Actually Michael, it's generally a better idea to buy something that has at least a year of warranty left so you can have it checked and repaired at zero cost to you. I tend to buy my vehicles that way (since I grew up in a household with a "car guy" - my dad's been in the car business 45 years this year). My current SUV is a 2012 and has factory warranty until early 2016 and then two more years of factory Merc "Star Warranty" so I'll keep it to the end of 2017 at the very latest. If I had bought it new, I would have had to suck up the $40k in depreciation - thanks but no thanks.

The money you lose always depends on what you buy and how much you spend (maintenance and deprec is always relative). If you're the type of person that will drive something into the ground before you buy another one, then by all means purchase whatever tickles your fancy. If you're like me (I never keep anything longer than two years generally) then you have to be very careful on end values for your vehicle. Pick the wrong one and it's gonna hurt.....

Edited October 23, 2015 by Hydraboss

Moonlight Graham · October 23, 2015

I've talked to people who have recently retired as car sales managers. They say the best value to buy is a used vehicle about 3 years old that has just come off the 3-year lease after someone bought it new. At that point the car has gone through the worst of its depreciation, and you're left with a recently built quality vehicle with the modern benefits that come with a recent vehicle (ie: better gas mileage, safety) with usually less than 60k mileage on it.

I bought mine like that and it was a beautiful vehicle, still had the "new car" smell.

Edited October 23, 2015 by Moonlight Graham

Michael Hardner · October 23, 2015

Actually Michael, it's generally a better idea to buy something that has at least a year of warranty left so you can have it checked and repaired at zero cost to you.

That is maybe a $1,000 bonus. A vehicle that new still likely costs five figures doesn't it ? I buy 10 year old vehicles. They are less than $5000, and usually cost about $1K a year in repairs or less.

msj · October 23, 2015

I like to buy new or nearly new.

Bought my 2004 Toyota Matrix brand new - it's what I could afford back in 2004.

Gave that car to one of my staff (with 288,000 kms on it) and bought a 2014 Infiniti this year with about 9,000 kms on it.

My philosophy is to buy new/near new and then run them to they are worth about $1,000. Then I give it away to family/friends/staff (someone in need).

Since I buy Japanese maintenance has never been an issue (I've had Honda, Toyota, and now Infiniti).

Yes, I did end using debt for my most recent purchase.

This is related to working capital - I prefer to have some cash sitting around.

It is also due to some opportunity cost - the interest rate is sufficiently low enough that I prefer to leave investments alone in the hopes/expectation that the return will exceed the cost of capital on the car loan. So a bit of a compromise here - I put $15,000 down, financed the rest over 48 months and have the option to pay down the debt at any time.

The interesting thing here is that if the markets go up then I am more likely to pay down the debt whereas if the markets were to continue to go down like I hope they do (like what happened in August) then I will not pay down the debt sooner but will put that money to work in the markets.

The theory being that as markets rise the future expected returns diminish and as they go down the future expected returns increase.

I also refer people to this article as an interesting take on such issues: http://www.ritholtz.com/blog/2015/10/never-buy-a-boat-and-other-misguided-financial-advice/

cybercoma · October 23, 2015

My wife drives A LOT for work so we typically by new for reliability. Also the insurance covers total write offs for two years from date of purchase. If the car gets into an accident where it's written off they'll give you the receipt price of the car back, so you can replace it more easily. Unfortunately we have had to use it.

Moonlight Graham · October 23, 2015

My wife drives A LOT for work so we typically by new for reliability.

The thing with buying new is that cars are made so reliable these days that any good vehicle (ie: Honda, Toyota) is very unlikely to have any major problems other than routine maintenance until you get higher KM's on it. They have really long powertrain warranties now (like 10 years/100km) because the powertrain will typically rarely break down. And if everything else is covered by ie: a 3-year warranty, it's very unlikely anything will break down that early too, unless it's a lemon. That's why buying new isn't really a good value. But hey some people like buying new that's fine.

Bonam · October 23, 2015

I bought my Honda new in 2008. It hasn't had any repairs come up outside of routine maintenance and now has 110,000 km on it. I'm sure it'll keep going perfectly until someday I replace it with an electric self-driving car.

