# Should I buy a car?



## MasterCard (Aug 2, 2013)

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## northernguy (Oct 19, 2013)

Only you can decide if you really need a car, but I have a few observations/pros/cons based on what you've posted:

- If you plan to only drive enough to burn $100/month in fuel, do you really need to purchase a new car or could something used be more appropriate? We all want new cars, but something a few years old could make more sense for you.

- If you decide not to drive to work, you may be able to reduce your insurance costs slightly.

- It sounds like you're in a larger city, keep in mind that parking can add up.

- You're only 23, a car is not normally considered something that is excessive assuming you don't go crazy with the purchase.

- Have you considered being able to get insured on your parents' car, using a car share if one is available or renting? For example, if you decided to rent every weekend to do 'car things' you could probably do it for less than half your car budget, even with young renter fees.

I had bought two used cars and a shiny new one by the time I was 23 so, like I said above, this is really your choice and not sure you can be faulted for going either way.


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## lonewolf (Jun 12, 2012)

Any debt ?
How much money in emergency fund ?
How much money in investments ?
How much money in RRSP & or TFSA ?

Might want to look @ some of these numbers to see if you can even afford a car


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## Butters (Apr 20, 2012)

If you don't need the car to get to work, why bother? waste of money imo

Just because you have lots of extra cash coming in? are you sure you aren't bored? sounds like a huge splurge!

If you want that freedom of transportation, just get a car 3 year old, one off a lease from some hot shot

New car at your price is 21,000

You can get one off a lease at like 13,000 its pretty much brand new! save 8,000 plus the insurance will be lower as it's not new anymore.

154$ month car payments (although you should just save up and pay it in cash unless you are getting under 1% like you say)
Insurance broker online can get you 150$ a month (1600 upfront 1 year, no interest)

300 a month vs new at 600 a month

both will get you want you want, the freedom and ease of having a car

working/saving 6 months for a used car, or a full year for a new car

the more you waste on a car now, the less of a down payment for your condo in 2016... or later!!!
and you should get 20% cash saved for that down payment (you will save 4000 bucks on CMHC fees) you may also look into home buyers RRSP for that too, could help you out a bit more

if you want the toy, just realize it will delay your cash for a house, a dollar now, is worth 2 dollars in your future!

I think you are doing EXTREMELY well, just be patient my friend!


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## alingva (Aug 17, 2013)

lease it
or release from someone to save on insurance


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

Just a couple things...your calcs do not include the cost of parking at work. Is it free?

Yes, absolutely you get more freedom to do what you want, when you want. You are at a good age for that but I agree with the above that you shouldn't have to buy a cheap, new car just to get 0%. Why not spend $15-20K instead buying a better used car that is 2-4 years old? I have done this several with several cars through the years and it has worked out very well for me.

Just to add...is it really necessary to buy a condo in 2016? Seems arbitrary. Most people your age start out renting. See my previous posts about not listening to RE rhetoric.


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## Xoron (Jun 22, 2010)

MasterCard said:


> ...
> With a car I am looking at adding the following expenses
> 
> Gas: *$100/month*
> ...


Why not look at used cars? Something 3-4 years old would already have most of the depreciation paid by someone else. And buy it from the money you already have saved up. (or wait until you have enough saved to buy it)

That 0.0% financing isn't all it's cracked up to be. You pay an inflated price (over cash) for the privilege of having 0% financing. The cash price for the same (new) car would be significantly lower that what you'll finance at 0.0%


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## Silverdart (Oct 18, 2013)

(QUOTE=Xoron;202782]Why not look at used cars? Something 3-4 years old would already have most of the depreciation paid by someone else. And buy it from the money you already have saved up. (or wait until you have enough saved to buy it)

That 0.0% financing isn't all it's cracked up to be. You pay an inflated price (over cash) for the privilege of having 0% financing. The cash price for the same (new) car would be significantly lower that what you'll finance at 0.0%[/QUOTE]

^^^+1. The smartest finance wizard I've ever known - my father, long gone now - always told me to delay the purchase of a car as long as possible. Then only buy a used vehicle that's been properly inspected by a mechanic you know and trust. There's no reason today to take a depreciation hit, let someone else do that.

