Time for a new car?

[jblack]

So currently DW and I have two paid off cars that are 7.5 and 9.5 years old that we purchased new. Both have about 100k miles on them, and with one of them (SUV, 7.5 yrs old) starting to have some higher maintenance expenses. Over the past week or so we've begun to wonder if we should go ahead and bite the bullet with a new car purchase.....

The car in question is a 2002 Nissan Xterra that gets 15 mpg (gas cost $1/g back then...oops) and probably will need ~$2k worth of work in the next 12 months if we keep it. It's worth about $4000-4500 in a trade-in or maybe $5000-5500 if we privately sell.

The reason we're considering now is two-fold: 1) Cash for Clunkers guarantees us at least $4500 value which avoids negotiating with the dealer, 2) new cars we're looking at have either a $1500 hybrid tax credit or equal dealer incentive thru Sept 30.

So guess I'm looking for opinions on if we should:
a) Pay for the repairs needed and drive it another 1-3 years.
b) Take the effort to try and sell personally before Cash for Clunkers expires in a few weeks, buy new with the incentives or used without
c) Keep it simple, forget about the extra $500-1000 we might be able to get selling privately, buy now and feel good about killing a car that gets only 15 mpg via Cash for Clunkers

I'm sure many folks will chime in and say (a) but the caveat is the older car we also have. It's in better shape but in another 2-4 years we'll likely need to replace it as well and perhaps better to stagger out the car purchases. It's also impossible to predict what incentives may be in place in future years vs the ones we know about now.

On a frugal / thrifty scale of 1-10 I'd say in general we're about an 8....willing to pass on many things but enjoy spending money where we can find value.

What say ye?

 

[LOL!]

Make sure you need the repairs. We drove our Toyota a second 100K miles while disregarding almost all the recommended repairs by the mechanic. That is, most repairs are cosmetic. Do you care if you need a valve job?

We keep our cars for 12-15 years and stagger like you do. This Cash-for-Clunkers changes the math though. Unfortunately, none of our cars qualify. Even our 2001 SUV gets more than 20 mpg.

 

[Goonie]

I'd lean toward doing the Cash4Clunkers deal and any rebates/discounts I could muster up.

A friend of mine just traded in his clunker (a vehicle he'd bought from a friend several years ago for $500 cash, that he ran the wheels off of) at a local dealership that not only gave him the $4500 clunker deal, but also a $3000 discount by the dealership, PLUS a $1500 factory rebate. So he got a brand-spankin' new 2009 vehicle for $9000 off!!!

The best part of the story is that he had been planning to trade it in for a couple of months....and THEN the Cash4Clunkers deal came along!!! What a deal!!!

 

[W2R]

The car in question is a 2002 Nissan Xterra that gets 15 mpg (gas cost $1/g back then...oops) and probably will need ~$2k worth of work in the next 12 months if we keep it. It's worth about $4000-4500 in a trade-in or maybe $5000-5500 if we privately sell.

A 2002 is not very old, and $2000 is not much of a repair bill these days. I think a lot depends on what you personally want to do.

As for what I would do? Well, personally I happen to want a new car whether I need one or not. So, I would get a new car. I would trade it in and try to get "Cash for Clunkers". That (option c) is probably the least profitable choice, but that is what I would do.

On the other hand, probably the most financially advantageous choice would be (a), keeping the old car. I assume it is paid off, and who wants car payments or to pay a lump sum that could be invested, given recent market conditions? But like I said, I personally happen to want a new car so I would be willing to pay for one.

 

[ProspectiveBum]

I think it depends how much you drive (i.e. how much the improved mpg will save you), and how ready you are for a new car?

It so happens that I have the same car as you (mine is a 2000), and have been mulling over the numbers, too. I've decided to keep the SUV. Like you, I've had some fairly high maintenance bills recently, but I think I've taken care of the worst of the items (including replacing the timing belt, which was pricey). Here were the points that factored into my decision (recognizing that they may not be applicable for you):

• I don't drive much. My commute is short, and I've averaged right around 8k miles per year for the last few years. I wouldn't save all *that* much money switching to a more fuel efficient car.
  