The_Squid · October 23, 2015

I bought a fairly sporty new Chevy a few years back... it was a lemon and I got rid of it quickly. That was the only time I bought new. I traded it for a 4 year old Mazda with low mileage. Great little car.

I had a Jeep Cherokee... best vehicle ever. Towed my boat... was a good 4x4 and never a problem with engine or tranny. Little things would go wrong though... power window motor... rear latch issues... rear wiper issues... but nothing I couldn't monkey around with and fix myself. That motor and transmission are extremely dependable!

I gave the Jeep away a few years ago with 300,000km and it's still going today... got a used Nissan pickup for boat towing and taking into the woods. It's been a great truck too.

I normally buy fairly old and drive them into the ground. I've found that to be the most cost effective strategy in the grand scheme of things. Your capital cost is low, insurance cost is low even if maintenance costs are higher than average. Occasionally I've been stranded with a broken vehicle, but that's what CAA is for! If you drive old junkers, CAA pays for itself!

Topaz · October 23, 2015

I post this before but for those who didn't see it, NBC did a view of what cars are the best and the Japanese and Korean were the tops and the only North American car that rate the high rating was Buick. The other NA cars brands aren't keeping up with tech. and some are having problems with the transmission. They also said Jeep was one of those cars having problems but people liked the looks of the car and so they are buying them. Right now I'm driving a 1996 Buick La Sabre and the one thing have had done is regular maintenance and hasn't cost me much but am going to buy a new next year because I'm tired of emission testing. I thinking of a KIA suv or Buick suv

Wilber · October 23, 2015

Depends which survey you look at. JD Power and Consumer reports both rate Lexus as #1 but after that they vary, sometimes wildly. For example, JD Power puts Mercedes at #8, Consumer Reports has it at #21.

Hydraboss · October 24, 2015

I thinking of a KIA suv or Buick suv

If that's the level of vehicle you're looking at, I'd seriously consider Hyundai. Regardless of "ratings", real world results have them coming in almost as high as my Merc for reliability. And their style has really shaken up the Japanese manufacturers.

Hydraboss · October 24, 2015

I bought my Honda new in 2008. It hasn't had any repairs come up outside of routine maintenance and now has 110,000 km on it. I'm sure it'll keep going perfectly until someday I replace it with an electric self-driving car.

Some vehicles just seem to last forever. My son (17) is now driving what was my wife's truck. 2002 GMC Sierra SLT Z71 (the spoiled little brat). All the toys, leather, etc with over 170km. We bought it in 04 with 59km on the clock - I did a 2300 head gasket and some maintenance and it's basically perfect. Gets low 20's for mileage and the four wheel drive is perfect. It'll probably last the kid another 10 years if he wants it to.

Hydraboss · October 24, 2015

I've talked to people who have recently retired as car sales managers. They say the best value to buy is a used vehicle about 3 years old that has just come off the 3-year lease after someone bought it new.

I bought both my Merc SUV and my 911 this way (except they both came off of 2 year leases which are more common with these vehicles). I may not get the "shiny new" part of the vehicles, but I also don't get the hurtful depreciation. My 911 (which I sold a few months ago) was purchased about $80k less than the original owner paid. He owned it for under three years and took that kind of hammering....I don't even want to think about it. Can you say "ouch"?

October 24, 2015

My wife has a 2005 Matrix with almost 500k on it. Never had a problem that wasn't age or mileage related.

Still has the original exhaust too, if I'm not mistaken.

Edited October 24, 2015 by bcsapper

Moonlight Graham · October 24, 2015

My wife has a 2005 Matrix with almost 500k on it. Never had a problem that wasn't age or mileage related.

Still has the original exhaust too, if I'm not mistaken.

500k wow! Good for you guys.

cybercoma · October 24, 2015

The thing with buying new is that cars are made so reliable these days that any good vehicle (ie: Honda, Toyota) is very unlikely to have any major problems other than routine maintenance until you get higher KM's on it. They have really long powertrain warranties now (like 10 years/100km) because the powertrain will typically rarely break down. And if everything else is covered by ie: a 3-year warranty, it's very unlikely anything will break down that early too, unless it's a lemon. That's why buying new isn't really a good value. But hey some people like buying new that's fine.

