# New Car or Not? Mazda 3 2008 vs ???



## Ubergame (Jul 6, 2013)

I would just like to hear what everyone/anyone thinks about me buying a new car. I bought my 2008 Mazda 3 right before the recession so I paid around 27k for it. I had the longest financing period (7 years) and still have a couple more left at .09%. I am paying 152 bi-weekly and can afford it easily and have about 12k left on the car to pay off.

I see all the adds in the paper and everywhere that give you the car for 160-200 monthly and think that I'm getting screwed with my oldy. 

My thought is that since my car is past its 5 year warranty there is a risk something large could happen (although its a low %) and if it were it wouldn't be covered and I would be on the hook for it. If I bought a new vehicle I would be paying less per month and I would have a new vehicle. Obviously there is a difference and I would have to pay off the remaining money from my car because I would sell it less than what I owe but where is the line drawn when I should just go get a new one?


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## none (Jan 15, 2013)

I was a day from buying a mazda 3 and made the mistake of test driving an Audi A3. 

Don't do that.


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## Daniel A. (Mar 20, 2011)

I'd say pay off your car and drive it.

Having a new vehicle has never been important to me personally.

Is there nothing you want more than car payments for life ?


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## cainvest (May 1, 2013)

Ubergame said:


> .... but where is the line drawn when I should just go get a new one?


The line is draw by your need/want on potential reliability and increased cost vs a little less reliability and likely lower costs. Also, are you going to be happy with a $160/mo car vs your current one ... is the loan period just longer (84 months?) and/or is the newer car lower quality?


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## cainvest (May 1, 2013)

none said:


> I was a day from buying a mazda 3 and made the mistake of test driving an Audi A3.
> 
> Don't do that.


I'd love to get an A3 TDI, just wish they'd offer a lower powered diesel with better mileage .... maybe they will someday.


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## Oldroe (Sep 18, 2009)

So you have a 5 year old car that you owe more than it's worth.

Low down payments and long loan terms and small bi weekly payments sounds good.

You should never go over 4 years on a car loan, put a reasonable down payment. This will keep your your car value more than your loan.


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## My Own Advisor (Sep 24, 2012)

I drive a 13-year old Mazda protege. Initially, took the payments over 5 years. Car paid off and have driven it ever since. 

Your car loan is low interest. Pay it off it due course and take what you can afford "easily" in a new car payment and invest the money. 

You will be able to pay cash for a future car if you do so.


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## FrugalTrader (Oct 13, 2008)

IMO, a 5 year old car is not an old car. If it was me, I would drive the car for as long as possible before buying again.


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## MoneyGal (Apr 24, 2009)

The line is drawn where you say it is drawn; this is the beauty of being a free adult. 

However, if you continue to buy cars new and finance them, you will continue to experience your current feelings of regret - that you could get a newer car for less money. This isn't about the cars or the "deals" other people are getting, it is that you are financing a depreciating asset. 

FWIW, I also have a five-year-old car - that I purchased earlier this year, in cash.


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## the-royal-mail (Dec 11, 2009)

I agree. At least get 10 years out of the car. 

But why oh why are you spreading out your loans like that? You should pay them off as soon as possible. Reduce recurring expenses as much as possible.


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## GoldStone (Mar 6, 2011)

OP: aren't you the guy who is trying to save for a house downpayment?

The money you spend on the new cars can otherwise go towards your downpayment. Bigger downpayment = less interest paid over the life of your mortgage. The amount you can potentially save on the mortgage interest is the opportunity cost of buying a new car.

A 5 year car is definitely not an old car. My car is 11 years old. DW's car is 7 years old. We will drive both into the ground before we replace them. OTOH, we are on track to retire at 55. Possibly at 50, if markets cooperate.


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## m3s (Apr 3, 2010)

1) The 0.09% loans are a marketing hoax because the cost of financing is built into the price (which is even worse.. you can't avoid the interest by paying it off sooner!)