• I think I've taken care of the big-ticket maintenance items, and won't have to sink much more money into it for a few more years. From perusing message boards, these trucks are easily good for 150K+ miles without any major issues. They're pretty simple, so there's not much to break. There are also many, many 15-20 year old Nissan Pathfinders still on the road, and this truck uses the same engine design as those did. I don't think it's a foregone conclusion that you'd have to get rid of it in 3 or 4 years, unless it's rusting to pieces or you're just tired of looking at it.
  
• Appearance-wise, this truck has held up better than any other vehicle we've owned. It looks far, far better inside and out than my last vehicle (a VW) did after 9 years. It's not rusty, and my wife is not embarrassed to be seen in it.
  
• I do like and use the 4wd for desert exploration, ski trips, camping, etc.
  
• My two kids are still in car seats, and the height of the vehicle is convenient for getting them in and out of the car without bending over (this one is highly personal, I know).

I can understand wanting a new car. If you think you'll be itching to get a new car in the next year or two, now is probably a good time to take advantage of the C4C deal, before you've sunk the maintenance money into the truck. If you think you can hold out 4 or more years, you'll probably be money ahead if you keep the Xterra.

Whatever you do, good luck with your decision!

 

[jblack]

Wow, thanks for the responses already....a few different perspectives.

We drive a good amount on the SUV, probably 15k miles per year, so going more fuel efficent definitely has some savings. We'd get 10-15mpg better with a Honda CRV or Ford Escape Hybrid we're considering.

As for the pending $2k+ in repairs needed, it's based on the dealership's evaluation of a slow leak of both power steering and engine coolant from high pressure hoses, new rear brakes, plus some other minor items. I'm no grease monkey but for a year I've let it be and just personally add some extra fluid every other month or so. Not sure how long that solution will last but feels like I'm nearing the edge of borrowed time.

Both DW and I like the Xterra's appearance and ease of use that PB mentions. We don't mind driving it aside from the squeeky rear brakes that 'Just Brakes' gave us a couple years ago. Not a safety issue but a bit annoying every now and then.

So all these things has me leaning towards option C so far. A new vehicle DOES sound nice since we've had both of these for awhile, and we do want to stagger our purchases.

Hmmmm......

 

[Bikerdude]

I think most of us have gone to sleep with $2.50 gal. gas. You're new car business case will change dramatically with $5.00 gal. gas. I believe the numerous energy incentives that are being offered are to prepare us for whats coming.

 

[haha]

Do you care if you need a valve job?

If you like your car to run well you would. OTOH ignore it if you enjoy misfiring, damage to the pistons, inability to go well up a hill, etc.

Ha

 

[Rambler]

What other incentives are the dealers offering? Goonie's friend got 9k off the sticker. I don't know what % that represents on your desired vehicles, but if I could get that kind of discount on say a 22-24k car, I probably would go for the the new car.

You could do the discounted cash-flow analysis to see what that says, but it will never be able to tell you if you are gonna throw a valve on the Xterra right after Cash-4-clunkers ends...

My only other comment is that if it was the car my DW drove, I would trade it in, for 2 reasons:

a) I don't want her stranded somewhere with a car problem
b) I might get a few extra brownie points (lovely when cashed in)

R

 

[donheff]

I laughed and read the first paragraph to DW. We are toying with the same dilemma except we will get more for our 7.5 yo SUV than cash for clunkers. Our main problem is that we would like to get a "luxury," compact, Hybrid SUV Gotta have those leather seats and be real comfortable. But MUST fit in our unusually short garage. Our current Jeep Grand Cherokee is 180" and we have about 3" to spare with the front end touching the wall. So far we can't find anything that fits the bill so we will probably wait a few years for new products to come on line. We are also potentially open to a compact sedan. Our son's BMW is nice and 176" but not yet offered in a hybrid.

 

[missionfinder]

Unless its a Yugo 100K miles isn't much. This ain't the 60s and 70s when 100K was an accomplishment. I drive them until the cost of a repair is more than the value of the car.

$2000 in repairs (actually, new brakes and new hoses are maintanence items and they are very cheap!) is still a lot less than a new car! No such thing as high pressure engine coolant hoses unless they consider 8-20lbs to be high pressure. Fuel injector rails, yes, they can be higher pressure. Coolant hoses do wear out, but the cost is well under $50 (far less if its a domestic) and it takes maybe 15-30 minutes for the mechanic to swap out plus the cost of new coolant so you're looking at under a couple of hundred bucks including labor, $250 if both the top and bottom hoses need to be replaced ---- if you take it a trusted independent instead of a stealership (who are looking to make up for lost sales via the service department).