It's not worth the headache when she puts 45000 kms on it each year. She can't risk the time it would take breaking down and whatnot.

Moonlight Graham · October 24, 2015

Cars.

What are your thoughts dear MLWers ?

Edited by Michael Hardner, Today, 01:18 PM.

derision by senior MLW member

"Derision by senior MLW member", I laughed out loud, best edit reason ever

October 24, 2015

500k wow! Good for you guys.

The strange thing is we'll never know exactly how many miles it has on it. The clock got as far as 300k and stopped. Dead on 300k. My wife drove it for 20 - 30k before the dealer installed another clock. They put a little plaque on the new clock saying there was already 300 k on it, but not the 20 - 30 k in between.

Edited October 24, 2015 by bcsapper

cybercoma · October 24, 2015

"Derision by senior MLW member", I laughed out loud, best edit reason ever

Haughty derision at that.

-1=e^ipi · October 24, 2015

Maybe you should stop contributing to the eventual climate Armageddon that will cause the Earth the Boil over, turn the oceans into battery acid, cause oceans to rise 1 km and make the air toxic to breath. There is a consensus among 297% of scientists that this will occur.

I suggest that you purchase a bike, give 90% of your money to 3rd world dictators to help them deal with all the climate change they will face due to the evil developed world, and that you join the Church of Climate Change Alarmism to atone for your climate sins.

Edited October 24, 2015 by -1=e^ipi

-1=e^ipi · October 24, 2015

So many sinful posters in this thread. Atone for your sins!

Edited October 24, 2015 by -1=e^ipi

Michael Hardner · October 24, 2015

Well, what are the downsides for buying end-of-life cars cheap ?

bush_cheney2004 · October 24, 2015

Well, what are the downsides for buying end-of-life cars cheap ?

Aside from being qualified to recognize existing or pending parts failures (or paying someone who is), end-of-life cars represent reliability, safety, and performance risks because of wear and normal materials failure. Many years ago in northern climes with salted winter roads, one would buy a "beater" car and park finer wheels until late spring. Not unlike preparing for a demolition derby, money would only be spent on vital parts to keep the beater car starting/running. I rarely see such rust buckets anymore.

kimmy · October 24, 2015

My first car was a Dodge Reliant "K-car" that was older than I was. I bought it as a teenager for $500, and sold it about 5 years later for $500. (Maybe $500 is a price floor for an automobile that still runs? Like, if it's capable of being registered, somebody will probably pay $500 for it? I dunno.) Despite its age and crappy reputation, it needed no significant service. Dad helped me install a rebuilt master cylinder for the brakes (or more accurately, dad installed a rebuilt master cylinder while I watched.) I think that cost $30, plus brake fluid. Later on we installed a rebuilt alternator that I think cost me $50. One thing that was good about that car is that there really wasn't much to go wrong with it. No complicated electronics or high maintenance mechanical systems... just basic well-proven automobile systems that haven't changed much over the years.

I lived sans car for several years after ditching that lemon, but after moving out here to the wilds, I bought a used 1996 Malibu that was quite cheap. A few years later I traded that in on a 2003 Impala. And earlier this year I traded the Impala in on a 2003 Pathfinder.

None of these vehicles have required significant repairs. Maybe I have just been lucky in that respect. The Pathfinder required a new exhaust and replacement of gaskets and o-rings around the oil cooler pump, plus brakes and rotors service when I bought it, so I had to put about $1000 into it right away, but the Impala was probably due for brakes and rotors as well. I expect that the Pathfinder will probably last me longer than the Impala would have, even though it has more mileage on it. I am planning on getting new shocks and struts next year, which will probably set me back another $1000... but that's again something I consider an expected expense. And probably I am going to get some all-weather tires that are more suited to rough roads than my current ones, so that could cost another $1000 before too long.

Buying older vehicles has worked out well for me. To buy a new vehicle comparable to the Pathfinder would probably cost me $35k-40k. So even with the money I have put into it and the money I'll be putting into it next year as well, I'm far ahead.

-k