# Do you think Buying new car is wise decision ?



## gladaki (Feb 23, 2014)

About me: 32 yo
Status:Married, Moved to canada in 2013
Income: 75k$
Spouse Income: 0$
No kids for next 2 years
Objective: 1. To save for house down payment (Thinking of doing 10%). (I am in Calgary)
2.To buy new car (Toyota Venza or Nissan Rouge)
3. To send my parents 200$ every month. (They depend on me)
4.Save for retirement aggresively

Debt:0
Saving:
HISA:1000
TFSA:1000 (INDEX Funding TD)
Foriegn Investment:1000
RRSP: I just started (currently contributing 12% of my income and 3% contribution by my employer)



Rent	1000
Car insurance	66
Groceries	400
Phone	70
Shaw Cable	74
Gas	200
Travelfund	200
Misc	100
Home insurance	13
Net 2123


----------



## KaeJS (Sep 28, 2010)

Short answer: Horrible idea.

Longer answer: In your current position, it would be a bad move. It says that you pay $66 in car insurance right now and $200 in gas/month. Do you already have a car?

Here's what you do:

1) If you have a car and it works, then don't change anything. There is no need to get a new car. This is then a want and not a need.
2) If you have a car and it doesn't work, figure out how much it would be to fix it versus how much it would be to buy a cheap and used car. In either scenario, buying a new car is more expensive and should be off the list.

Your spouse and parents depend on you and you have very little money saved. You plan to have children in the next couple years and you haven't even started a safety net, let alone retirement or any other real savings. Buying a new car is an absolute no-no in my opinion. You still need your downpayment that you have to save for, also.

You need to save and continue to do so. A new car is only going to hold you back financially and ultimately cause more stress on an emotional level.

Truth hurts, but I would also say that your $200/month for a "Travel Fund" is way too much. I don't even think you should be traveling anywhere. You should worry about saving that $200/month and it shouldn't be going to anything that you will use for leisure. That $200/month needs to be saved.


----------



## gladaki (Feb 23, 2014)

KaeJS said:


> Short answer: Horrible idea.
> 
> Longer answer: In your current position, it would be a bad move. It says that you pay $66 in car insurance right now and $200 in gas/month. Do you already have a car?
> 
> ...


Appreciate your reply..


----------



## lightcycle (Mar 24, 2012)

You asked if buying a new car is a good idea on a sub-board titled, "Frugality".

I think you really knew the answer but wanted some support.

So here it is: I think it's a bad idea too.


----------



## DayTek (Sep 26, 2013)

Your math is not adding up for me. You make $75K/year, but your "Net" monthly income is $2123? Or are you saying that is your Net Income after your listed expenses? Sorry, it's just backwards for me. Also, your expenses add up to $2123 exactly, so I'm confused.

At any rate, what is your time frame for purchasing a home? I'm assuming you'd want something ready for when kids came along. If that's the case, given the median home price in Calgary, you're looking at least $400,000 for a decent detached home. So with a 10% down payment in mind, be prepared to start socking away a good $1600+ in down payment savings over the next 2 years. If your Net Income after expenses is $2123, saving for a down payment is going to take a big chunk of that. The rest should be beefing up an emergency fund. Also, is your "Misc" your leisure money? If it is, I have no idea how you can only spend $100 in entertainment every month...And I am pretty frugal, LOL.

In short, a new car right now is bad timing, given your wanting to purchase a home. Drive the car you have right now into the ground. Buy a house, then, once you've established a new budget with a mortgage, land taxes, and other utility expenses it looks like you are not incurring right now (utilities tied into rent?), then you can decide how a new car fits into your finances. 

Good luck.


----------



## Nemo2 (Mar 1, 2012)

We generally don't buy new cars until they're at least 5 years old. :wink:


----------



## gladaki (Feb 23, 2014)

DayTek said:


> Your math is not adding up for me. You make $75K/year, but your "Net" monthly income is $2123? Or are you saying that is your Net Income after your listed expenses? Sorry, it's just backwards for me. Also, your expenses add up to $2123 exactly, so I'm confused.
> 
> At any rate, what is your time frame for purchasing a home? I'm assuming you'd want something ready for when kids came along. If that's the case, given the median home price in Calgary, you're looking at least $400,000 for a decent detached home. So with a 10% down payment in mind, be prepared to start socking away a good $1600+ in down payment savings over the next 2 years. If your Net Income after expenses is $2123, saving for a down payment is going to take a big chunk of that. The rest should be beefing up an emergency fund. Also, is your "Misc" your leisure money? If it is, I have no idea how you can only spend $100 in entertainment every month...And I am pretty frugal, LOL.
> 
> ...