Power steering pumps, go buy a bottle seal conditioner at Pep Boys and pour it in. 90% the time that'll take care of the problem. Even if it doesn't seal it, a slow leak won't hurt it at all. If the pump squeals then its time to change it --- and even in those cases you can still drive it if you can live with the noise!

 

[Midpack]

It all comes down to whether or not you have to have a new car. There are lots of cost effective miles left in the cars you own. And while CfC is a good deal for buyers, the peak opportunity was the first weekend. Dealers have less inventory and they are suddenly not dealing like they were before CfC. I know a guy who bought a Malibu a few months ago and got a ton off sticker (a loaded except sunroof model for less than $20K, no trade). I know another guy who bought his first foreign car ever this past weekend (after the initial CfC wave), a Kia with his clunker, after the local Ford and Chevy dealers he went to would not come off MSRP at all and weren't all that interested in his business. So the value of CfC is already diminished by (conceivably) thousands. Good luck...

 

[Goonie]

What other incentives are the dealers offering? Goonie's friend got 9k off the sticker. I don't know what % that represents on your desired vehicles, but if I could get that kind of discount on say a 22-24k car, I probably would go for the the new car.

IIRC, the new car was in that price range...$22,500-$23K.

 

[Spanky]

.. I'm looking for opinions on if we should:
a) Pay for the repairs needed and drive it another 1-3 years.
b) Take the effort to try and sell personally before Cash for Clunkers expires in a few weeks, buy new with the incentives or used without
c) Keep it simple, forget about the extra $500-1000 we might be able to get selling privately, buy now and feel good about killing a car that gets only 15 mpg via Cash for Clunkers ..

On a frugal / thrifty scale of 1-10 I'd say in general we're about an 8....willing to pass on many things but enjoy spending money where we can find value.

If you can trade in the SUV or sell it for $5000, why not just get one of the newer gas-efficient and low-maintenance used vehicles, i.e, Toyota Camry, Corolla, Honda Accord, Civic, etc?

 

[Spanky]

The best part of the story is that he had been planning to trade it in for a couple of months....and THEN the Cash4Clunkers deal came along!!! What a deal!!!

Yes, it's a great deal for him. Guess who's paying for the huge government spending? I am still waiting for my tax refund from the 2008 amended return filed back in May. The IRS said that it would take up to 12 weeks to process the return. I am still patiently waiting while the governemnt continues to pour billions of dollars (without any end in sight) onto economic stimulus programs.

 

[Dennis]

In one word? YES, go for it! but not for the reasons you mentioned, but because DEALERS ARE STARVING! Low ball them on the Price of the Car you want to buy and Go to at least 3 others with the best quotes from the others..

In faster than you can say INFLATION, Auto Prices will Skyrocket in a few Yrs to make up.. and so will Loan rates, etc..Just look at Prices after the Last Bear yrs of 00-02' and compare to yrs 03'-06'....prces..

We got a new Ford Tarus.. Sold our 2001-Sable for $3k ourselves ( had 4 buyers the first day in the papers) it didn't qualify for the Cars for Clunkers..got 18 mpg..

Hybrids? Sure go ahead and try them.. but if oyu live in Cold Climates? get a Jump Starting Unit to use..I had to go jump my neighbors Toyota hybrid SUV 3 times last winter and the Electric only works upto 25 mph ( all our roads are 35 + ) and the Batteries only last about 7-8 yrs.. at $10k to replace them..

Chevy Volt? Another Con game.. It's a Sports Car.. and for the extra $12k you pay for it? You can get a same car with Free Gas for over 90-120,000 miles with that $12k! ( $12k by $3 gal = 4,000 gals x 22-30 mpg)

Tax credits? Big deal.. Get $5k TC on paying 25% taxes and it's really worth only about how much in Real out-of-pocket dollars? $1,250 bucks.
That's like Donate the care to Charity business..and get $5k tax credit but it's really only worth about $1,250 to you.. vs selling it and getting $3k, your far better off..!

