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$300/mo car loan to save $100/mo gas?
Old 06-07-2006, 03:41 PM   #1
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$300/mo car loan to save $100/mo gas?

Hello All,

Would you take out a $300/mo car loan to save $100/mo gas?

Currently, I am driving a taurus wagon with 190K that is dying (transmission slip, no A/C, etc). I drive this commuter car to work to save wear and tear on my '97 expedition (crazy). I actually took over driving the car 2 years ago when my wife got a newer more dependable car with less miles. At the time, the current value on the car was nothing, so it made sense to drive this car. However, now that the car is in need of new tires, transmission, etc.. I am debating whether to get a 2nd car with better gas mileage or just drive my truck, when my car dies. My current truck is in excellent shape (wash and wax regularly) but only gets ~12mpg. I put on 250/miles per week. Current truck value is ~$6500. I owe nothing on it. I still need (or want?) to keep the truck to pull our 24' trailer during summer vacations and local home improvement runs.

The car I am looking at gets 24+ mpg (and is really cool) Purchase price $13,000. I would need to take a car loan. Am I crazy?

Insurance wise- 2nd car would be neglible since I have insurance on two vehicles already. My truck has a discounted insurance (recreational driven <5000mi/yr).

Let me know your thoughts... Thank you

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Re: $300/mo car loan to save $100/mo gas?
Old 06-07-2006, 03:52 PM   #2
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Re: $300/mo car loan to save $100/mo gas?

Would I? No, i'd save for the car first and then buy it with cash. I'd rather pay for everything in full (including more gas/month) than to borrow money to buy an auto with interest rates like they are now.
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Re: $300/mo car loan to save $100/mo gas?
Old 06-07-2006, 03:56 PM   #3
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Re: $300/mo car loan to save $100/mo gas?

My thoughts:

Get a high-mpg car such as a Prius, Corolla, Civic/Civic hybrid (the hybrids provide tax rebates). Why bother getting a new car that gets only 24 mpg in the 21st century? Especaily when your other car gets only 12 mpg :P --that's a bad fleet average!

I'd consider selling both the Taurus and Expedition, getting a fuel-efficient commuter car, and renting (borrowing?) an Expedition or other hauler when you need one.

I'd also consider slashing my discetionary spending to the bone for a while to put a better down payment on the new (or perhaps fresh off a short lease?) car.

My husband and I avoid needing to replace more than one car every 4-6 years (keep them for ~10 years and stagger the purchases). That enables us to save and pay cash, avoiding car loans.
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Re: $300/mo car loan to save $100/mo gas?
Old 06-07-2006, 04:05 PM   #4
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Re: $300/mo car loan to save $100/mo gas?

It wouldnt make a lot of sense to sell the expedition. You'd get nothing for it right now...maybe more in a few months if gas prices slip down a little.

I'd junk the old car, drive the expedition and wait until you come to a conclusion you can live with. Sounds like you really want this new car so chances are you're going to do that anyhow.

"Saving" the expedition so you can sell it for below wholesale and spending money on a new car to save a couple of bucks on gas while spending a lot makes very little financial sense.

But sometimes we make financially unsensible decisions...
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Re: $300/mo car loan to save $100/mo gas?
Old 06-07-2006, 04:14 PM   #5
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Re: $300/mo car loan to save $100/mo gas?

Quote:
It wouldnt make a lot of sense to sell the expedition. You'd get nothing for it right now...maybe more in a few months if gas prices slip down a little.
I was thinking the same thing. When gas hits 3 bucks a gallon, I seem to see a lot of trucks for sale :P. Have you looked at ways to save on gas...5% rebate credit cards, etc.
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Re: $300/mo car loan to save $100/mo gas?
Old 06-07-2006, 04:17 PM   #6
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Re: $300/mo car loan to save $100/mo gas?

Fords giving $8-10k off of new expeditions. An older one with some miles on it in decent shape might sell for $5-6k.

You might get another grand or two waiting to sell the expedition until gas prices settle down or people get used to them.

That'd probably pay for your gas for a while...
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Re: $300/mo car loan to save $100/mo gas?
Old 06-07-2006, 04:28 PM   #7
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Re: $300/mo car loan to save $100/mo gas?

Thanks for all the responses!

My thought was to keep my truck a long time... and always drive a 2nd commuter car. By not putting a lot of miles on my truck annually, would allow this. I plan on camping for quite a few years while my kids are small (7 &6), averaging 3-4 trips per summer. When they become older and do not want to go (13-14+) then I would likely sell my trailer, truck may be too (by then my home projects should be done). But that is 7+ years from now. I figure, the value of my truck is rock bottom and will only move with inflation.
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Re: $300/mo car loan to save $100/mo gas?
Old 06-07-2006, 04:43 PM   #8
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Re: $300/mo car loan to save $100/mo gas?

Quote:
Originally Posted by green1
Currently, I am driving a taurus wagon with 190K that is dying (transmission slip, no A/C, etc).
What model year is that Taurus, and how far are you from Oahu? We're keeping a '94 with 100K miles alive and the parts are starting to get expensive...
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Re: $300/mo car loan to save $100/mo gas?
Old 06-07-2006, 04:47 PM   #9
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Re: $300/mo car loan to save $100/mo gas?

I'm thinking that your submarine expertise might be called for...
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Re: $300/mo car loan to save $100/mo gas?
Old 06-08-2006, 06:59 AM   #10
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Re: $300/mo car loan to save $100/mo gas?

How many miles does the Expedition have on it? One thing to keep in mind is that if you start driving the Expedition regularly, you're going to wear it out more quickly to where you'll need a replacement to pull your trailer and do all your heavy-duty needs.