Appreciate you reply. My net is 3800. My Monthly expenses are 2123$. I try to save 1500$ per month. Where 1000 goes in to HISA and 500 goes in INDEX fund. Thanks for your advice


----------



## gladaki (Feb 23, 2014)

jacofan said:


> New, no. The new Rogue gets great reviews though and looks sharp. Wait a year or two (or three or four) and get a used 2014 Rogue instead, you'll save thousands.
> 
> Suze Orman would say DENIED!


Appreciate it


----------



## KaeJS (Sep 28, 2010)

gladaki,

Ideally, it just comes down to what will satisfy you in the short and the long term.

Some people like going on vacations and buying new cars. If that's your thing - by all means. But in terms of finances, it just isn't really a great decision at this time.

It's fantastic that you are saving a good portion of your income ($1500/month), but most people on here will tell you that cars are the devil - _espcially_ new ones. Good luck.


----------



## protomok (Jul 9, 2012)

jacofan said:


> New, no. The new Rogue gets great reviews though and looks sharp. Wait a year or two (or three or four) and get a used 2014 Rogue instead, you'll save thousands.


+1 - I've been burned buying the cheapo 10 year old cars by the constant repairs...and I've watched friends get into piles of debt with new cars which rapidly depreciate in value. Buying 2-4 years used is IMO the way to go.


----------



## lightcycle (Mar 24, 2012)

There's definitely a sweet spot between depreciation and repair costs, but I'd argue that it's dependent on brand, model and year. Some cars are still good at 5 years, others seem engineered to fall apart the week after the warranty ends.


----------



## Nemo2 (Mar 1, 2012)

lightcycle said:


> Some cars are still good at 5 years, others seem engineered to fall apart the week after the warranty ends.


We have a 2005 Honda Civic manual transmission, and have had only minor 'problems' with it.


----------



## My Own Advisor (Sep 24, 2012)

I personally don't think a new car is a bad idea, provided: 

1) 0% financing.
2) You intend to own the car for at least 10 years.

If you're not sure about either 1) or 2), buy nearly new, 2-5 year old car.


----------



## gladaki (Feb 23, 2014)

I drive 1998 nissan altima. Bought it for 2000$ worked fine for 3 years. Recently started giving CV joint noise problem during turning Which will cost around 800.
So thats why I am more incline towards buying new car. I was not able to save much till now, but wan to save aggressively for some time now. Currently I am putting 12% of my income in RRSP and 1000 to HISA every month also 400 to TD Index fund. I just started and would be long journey for me. My Spouse is currently in school and will finish in 2016.


----------



## gladaki (Feb 23, 2014)

My Own Advisor said:


> I personally don't think a new car is a bad idea, provided:
> 
> 1) 0% financing.
> 2) You intend to own the car for at least 10 years.
> ...


Yes, Toyota Venza has 0% finance deal and I am inclining toward it. Nissan Rouge has 1.99%.Only problem with venza is its 20 inch wheel will cost little more for winter tires


----------



## wendi1 (Oct 2, 2013)

Gladaki, that 98 Altima is 16 years old. If you buy a 2-4 year old car and drive it for a decade or more, you will be saving lots of money. 

I think Phil Edmunston's Lemon-aid book has some excellent ideas on used cars that are good buys. I buy one of his books before I buy a car, but you can probably find them in the library if you are feeling frugal. 

New cars are for rich folk. Which you are not (me neither).


----------



## cainvest (May 1, 2013)

gladaki said:


> I drive 1998 nissan altima. Bought it for 2000$ worked fine for 3 years. Recently started giving CV joint noise problem during turning Which will cost around 800.


Considering a complete aftermarket CV half shaft assembly is only ~$70.00 for your car ($140 if you do both sides which is probably a good idea) and normally about 1.5 hours labour, I'd say $800 is pretty steep. Did you get quotes from a few places (not dealerships BTW) for a complete half shaft replacement?

Also, this is normally a very easy job for backyard/DIY mechanics, usually just one big nut on the wheel side and 4-6 bolts on the transmission side and out it comes. Definitely not an issue I'd be looking at buying a new car, from the saving money side of things anyways.