Smaller is Not Better> ever see a Small elec. car broad sided by a SUV? Take a beer Can and Squeeze it to get an idea.. Worse yet, Crushed btwn 2 trucks! Or wrapped around just a Light Pole , let alone a tree? It's not A Pretty sight..
For safety? I'll take a 56' Buick or a 2008 Cad STS or GMC anyday..

lol..

 

[albundyz]

For me, it would be worth a trip to the dealership to clarify all the rules in the Cash For Clunkers program.

Make sure your car qualifies. It seems really confusing to me.

If your car was originally rated at 22/17, do the "rules" average that out to an average of 19.5 miles per gallon? Again, that's quite a bit higher than your estimate of 15.

Personally, I don't know. I'm just trying to warn you.

Our local newspapers have documented how confusing the "rules" are. I'd hate to see you get your hopes up and then find out your car did not qualify for the Cash for Clunkers.

On the other hand, if it did not qualify, it might make your decision easier.

 

[JOHNNIE36]

Went to a Toyota dealer Friday just to look at a Prius. They had one and it was sold. Told there is a waiting list. Asked about CFC program and the dealer said it would probably be over by today (Monday). Lots of demand and not enough money to extend the program again. He showed me on his computer that the dealership is still owed $450k but the g'ment hasn't sent a dime so far. Haven't heard anything on the news about the program having run out but dealer said it would be over soon.

 

[Meadbh]

Top 10 vehicles bought by people trading clunkers

1. Toyota Corolla
2. Honda Civic
3. Ford Focus
4. Toyota Camry
5. Toyota Prius
6. Hyundai Elantra
7. Ford Escape (front-wheel-drive)
8. Honda Fit
9. Nissan Versa
10. Honda CR-V (four-wheel-drive)

Top 10 vehicles bought by people trading clunkers - The Globe and Mail

 

[BunsGettingFirm]

Went to a Toyota dealer Friday just to look at a Prius. They had one and it was sold. Told there is a waiting list. Asked about CFC program and the dealer said it would probably be over by today (Monday). Lots of demand and not enough money to extend the program again. He showed me on his computer that the dealership is still owed $450k but the g'ment hasn't sent a dime so far. Haven't heard anything on the news about the program having run out but dealer said it would be over soon.

I'm seeing conflicting report that the initial wave of demand is over and that the second chunk of $2 billion isn't going as quickly as the first $1 billion. However, inventory is low.

As for the rules mentioned by albundz, there is no need to ask the dealer. They fire up the PC and look at the cars.gov site just like you.

The only reason I'd do it now is to save myself the hassle of haggling over a $2500 trade in because that's what my car is worth.

 

[Spanky]

1. Toyota Corolla
2. Honda Civic
3. Ford Focus
4. Toyota Camry
5. Toyota Prius
6. Hyundai Elantra
7. Ford Escape (front-wheel-drive)
8. Honda Fit
9. Nissan Versa
10. Honda CR-V (four-wheel-drive)

Top 10 vehicles bought by people trading clunkers - The Globe and Mail

In other words, other than Ford, the program really benefits the Japanese and Korean car manufacturers.

 

[jblack]

Quick follow-up....thanks to everyone's thoughts and feedback.

Despite the fact that we could have probably pulled another 1-3 years out of the existing clunker we decided to go ahead with option (c) and make the purchase. In the long term it's not that big of a difference compared to all the other savings we do and it seems like the right balance. The remaining 10 year old car will now have to last to at least another 4 years so we can keep our payments to one vehicle.

On a related note, I did find it harder to negotiate with various dealers than I thought it would be...inventories here are much drier than they were and several dealers were just starting to pull out of CFC. We still got the average of what other are paying according to Edmunds ($1700 under MSRP), though, and the gas savings each year should be great.

Now time to shop for an auto loan. Will see if we can beat PenFed's 3.99%. Fun fun....

Thx again!

 

[BunsGettingFirm]

CFC is ending next Monday, and the dealer from which I got the best quote just pulled out, so I guess I will have to wait a couple of months for the inventory to fill up again and the dealers to get ready to deal.

 

[kcowan]

i would trade the car that has significantly less value than $4500. Otherwise it is only a breakeven at best. No compelling reason to act now. Dealer incentives will probably grow after the C4C program expires.

Get a second opinion on the $2k repairs from an independent.