Take that $600 and put it away for a year in, say, a GIC or some other conservative interest-bearing account. When the year is up, use that money to send your parents on a Caribbean cruise or something. Seriously. Then come back and tell us that the money you used for your parents vacation wasn't the best money you've ever spent, ever.


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## MasterCard (Aug 2, 2013)

lonewolf said:


> Any debt ?
> How much money in emergency fund ?
> How much money in investments ?
> How much money in RRSP & or TFSA ?
> ...


Debt: $0 (no long-term debt, everything paid off each month on credit card)
Condo fund: $6k (put in $2k/month)
Cash: $22k 
Investments: Have around $6k in investments (not doing particularly well but I'm hoping to work on this)
RRSP/TFSA: $0


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## MasterCard (Aug 2, 2013)

the-royal-mail said:


> Just a couple things...your calcs do not include the cost of parking at work. Is it free?
> 
> Yes, absolutely you get more freedom to do what you want, when you want. You are at a good age for that but I agree with the above that you shouldn't have to buy a cheap, new car just to get 0%. Why not spend $15-20K instead buying a better used car that is 2-4 years old? I have done this several with several cars through the years and it has worked out very well for me.
> 
> Just to add...is it really necessary to buy a condo in 2016? Seems arbitrary. Most people your age start out renting. See my previous posts about not listening to RE rhetoric.


I won't be driving this car to work, it would be 120km a day. Figure it's not worth the wear and tear and the gas, I'll be driving on the 401 which is Ontario's largest parking lot.

Isn't interest on a used car like 3.99-4.99% generally? 
I figure I'm better off getting brand new and paying about the same to slightly more. 
I feel like having enough to enter the real estate market by then is good. I graduated in May 2012 and by May 2016 that would mark 4 years living at home :/


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## Sherlock (Apr 18, 2010)

Why not just buy something for about $5000 instead of going to debt and paying interest on a depreciating asset? $5k should buy you a fairly nice car. Just make sure to get it inspected by a mechanic first.


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## Sherlock (Apr 18, 2010)

the-royal-mail said:


> Why not spend $15-20K instead buying a better used car that is 2-4 years old? I have done this several with several cars through the years and it has worked out very well for me.


Agreed. Give me a 3 year old BMW 328 over a brand new civic/corolla any day. Should still come with a bit of warranty.


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## mcoursd2006 (May 22, 2012)

Give me a three-year old Civic/Carolla instead and save the rest.


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## MasterCard (Aug 2, 2013)

So say I downgrade my car selection, I probably only shave off $100 right?
My insurance shouldn't move much right...
Even then I'm at $1300/month :/


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## Butters (Apr 20, 2012)

You have 22k cash, that's more than enough to buy a good used car in full, no interest... why bother with payments?
New car at 0% has the price of interest built into the car, like someone else said, its not all what it seems.
a 2010 model is just as nice as the 2013
if you aren't taking the car to work, not using it everyday, why even bother with a new car?
to be honest, knowing you are just using it as a "weekend / late night" car for transportation to your friends places, I would pay less than 10000... its not an everyday car, you dont need a new one that will just sit and de-value big time... its a toy
get a 2008, and you'll save big on insurance as well, overall cheaper, and it will do justice for what you need it for! 2008 is still a good car, and if you drive it nice, and take care of it, get oil changes, it will last you well over 10 years!

Again, save money on car you are barely going to use
Have a larger sum for your condo, and pay less fee's, even writing a big cheque when you offer on a house goes a long way, ppl know you are serious when they see that large cheque of money!

trust me bud, i was in your same shoes 3 years ago, i have a 2008 (bought in 2010) and i would rather an older car even, i'd have more cash right now  house would have less than 20 years left, or new windows, more investments, etc... cash is king


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## james4beach (Nov 15, 2012)

I totally agree, pay cash in full -- don't borrow money for a car. 0% is a trick, it's really not a free loan at all.

Buy something slightly used. Not very used, just a couple years old... that's practically as good as new and can still be covered under original manufacturer's warranty

I'm looking at getting a car soon too and am looking for something 2 to 3 years old, that still has some warranty on it.


