Gyroscopic Investing

All--

Thinking about getting a new car.  Thought I'd ask for some recommendations here regarding:

1.  Make/model
2.  Used vs. New
3.  Cash up front vs payments
4.  Buy vs. Lease

What are your needs?

All IMO:

1) The Honda Civic and Toyota Corolla are so proven that they are just the default choice, and one must justify any divergence from them with a concrete rationale.

If there's a specific feature you need that you can't get from a Civic or Corolla I'd try to stay within the universe of Honda/Toyota/Nissan/Subaru/Mazda w/ 4 cylinders.

2) The best bang/buck is old cars from private sellers, but buyer beware. A reasonable compromise is a used car with some kind of inspection and warranty as provided by a certified used program or Carmax. That said, Civic/Corolla don't depreciate very much so buying them new can be justified.

3) Cash

4) Buy. Lease only makes sense if you're committed to changing cars every few years which is very expensive. It's more prudent to keep cars many years and if you do that it's cheaper to buy.

The Honda CR-V is a nice and versatile vehicle that gets good mileage, is reliable and should have good resale value.

A few years ago, I bought a used Toyota Corolla 2001 for $4,200. It does not give me any troubles so far.

KevinW wrote: What are your needs?

All IMO:

1) The Honda Civic and Toyota Corolla are so proven that they are just the default choice, and one must justify any divergence from them with a concrete rationale.

If there's a specific feature you need that you can't get from a Civic or Corolla I'd try to stay within the universe of Honda/Toyota/Nissan/Subaru/Mazda w/ 4 cylinders.

Yeah, I have a 1999 Honda Civic right now.  I can barely justify getting rid of it.  It only has 75K miles on it, and runs great.  The power locks are giving me a headache, though.  But you're right, it's hard to justify anything else.

Occasionally, I have to move something that won't fit in the car, which is annoying.  I was thinking of a Subaru Outback, but still really like the Civic.

2) The best bang/buck is old cars from private sellers, but buyer beware. A reasonable compromise is a used car with some kind of inspection and warranty as provided by a certified used program or Carmax. That said, Civic/Corolla don't depreciate very much so buying them new can be justified.

I've always felt like it was a dumb idea to buy a brand new car, but I noticed that a lot of used Civics with low mileage don't sell for much less than new ones, so it might make sense.

3) Cash

That's what I usually do, but interest rates are so low right now...still, the car payment concept just bothers me for some reason. 

AdamA wrote:

KevinW wrote: What are your needs?

All IMO:



quote]

That's what I usually do, but interest rates are so low right now...still, the car payment concept just bothers me for some reason. 

Owning a car outright is always a comforting feeling regardless of the interest rates.  Don't try to out think the whole process.  Just do what you are more comfortable with.

BTW, I own an older Toyota 4-Runner with a ton of miles and terrible gas mileage.  Just can't bring myself to part with it.

Being perfectly practical and boring, people usually only need to move large objects 1-2 times per year. So paying a mover or renting a truck on those occasions is more economically efficient than buying a larger vehicle.

Another solution I like is to buy a light utility trailer and tow it with a Civic/Corolla. That way you can move cargo at your convenience but you're only weighed down by that capability on an as-needed basis.

Coincidentally I bought an Outback after a lot of research. Couldn't be happier. But our needs are idiosyncratic. We don't commute by car so my wife and I share this car only for errands, road trips, and the occasional pickup like you're describing. I'm not sure I'd recommend a Subaru for more typical usage patterns though. The AWD system hurts mpg and makes upkeep more expensive.

The CR-V Tex mentioned and RAV4 have a big hatch area and towing capacity with only a slight mpg penalty. You could also look at the Toyota Matrix which is basically a Corolla wagon but not called that. Or the cube cars: Honda Element, Nissan Cube, Scion xB.

Again being coldly rational, probably your cheapest option is to keep your current car, fix the windows, and buy a trailer and hitch.

This is a really tricky subject, since there are so many variables involved that you can pretty much skew anything into the direction you prefer.  I remember doing an economic analysis over five years ago comparing buying new vs old.  At the time I didn't have enough cash, so I was going to need a loan.  Ultimately it came down to the fact that I qualified for a 0% five year loan on a new car, which tipped the scales in that direction.  The used car would have been a 6-7% loan IIRC.

Lately I have been thinking about leasing as an option.  I realize it is not the most cost effective method, but it is the most convenient and you get a brand new car every three years (lets throw this under rule 15 'Enjoy your money').  I also don't drive very many kilometers (miles), so that's not a problem. 

I seem to recall someone saying "It is better to rent a depreciating asset".  To me owning an older car is like hold a lottery ticket with 50/50 odds of winning.  I have played that game before and lost.  But then again I am likely using this as justification to own a new car.

I've been looking at the Mazda CX-7...not too pricey but the ladies will still dig it! 

Didn't I see this thread on the Bogleheads site?