----------



## MrMatt (Dec 21, 2011)

Reduced rate financing is just "magic" to make it look like a deal.
0% is equivalent to a 10-20% discount, which you can sometimes get as a "cash purchase" option.

If they jack up the price of the car by ~25%, then give you 20% off, it's not much of a deal.

For some people the fewer repairs, and more importantly less time in the shop can be a big savings. If you have to take a day off every few months for a car repair, your "used" car can be quite expensive.


----------



## Jagas (Feb 11, 2013)

Buying a new car is an excellent idea if you wish to satisfy your second listed objective!
Captain obvious out.

(alternatively +1 to what My Own Advisor said)


----------



## OurBigFatWallet (Jan 20, 2014)

I don't think there is anything wrong with buying a new vehicle as long as you keep it for 8-10 years. You start taking big losses when you trade in every 2-3 years for the latest model


----------



## AltaRed (Jun 8, 2009)

OurBigFatWallet said:


> I don't think there is anything wrong with buying a new vehicle as long as you keep it for 8-10 years. You start taking big losses when you trade in every 2-3 years for the latest model


I agree. The key is to pay cash for the car OR at least a short(er) term low cost loan... and then keep it for a long time, maintaining it properly with fluid changes as recommended and not driving the crap out of it.


----------



## Brian K (Jan 29, 2011)

The $800 for the repair will be about 1 or 2 months payment for a new car (more or less) . I wonder why people complain about repairing older cars so much yet go out and are willing to spend so much on monthly payments for a new one. Your older car doesn't need collision insurance, just PLPD - with a new one, you probably would want collision insurance - probably $800 so take that and fix your car. 

Yes - 20" tires are very expensive - something like $350+ per tire * 4 - a nice bill for 'regular' manintenance. I'll bet your '98 has smaller tires which are much cheaper. In 4+ years you will need new tires (ok depending on how much you drive but you might also want winter tires too as the all season tires won't be good in winter after 3-4 years - and they are very expensive too). If you really want a Venza - as others have said, get one that is 3-4 years old but you will need new tires. I have a friend who has a Venza and has had no problems with it - it has been a good vehicle. I changed the brakes on it at 100,000kms. Cost $200 for parts but $800 at the dealer. Change the fluids (yourself if you can) regularly and you'll save lots of $$. The CV shafts are pretty easy to DIY as someone pointed out. Look on Youtube to see if there are any issues. Lots of good DIY hints and pointers all over the internet.

I drove a '79 (bought used in '83) and drove it until 2005 and figured I saved TONS of money on vehicles. Yes new cars are nice - but as someone said it is in the "Want" category and not a "Need". My daughter has a '98 Ford Ranger - yup needs things like shocks and other things but maintaining it is way cheaper than buying a new one.


----------



## cainvest (May 1, 2013)

Brian K said:


> I drove a '79 (bought used in '83) and drove it until 2005 and figured I saved TONS of money on vehicles.


Did the same, drove a 1984 until 2002 which saved my lots of money, both cost and fuel (~45 mpg), finally retired it at 440K kms. Even tried to kill it by not changing the oil over that last year ... didn't phase it. I did replace it with a new car but since I keep them so long and do almost all the repair work myself, the new car premium doesn't matter to me much. Only now after 11 years/220K kms are repairs starting to creep in but those costs are rather small compared to a new car.


----------



## kcowan (Jul 1, 2010)

We buy "good" used cars. We purchased a 2005 Ford Escape in 2009. It had 80k on it which was driving to and from Whistler. ($12k)

Last year, we bought a mint 2008 Nissan X-Trail for $14.5k that had 80k on it.

Both were one owner with no kids, and the accident record was clear on them. We avoid Honda and Toyota because of their higher resale values. We will keep them until they start to give us trouble.


----------



## wendi1 (Oct 2, 2013)

Yes! The secret is to find a model with a bad or mediocre reputation, that is actually a good car (which is where Edmunston comes in). Toyota and Honda usually are too expensive used (if I really wanted one of them, I would buy new, but keep it for a couple of decades).


----------



## gladaki (Feb 23, 2014)

Thanks to every one for wonderful advice.


----------



## coptzr (Jan 18, 2013)

There is a lot to consider when going used vs new. Without going into that detail right now, something to consider...when I went to buy a 2013 Nissan Rogue the price came down to $30k+interest when financed or $27k cash in hand (There was a $3000 cash back offer when paid in full). Could not believe it. My relatives and friends own used car dealerships and its the opposite, better deal for those who finance.


----------