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## nathan79 (Feb 21, 2011)

What happened to the days when your first car would be a beater that barely runs, lol. Seems like people expect so much these days.

I would look to spend about 3K on a 8-10 year old car, and don't put any collision or comprehensive on it. It's worked out good for me.


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## james4beach (Nov 15, 2012)

Sherlock said:


> Why not just buy something for about $5000 instead of going to debt and paying interest on a depreciating asset? $5k should buy you a fairly nice car. Just make sure to get it inspected by a mechanic first.


Sherlock you pretty much read my mind. Could you tell me, around the 5K mark what are you thinking when you say fairly nice. Like how many years old, what kind of km do you think 5K should be able to buy?


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## YYC (Nov 12, 2012)

I agree with the 'buy used' camp. I've been guilty of buying cars on financing all my life, and it has set me back a long ways (and I'm still paying them off, keeping me from advancing my other goals as quickly as I want to). I am done with that trap. You can find a great used car for under $10k. I would take some of your cash and do that.


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## Plugging Along (Jan 3, 2011)

I am in pay cash camp. 0% usually has the price factored in to the price! and you can get it cheaper after for paying cash.

Since you don't drive much, I would say buy used because you will lose a lot more in depreciation whether you drive little or average amount. I would get a car for the freedom, buy used, maybe better than $5k used, get the freedom you want, but still have some savings. 

We just sold our 2000 Honda CRV in good condition for just über $5k. We could have got more, but decided too many cars in my driveway, so sold it cheap. 

On a side note, I don't agree that a 3 year old BMW is necessary better than a new corolla. You have to remember that the insurance will be higher, higher costs for premiums gas, and much higher maintenance cost if you bring it into shop.

Years ago, my parent got a $100k brand new Mercedes, the cost of maintenance, gas, and insurance was so much higher than their accord, they never drove it. They offered to sell it to use with 10k on it, and we said no thanks. Every oil change/maintenance cost on average $200.


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## Sherlock (Apr 18, 2010)

james4beach said:


> Sherlock you pretty much read my mind. Could you tell me, around the 5K mark what are you thinking when you say fairly nice. Like how many years old, what kind of km do you think 5K should be able to buy?


Hmmm... depends on whether you want sedan or coupe or pickup or suv, compact or mid-sized or large, american or japanese or german, etc. I'd be aiming for maybe around 2004-06, with about 130-160k kms.

Some examples:
http://wwwb.autotrader.ca/a/Mazda/MAZDA6/BRAMPTON/Ontario/5_17796412_20121129092852693/
http://wwwb.autotrader.ca/a/Volkswagen/Jetta/WHITBY/Ontario/5_18142599_ON20070704162503103/
http://wwwb.autotrader.ca/a/Ford/Fusion/MISSISSAUGA/Ontario/5_17963906_20110928101251178/
http://wwwb.autotrader.ca/a/Volvo/S40/TORONTO/Ontario/5_17842295_20120606122016261/


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## Sherlock (Apr 18, 2010)

Plugging Along said:


> On a side note, I don't agree that a 3 year old BMW is necessary better than a new corolla. You have to remember that the insurance will be higher, higher costs for premiums gas, and much higher maintenance cost if you bring it into shop.


Surprisingly, insurance is higher on civics and corollas than it is on the BMW 3 series, and many other luxury models too. Statistically corollas/civics are more likely to get in accidents, because the owners are often boy racers who soup them up and get in accidents or get tickets. BMWs are harder to afford so the people driving them tend to be older and more responsible so they're cheaper to insure.


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## northernguy (Oct 19, 2013)

Sherlock said:


> Surprisingly, insurance is higher on civics and corollas than it is on the BMW 3 series, and many other luxury models too. Statistically corollas/civics are more likely to get in accidents, because the owners are often boy racers who soup them up and get in accidents or get tickets. BMWs are harder to afford so the people driving them tend to be older and more responsible so they're cheaper to insure.


As someone who recently sold my 2007 BMW 328 down downsize to one car, I can tell you that the cost of ownership of a 328 isn't astronomical, but it is higher than the average car that size like the corollas/civics you meantion. 