2) Comparing the price of cars by monthly payments alone is very naive. The car isn't any cheaper just because you take longer to pay for it.. and you have to pay full insurance while a car has a lien!

3) Taking a loan out for a depreciating asset is foolish enough, let alone upgrading a car when you owe more on it than it's even worth... If the car is totalled tomorrow insurance will only pay what it's worth..

I draw the line at paying cash for cars. This has let me bank that "low low monthly payment" and $$$ insurance saving for years. After driving used cars for 10 years, I could buy a few new ones in cash

If this cycle you're on continues, you will end up owing more and more on cars every 5 years and always driving entry level cars worth less than you owe. Do you really think they pay for all those ads in the paper for your benefit?


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## lonewolf (Jun 12, 2012)

Ubergame

The question should not be weather or not you should buy a new car & live even further beyond your means. The question I would ask is why do you want & live beyond your means ?

This is not a money problem. It could be an esteam problem & you judge your self worth by the car you dive & or think people will like you more by the car you drive.

Think/learn of how to be happy living within your means, make a plan, follow the plan, anilize the results, keep looking for ways to improve, keep makeing improvements. After years of travel this is the road I travel on.


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## m3s (Apr 3, 2010)

cainvest said:


> I'd love to get an A3 TDI, just wish they'd offer a lower powered diesel with better mileage .... maybe they will someday.


You mean the 1.6L TDI 3.5L/100km in the A1/A3? :tongue-new:

A diesel engine is just torquey by nature, and a turbo adds another shot of torque when needed without constant higher consumption (Eco-boost as Ford calls it...) A turbo diesel engine is a win-win situation on the street, but a performance slouch at high speed (which nobody can use on the street anyways)


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## cainvest (May 1, 2013)

m3s said:


> You mean the 1.6L TDI 3.5L/100km in the A1/A3? :tongue-new:


Now were talking ... a 1.6L at about 80-90HP hitting less than 5L/100km combined would be sweet! I'm guessing the 1.6L is only in europe right?

FWIW, my daily driver is 12 years old now. It's only needed a few minor repairs in the past few years which are far cheaper than monthly new car payments.


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## praire_guy (Sep 8, 2011)

I drove a protege for 10 years. Same car as a 3. 

You will have no problem driving most modern Japanese cars for 10 years relatively problem free. 

Keep the car.


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## none (Jan 15, 2013)

I think I get about 32 mpg (I have a roof box that results in a 1-2 mpg hit) which I'm fairly content with. The premium gas kind of sucks but costco is about $.09 for premium gas compared to a regular gas station.

The power is great. I wish I used the paddle shifters more because they're so awesome but really the auto trans does a great job.

Great car, I'll never buy one again because we bought it in the states - 1 year old, 20K - for $25K all in (we payed cash). I had to spend a long time finding a deal that great for this car. 

After bringing it up to Canada it was up until last year that i could sell it for more than I paid for it. Crazy.


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## m3s (Apr 3, 2010)

cainvest said:


> Now were talking ... a 1.6L at about 80-90HP hitting less than 5L/100km combined would be sweet! I'm guessing the 1.6L is only in europe right?


Yes the A3 1.6L TDI is available in Europe... of course CBSA won't let me bring one into Canada. What are they paid off by Suncor and Irving? It's pretty messed up when you think about it, that we can have the 2.0 but not a 1.6...


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## m3s (Apr 3, 2010)

none said:


> After bringing it up to Canada it was up until last year that i could sell it for more than I paid for it. Crazy.


Yea I've seen Land Rovers going for a fraction of what people pay in Canada. I have half a mind to start investing in sea containers... You can import anything that's +15 years


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## fraser (May 15, 2010)

Last time I almost bought a car was three years ago. I thought or I knew what I really wanted was an Acura. Went to see them and drive them. All was good.

But, when my spouse asked me what the delay was I told her that I was not very excited .....and I should have been when buying a new toy.