BTW, have you had any problems with the Expedition? I had a neighbor who had a '97 or so, and it ate transmissions on a regular basis. He did some towing with it, but just a motorcycle trailer.

I might be tempted to get a new car to replace the dying Taurus, and to prolong the life of the Expedition. My uncle did something like this about 4 years ago. He has a '97 Silverado that he used to drive to work regularly, and by this time it was up to about 100,000 miles. He bought an '03 Corolla, early in the model year, to run back and forth to work and help keep the miles off the truck. IIRC the Corolla was about $16K out the door, and now has about 105,000 miles on it. It gets 34-38 mpg in his mostly highway commute, where the truck usually got about 19-20 at the best. And if he hadn't gotten it, the truck would have over 200,000 miles on it by now, and would probably be ready for replacement. And a new truck is a helluva lot more expensive than a new economy car!

So yeah, I'd be tempted to do it, for three reasons...

1) Prolong the life of the Expedition, which would be pretty expensive to replace
2) Peace of mind of a new car. At 190,000 miles, that Taurus, or ANY car for that matter, is a crapshoot. And the newer the car, the more risky, because when things fail they're going to be more complex and expensive.
3) Improved fuel economy.
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Re: $300/mo car loan to save $100/mo gas?
Old 06-08-2006, 07:03 AM   #11
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Re: $300/mo car loan to save $100/mo gas?

If I were in your shoes, I would probably drive the taurus until it was becoming unsafe (might already be there), and then drive the truck until I found an inexpensive used car/beater to commute in. Plenty of detroit metal floating around that gets 25 to 30 MPG that can be had on the used car market for well under $10k.
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Re: $300/mo car loan to save $100/mo gas?
Old 06-08-2006, 09:04 AM   #12
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Re: $300/mo car loan to save $100/mo gas?

My two cents on this topic:

The question that the OP is really asking is ... What does it really cost to own and operate a vehicle ? Is there an optimum strategy to minimize the cash flow (cash flow ==> depreciation, repairs, interest, fuel costs).

This question then needs to be modified given that the OP has (initial conditions) a really old car and a moderately old truck. Also the question can be modified given that the OP has a preference for certain vehicle types.

- From what I have read over on some auto forums, optimal cash flow results from buying domestic cars that are either a few years old and have depreciated down (but still have lots of life in them) and then driving them until a major repair is needed (eg:engine, transmission). Other optimal strategies involve buying rental cars or buying new japanese cars.

For what it's worth trucks always seem to up the cash flow because they tend to be expensive and use more gas. However if you trade often trucks often depreciate less than cars.
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Re: $300/mo car loan to save $100/mo gas?
Old 06-08-2006, 05:58 PM   #13
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Re: $300/mo car loan to save $100/mo gas?

Buy a 2 year old Hyundai that gets good mileage and call it a day.


I always have an economical car and the "other" car.
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Re: $300/mo car loan to save $100/mo gas?
Old 06-09-2006, 12:42 PM   #14
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Re: $300/mo car loan to save $100/mo gas?

Quote:
Originally Posted by green1
... I plan on camping for quite a few years while my kids are small (7 &6), averaging 3-4 trips per summer.* When they become older and do not want to go (13-14+) then I would likely sell my trailer, truck may be too (by then my home projects should be done).* But that is 7+ years from now.* I figure, the value of my truck is rock bottom and will only move with inflation.
Your taurus is junk, drive it to the junkyard before you get stranded somewhere.

You mentioned you drive 250 miles per week, and you need your truck for 7 more years. You have a total of 91,000 miles to drive during that 7 years. The truck gets about 12 MPG, the car you want gets 24 mpg. The difference in gas milage between the car and the truck is 12 MPG. 91000miles divided by 12 MPG is almost 7600 gallons of gas. At $3 per gallon, that's $22800.

If you buy the new car, you'll be money ahead at the end of the 7 year period plus you'll have a 7-year old car with only 91,000 miles on it. That car might last you another 7 or more years after that.
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Re: $300/mo car loan to save $100/mo gas?
Old 06-09-2006, 03:19 PM   #15
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Re: $300/mo car loan to save $100/mo gas?

Wait! I made a terrible math error.

You have 91000 miles to drive. If you drive it using your truck @ 12 miles per gallon, you need 7600 gallons of gas.

If you drive 91000 miles with your new car @24 miles per gallon, you need 3800 gallons of gas.

So the car saves you 7600-3800 = 3800 gallons of gas. At $3 per gallon, your car saves you $11400.
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Re: $300/mo car loan to save $100/mo gas?
Old 06-12-2006, 03:53 AM   #16
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Re: $300/mo car loan to save $100/mo gas?

i just ordered a new bmw x3 which will replace my nissan xterra...the bmw gets about 20% better gas milage but requires premium...since i drive under 12,000 a year i figured out the cost will be about the same in gas...the profits i make from my energy stocks every time oil jumps up cover the add'l gas increases ,kind of my own rebate system....
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Re: $300/mo car loan to save $100/mo gas?
Old 06-20-2006, 11:48 AM   #17
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Re: $300/mo car loan to save $100/mo gas?

Quote:
Originally Posted by slepyhed
Wait! I made a terrible math error.

You have 91000 miles to drive. If you drive it using your truck @ 12 miles per gallon, you need 7600 gallons of gas.

If you drive 91000 miles with your new car @24 miles per gallon, you need 3800 gallons of gas.

So the car saves you 7600-3800 = 3800 gallons of gas. At $3 per gallon, your car saves you $11400.
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