For example, it burns about double the cost in fuel of a civic (extra L/100km + premium vs regular) and has far more expensive parts, right down to those terrible run flat tires!

That said, I drove my 328 for three years and it held its value incredibly well and cost me next to nothing to drive for three years from a depreciation point of view in comparison to other vehicles I've owned.


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## Plugging Along (Jan 3, 2011)

^ interesting, I don't have a corolla, civic or BMW so will take your word for it. I would imagine parts for a BMW are more expensive still and the gas too


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## MrMatt (Dec 21, 2011)

Plugging Along said:


> ^ interesting, I don't have a corolla, civic or BMW so will take your word for it. I would imagine parts for a BMW are more expensive still and the gas too


Why would you imgaine BMW parts are more expensive? They're made at the same factories as everything else.


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## Xoron (Jun 22, 2010)

Sherlock said:


> Surprisingly, insurance is higher on civics and corollas than it is on the BMW 3 series....


The insurance bureau of Canada ranks cars by rate of theft / accidents. We used it when we decided on our last car. We avoided the higher costing cars.

The ICB Website:
http://www.ibc.ca/en/car_insurance/buying_a_new_car/hcmu.asp

Spreadsheet of cars and insurance profile
http://www.ibc.ca/en/Car_Insurance/documents/hcmu/2012/HCMU_E_2012.xls


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## Plugging Along (Jan 3, 2011)

MrMatt said:


> Why would you imgaine BMW parts are more expensive? They're made at the same factories as everything else.


Because it's a more expensive car and manufactures know people who buy bmws will pay more.


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## MasterCard (Aug 2, 2013)

I don't want to drive a Civic or a Corolla. :/


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## Spudd (Oct 11, 2011)

I think the answer to the question "should I buy a car" is clearly no. The amount of benefit would be minimal for the amount it will cost. You're already getting along just fine without a car. 

If you *want* to buy a car, then you should evaluate your choice knowing that it is a want and not a need. How much is having a car worth to you, vs saving that money and retiring earlier, or putting it into a nice house a few years down the line?


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## fraser (May 15, 2010)

I depends where you live, where you work, rapid transit, your lifestyle etc.

When we lived in downtown Toronto we did not have a car. We did have bicycles and two subway stops within a few blocks. When we wanted a car for the weekend we just rented one. Much better than owning a car. It would have been a very different situation if we lived in Mississauga or if we access to our parent's car.


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

Ok what kind of a car have you decided on?


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## MasterCard (Aug 2, 2013)

I've ruled out something new in 18-22k range...

Looking at something $5k-$12k...06-08 at the oldest...my insurance is still $230-$250 a month regardless if I buy old or new when I use TD MM's online quotes.

Something not boring - e.g. not a Civic, Corolla, Versa, etc.


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## YYC (Nov 12, 2012)

Chicks dig Corollas.


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## MasterCard (Aug 2, 2013)

YYC said:


> Chicks dig Corollas.


Yup.
Chicks dig affordability, reliability and efficiency.


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## YYC (Nov 12, 2012)

Smart chicks do.


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## MasterCard (Aug 2, 2013)

YYC said:


> Smart chicks do.


Well, I like smart chicks and dumber chicks - but I like exciting cars too!!


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## peterk (May 16, 2010)

bahah. You're alrite MasterCard... And good decision with holding off on the expensive car.

I think the ladies would dig you out of your parents house more than in your car, though. Unless we're talking a VW bus perhaps...


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## realist (Apr 8, 2011)

Unless I missed it in the thread somewhere you haven't budgeted for maintenance costs which can add up in a hurry. 

Why do you want a car? If you aren't commuting in it (are you in the GTA?) then how much are you actually driving? My wife and I live right in Toronto and take the TTC to work, have a Zip Car membership and get a weekend rental about every 1.5 months, more in the summer. We have insurance through our credit card, so one weekend of rentals a month is less money than I was previously paying just for insurance. (Mind you I was younger and paying pretty high insurance then.)

My advice to people deciding if they want a car or not is this - you need to think of the car as paying for a combination of transportation, time and convenience. If you can viably use transit then you are paying with some extra time and giving up some convenience instead of paying cash. Buying a car means you are gaining time (in theory) and convenience at the expense of cash. 