So, I kept the 13 year old Toyota. It is 16 years old now and it will be a keeper. The money that I would have spent on the new car is now appreciating instead of depreciating. Unfortunately, the appreciation rate is considerably less than the depreciation rate! 

A very successful businessman told me years ago to avoid buying a depreciable asset whenever possible. And if you absolutely have to, try your best not to compound the situation by financing it.


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## Oldroe (Sep 18, 2009)

You all are missing the problem.

Your car is not worth 12k the amount of your loan. So today the bad happens you write your car off. The insurance says book value is 4k you get4k.

You still owe 8k and now you are tacking this amount on to the next vehicle. This means when you drive your new vehicle off the lot and lose 1/3 you tack another 8k on top of that. 

So basically you are self insuring over 50% of your new vehicle.


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## MoneyGal (Apr 24, 2009)

I'm not missing it, and I don't think other people are either! 

People are entitled to spend their money in any way they choose. 

Would I do this? No (and I said as much). Do I think it is wise financially? No. 

But his question was, "when do you draw the line?" and my answer is, "you are a free adult; you can draw it anywhere you want!"

(But I appreciate your self-insurance perspective, and think this is a great way to break down the consequences of this decision)


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## cainvest (May 1, 2013)

Oldroe said:


> Your car is not worth 12k the amount of your loan. So today the bad happens you write your car off. The insurance says book value is 4k you get4k.


Not sure why you'd say 4K ... 12k is in the ballpark for selling prices on that car, depending on mileage/condition/model of course.


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## Ubergame (Jul 6, 2013)

I wasn't looking for a reason to buy. Just more of a reason I shouldn't buy. Lots of good stuff though and all things I thought of. 

I would much rather save for my down payment on my first house. 

Thanks for the answers!


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## Oldroe (Sep 18, 2009)

My numbers are just numbers . You need find out how much you owe on your ride and what book value is. Now you know how much you are self insuring your ride. If your car gets wrote off you still get to pay the difference and you need a new car.

Just had friends with 2 year old kia suv payed 31k for 84 months 2 years old and wrote it off still owing 27k. Book value 12.5k. 

Can't believe any money person would put themselves in this position.

These friends got very lucky in they had full replacement insurance.


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## MoneyGal (Apr 24, 2009)

Yeah, I knew someone who totalled a new, financed minivan within a few weeks of purchase. Ouch!


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## praire_guy (Sep 8, 2011)

fraser said:


> Last time I almost bought a car was three years ago. I thought or I knew what I really wanted was an Acura. Went to see them and drive them. All was good.
> 
> But, when my spouse asked me what the delay was I told her that I was not very excited .....and I should have been when buying a new toy.
> 
> ...


A car is not an asset, or an investment.


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## crazyjackcsa (Aug 8, 2010)

Great, the "asset" argument again. A car isn't an investment, but it is an asset. Assets represent value of ownership that can be converted into cash (although cash itself is also considered an asset).


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## Oldroe (Sep 18, 2009)

If you sign up for 1 of these low down payment ($500) 84 month small monthly payment (most people) there is no cash.

The second you drive of lot your vehicle lose 1/3. 

Your 30k loan is worth 20k book value. So you self insure your ride for 84 months for 10k. The tricky part is if your car gets wrote off, now you still owe that 10k and you need a new ride. 

So you buy another 30k ride tack the 10k still owing on the new ride and drive off lot and lose another 10k. Now you are self insuring for 50% of vehicle worth for 84 months (7 years)

You need to put reasonable down payment on your ride and 48 months. This will always keep you in a cash position.


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## MoneyGal (Apr 24, 2009)

Oldroe said:


> If you sign up for 1 of these low down payment ($500) 84 month small monthly payment (most people) there is no cash.
> 
> *The second you drive of lot your vehicle lose 1/3. *
> 
> ...


Actually, more; as the tax you've paid is a total wash.


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## cainvest (May 1, 2013)

You really lose nothing when you drive off the lot, its only when the car is converted to cash again, as in, writeoff or sell it. Insurance here can be bought for new cars at ~$100 for 2 years to give the full value in a writeoff situation, less deductable if applicable. I believe PST is refunded if owned less than 6 months but I'm not sure about that.


