Possible new car purchase?
When it comes to the buy new car vs. keep old car dilemma, the financially prudent answer seems to always lean towards the latter. Of course, a new car is a significant drain on one’s monthly cash flow, but when is the right time to finally buy a new car? I have never considered buying a new car quite as seriously as I am doing right now. This past Independence Day, I spent $350 on rest and pampering… for my car! (some recent repairs include: $120 in December 2009, $350 in May 2009, and $400 in November 2008).
The cost and headache of spending a holiday weekend on car-related issues has made me wonder: should I buy a new car? Has the time come to finally let go of my beloved Honda (who has served my Dad, then me, faithfully for 230,000 miles, and counting) and get something with side-impact air bags and a CD player?
Recently, my parents also suggested that I should buy a new car, mostly for safety reasons. I demurred, although driving 60 miles a day has made me somewhat more inclined to consider a new, more comfortable ride with updated safety features. CB raised a good point – given that my car is so old (even though it’s still in very good condition for its age / mileage, knock on wood), I should do some research into the type and cost of car I want.
Estimated Cost of New Honda
My family has had pretty good luck with Hondas, so I pulled up the numbers on Edmunds’ Auto Loan Calculator to see how much a Honda Civic DX would cost.
Even with a $10,000 down payment on a 36-month loan, and at a very favorable 5.0% interest rate, I would be paying $234 a month in car payment.
New car vs. Old car in dollars
Keep Current Car: the cost of driving and maintaining my car total $400 a month, or $13.11 per day.
- $150 – gas
- $90-$100 for liability only
- $150 – repairs / monthly contribution to Repair Fund
Buy New Car: if I were to buy a new car, my repair expenses would decrease, but my other car-related expenses would increase.
- $150 – gas, maybe somewhat lower because of more efficient gas mileage? my current car gets around 29 miles per hour. I’m not sure what new Honda would get.
- $234 – monthly payment (according to Edmunds calculator)
- $130? – car insurance would go up because I’d be insuring a new car and I’d need comprehensive / collision coverage
- no out-of-pocket repair costs for the first 3 years (or so I’d hope)
- I would also be out the $10,000 for down payment
It seems that keeping my old car would be in my best financial interest. However, am I compromising my personal safety by not purchasing a new car? As cars get older, their safety features becomes outdated. Even though my Honda is rated very well for its year in terms of safety, and it has never been in a major car accident (again, knock on wood), a new model would of course have more up-to-date safety features. If I somehow end up in a match with a Hummer on the freeway (knock on wood, again, that that never happens), I will very much like to have side-impact air bags and new 2010 construction.