Personally the value of NOT having to drive in the GTA on a regular basis is worth a lot to me.


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## MasterCard (Aug 2, 2013)

Nearest GO station is 6 km away - I've gotten fed up arranging rides back with my card or brother. Nearest gym is the same distance.
Nearest ZipCar is a solid 50 minute bus ride away...
Its largely freedom and discretionary.

Anyways, this idea is still standing still. Some days its fine other days its like dear god I wish I had a car.


And yeah I've always liked cars too. Its been a hobby of mine since I was young.


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## northernguy (Oct 19, 2013)

Perhaps this isn't a good suggestion, but how about a bike to get to and from the station? I sold my car last fall as it wasn't getting driven much. Ever since I moved to Ontario I've commuted to work back and forth 37km a day. When I was looking to make the decision, I added up what I thought I'd save and it's even more than I thought. My bike costs me about $500 / yr in parts and clothing (I have ridden ~7,500km/yr the last three years) otherwise I haven't taken the bus much at all. 

To be completely transparent, we are now a one vehicle family, I haven't gotten rid of a car entirely. We burn very litle fuel and insurance not commuting to work is even greater savings.


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## MasterCard (Aug 2, 2013)

northernguy said:


> Perhaps this isn't a good suggestion, but how about a bike to get to and from the station? I sold my car last fall as it wasn't getting driven much. Ever since I moved to Ontario I've commuted to work back and forth 37km a day. When I was looking to make the decision, I added up what I thought I'd save and it's even more than I thought. My bike costs me about $500 / yr in parts and clothing (I have ridden ~7,500km/yr the last three years) otherwise I haven't taken the bus much at all.
> 
> To be completely transparent, we are now a one vehicle family, I haven't gotten rid of a car entirely. We burn very litle fuel and insurance not commuting to work is even greater savings.


I thought Ottawa was a lot colder than Toronto.
With winter being November - March more or less, and then summer being blistering hot May - September; the weather is horrible.


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## liquidfinance (Jan 28, 2011)

Sherlock said:


> Surprisingly, insurance is higher on civics and corollas than it is on the BMW 3 series, and many other luxury models too. Statistically corollas/civics are more likely to get in accidents, because the owners are often boy racers who soup them up and get in accidents or get tickets. BMWs are harder to afford so the people driving them tend to be older and more responsible so they're cheaper to insure.


So so true. BMW / Mercedes I have been looking at are cheaper than Civics etc.
I actually looked at getting an old Acura TL as a winter runner Insurance with liability only was $60 a month more than a BMW 325XI with comprehensive coverage. 

The cheapest vehicle I have found for myself to insure is a Porsche Ceyenne SUV. Obviously the running costs would be higher. 

I have had various BMW's and Mercedes in the past and they have never really cost more to run than any other car. People seem scared that because they are "premium" brands that they will have premium running costs.


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## northernguy (Oct 19, 2013)

MasterCard said:


> I thought Ottawa was a lot colder than Toronto.
> With winter being November - March more or less, and then summer being blistering hot May - September; the weather is horrible.


Winter certainly isn't warm, but I haven't had too many days where I couldn't ride the 19 km I have each day to work, so I'm sure 6 a km to the transit station would be a piece of cake. It's a matter of personal preference and comfort obviously...I figure that each trip in the car cost me at least $50 and even some of those weren't necessary. In fact, I found myself driving the car 'for a run' in the winter just to keep the battery charged up.


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## liquidfinance (Jan 28, 2011)

northernguy said:


> Winter certainly isn't warm, but I haven't had too many days where I couldn't ride the 19 km I have each day to work, so I'm sure 6 a km to the transit station would be a piece of cake.


That makes me feel so ashamed of myself. There is no reason why I couldn't do that. If only there were suitable cycle paths where I live. It seems to be something town planners haven't given much thought to.


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## Four Pillars (Apr 5, 2009)

I would also go for a used car. I'm someone who could never live without a car - I always wanted the independence etc. 

It's not necessarily the best financial choice, but I totally understand getting something to boot around in.


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