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## MoneyGal (Apr 24, 2009)

cainvest said:


> *You really lose nothing when you drive off the lot*, its only when the car is converted to cash again, as in, writeoff or sell it. Insurance here can be bought for new cars at ~$100 for 2 years to give the full value in a writeoff situation, less deductable if applicable. I believe PST is refunded if owned less than 6 months but I'm not sure about that.


Yes, just like you really lose nothing when your investment portfolio drops in value. However, "market value" is something people pay attention to, because of the risk they might need to convert that asset into cash.


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## cainvest (May 1, 2013)

Well car vs investments are apples to oranges, not exactly the same but I understand what you're saying, its a perception problem some people have.
And like I said, insurance will likely cover the "worry" for the first two years.


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## MoneyGal (Apr 24, 2009)

If you get the waiver of depreciation - I'm not sure how many people know that kind of insurance is available!

I solve this problem by buying used cars in cash.


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## Oldroe (Sep 18, 2009)

You are in the same situation if you trade your 5 year old ride. You owe more than value.

Full replacement value is available. And yes you pay more. 

I think most will look for cheapest insurance and put there financial future in jeopardy.


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## MoneyGal (Apr 24, 2009)

You can't get a waiver of depreciation on a five-year-old car.


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## tiffbou2 (Jul 4, 2013)

MoneyGal said:


> If you get the waiver of depreciation - I'm not sure how many people know that kind of insurance is available!
> 
> I solve this problem by buying used cars in cash.


My husband and I have always done this. We have a 2005 and a 2011 car (purchased the last one this past year) and we've always paid cash. We aren't big car people though. I have had so many friends get on the road to BIG debt starting with car loans and I just don't get it. I also don't understand why some people don't really think of car loans as real or unavoidable debt just because their payments or interest rate is low. 
But that's just me. I'm sure a lot of people wouldn't "get" the priorities that I like to spend my $$ on.


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## praire_guy (Sep 8, 2011)

crazyjackcsa said:


> Great, the "asset" argument again. A car isn't an investment, but it is an asset. Assets represent value of ownership that can be converted into cash (although cash itself is also considered an asset).


Your right a car is an asset. So is the Big Mac I just bought. How much is it worth when I **** it out?

My point was dont worry about what the car is worth or that it is a depreciating asset. It's a car. You buy it to drive around.


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## My Own Advisor (Sep 24, 2012)

Anything (like an average car) that depreciates quickly is not an asset. Cars, for the most part, and assets, are an oxymoron.


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## nathan79 (Feb 21, 2011)

This is a good reason to never finance for longer than the warranty period. I would not want to be making payments on a vehicle that was out of warranty. Sure, the chance of anything major going wrong is small, but it's not good for piece of mind.

I would still say keep the car. I don't think there is any point where it suddenly makes more sense to buy new. You are not going to come out ahead -- the monthly payment might be less, but the total cost will be more in the end. Buying a new car is mainly an emotional rather than rational decision. As long as that's clear, go ahead and buy a new car if it makes you happy.

There may be some unique situations where buying new actually makes sense; if you're operating a fleet of vehicles or putting on exceptionally high mileage every year, it become easier to justify.


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## Young&Ambitious (Aug 11, 2010)

none said:


> I was a day from buying a mazda 3 and made the mistake of test driving an Audi A3.
> 
> Don't do that.


I haven't read the rest of the responses yet *disclaimer*

I'm sure glad I didn't! I sure love my mazda3! "my 2 cents"


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## dBII (Mar 12, 2013)

*I just traded...*

my 2007 Camry for a 2012 Sentra with 16k on it for $10k cash. I'm pretty happy with it because I bought a nearly new car with lots of warranty and the off-the-lot depreciation is paid. The Camry was a good car, but that length of time really started to show and things were starting to go wrong.


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