# Purchasing a car - crazy?



## Saniokca (Sep 5, 2009)

So in the past 6 months or so I've been trying to figure out whether to purchase a car or not. Right now my wife and I live in downtown Toronto but we are expecting a baby around the end of May and in July will be moving to Etobicoke/Mississauga area (renting). Every time I sit down to research the cars/prices I get "depressed" because the prices seem so high. I am not a car guy so maybe someone here can beat some sense into me...

I was looking at Honda CRV, Rav 4, Subaru Forester and for example 2012-2013 models are about 15-25k. Let's be super aggressive and say it's only 15k+tax. Insurance - about 2500/yr, maintenance+repairs will be about 1k/yr? without taking gas and opportunity cost (I could invest this money) into account that's a 55k decision over the next 10 years!

To put things into perspective my wife and I bring in together around 200k/yr (gross) and have 800k saved in liquid assets. We are however both taking about a year be with the baby (I like freedom more than I like stuff).

Question - am I crazy to think this way? What am I missing?


----------



## DollaWine (Aug 4, 2015)

I'm personally an advocate of buying older used cars. Not so old that they're risking falling apart (15+ years), but also not so newly used that they're still expensive (5 years or younger). A good place to look is in between that. Maybe cars from 2005 - 2010. They are cheaper off the bat, can often be purchased with cash so no loan or financing is necessary, and they lose their value much slower than a newer car. If you know how to pick a good one and have a good mechanic, an 8 year old car can last you another 8+ years. And again, no monthly payments. But you said you're not much of a car guy so that might seem like a risky route. If you have friends who know cars, I'm sure they can help you pick a gem for a much cheaper price. 

For example I bought a used 2005 luxury car (still turns heads in 2016!) for $3.3k. Pristine condition, well-maintained. It doesn't look like an 11 year old car, and it performs like a 3 year old car. It all depends on the car itself. People love to label cars as horrible money pits, but that's often because they don't know how to pick em... 

That's my 2 cents!


----------



## cainvest (May 1, 2013)

Doesn't sound crazy, if your income/budget can afford it and you like/need transportation then go for it. If you find car prices too high then find cheaper 2012-2013 models, like compact cars instead of small SUVs.


----------



## treva84 (Dec 9, 2014)

Saniokca said:


> So in the past 6 months or so I've been trying to figure out whether to purchase a car or not. Right now my wife and I live in downtown Toronto but we are expecting a baby around the end of May and in July will be moving to Etobicoke/Mississauga area (renting). Every time I sit down to research the cars/prices I get "depressed" because the prices seem so high. I am not a car guy so maybe someone here can beat some sense into me...
> 
> I was looking at Honda CRV, Rav 4, Subaru Forester and for example 2012-2013 models are about 15-25k. Let's be super aggressive and say it's only 15k+tax. Insurance - about 2500/yr, maintenance+repairs will be about 1k/yr? without taking gas and opportunity cost (I could invest this money) into account that's a 55k decision over the next 10 years!
> 
> ...


You are not crazy - cars are huge money sinks (can you name any other depreciating asset that costs you significant amounts of money in ownership?). The majority of the population justifies this however as cars are a status symbol for most. Ironically, those who drive the most expensive cars tend to not have the most wealth.

In any event, a few suggestions:
- As has already been said, buy used
- Research reliability ratings (personally I use consumer reports, available at my local library)
- Research cost of ownership ratings (again, via CR for me)
- Pick your make / model
- Pay in cash, don't finance


----------



## Spudd (Oct 11, 2011)

Call me crazy, but I think you'd be happier staying in downtown even if your living quarters are a bit more cramped than they would be out in Etobicoke/Mississauga. Or at least somewhere along the subway line. I assume you work downtown, so your commute will be a ***** if you move out there and buy a car. And the soulless suburbs will start to wear on you. This is based solely on my personal perspective, I know some people are perfectly happy in the suburbs and would not want to move downtown. Maybe you're one of those. 

You could take the money you were thinking of spending on a car and use it to rent a bigger place on the subway line.


----------



## dubmac (Jan 9, 2011)

I've always done my best to buy a car that will last 10-15 years. Buy a good one, maintain it, and only replace ot when necessary. I've done well until now - most of my purchases (VW Jetta, Toyota Corolla) have worked out. In 2010 we bought a used 45km 2008 Subaru Forester for 17K . I researched it, it got good reviews. I only put 15-20K on a car per year. It was supposed to last 10 years to 2020. 

I took it into the shop last week and learned that many Subaru Foresters (2006-2011 or so) were found to have poorly designed head gaskets which tend to start to show evidence of failiing at around 80-110 km. Mine has 104km and the head gasket is "weeping" - it hasn't failed outright, but it will eventually.

Now I'll likely need to replace the car (likely I'll try to trade it in at a dealer), I don't have the stomach to sell it to someone. I could replace the head gasket - the mechanic said $4000 to do the job - no guarantees! TYpe in "Subaru Forester head gasket" into google - and you'll see some trending news. Subaru, obviously, says nothing is amiss - they do not acknowledge a problem.

Be careful if you buy a Subaru - look into the head gasket history along with all other history. I'm not sure whether this is in the lemon-aid guides at this time.

Me. I have about a year to work through this and get a new ride. I have been looking casually.


----------



## cainvest (May 1, 2013)

dubmac said:


> I could replace the head gasket - the mechanic said $4000 to do the job - no guarantees!


Holy cow, $4k for head gaskets ... I'm guessing that's their Boxer engines and they need to pull the entire motor to do it.


----------



## Getafix (Dec 29, 2014)

The best bet is to buy a slightly used car with a balance of factory warranty remaining. This way you save yourself the initial depreciation hit soon as you drive off the lot. For example last year i bought a 2014 Mazda 3 (25k mileage), with a 7 year/140'000km factory warranty. I think i saved around 5-6k and still got all the perks of a new car. As far as maintenance costs go, all i've done is a $70 oil change 4 times a year (needed for warranty). So under $300 a year and no headaches about things breaking down etc. Excluding fuel i spend around $2500/year on my car, which for the convenience it gives me is not a great cost.


----------



## wendi1 (Oct 2, 2013)

Edmunston - Lemon-aide.

Never steered me wrong.

With a baby in Etobicoke, you will need a car. If it were me, I would try to stagger your paternal leaves - but it's up to you and your wife. I also wouldn't be planning on moving just before you have a baby - the suburbs can be isolating, and all your friends and neighbours are probably downtown (is that right?).

I usually buy 3-5 year old used cars with a good rating and drive them into the ground. I stopped trying to keep my '98 Escort on the road last June, and bought a used Mazda 3, for less than $10,000, which will last me a at least 10 years.

Helps if you have cash saved up. I hate buying cars...


----------



## Saniokca (Sep 5, 2009)

Thanks for the comments!

Some facts to clear things up:
1) We are going to buy it with cash.
2) We actually don't really like downtown Toronto - Vancouver was a different story. So Spudd we are "one of those" :cheerful:.
3) I thought about staggering the leaves but decided that I wanted the luxury of both of us being off at the same time. To be honest it is very likely that my wife will not return to work in the next 3-5 years or we would both go back part time.
4) We are moving at the end of June when the baby will be about a month old. Not ideal I know but the timing worked out that way. It won't be too bad because my wife will just stay with parents for a week while I set up at the new place.

I think my issue with buying a car is not whether it costs 15k or 25k really. The decision is between "0" (i.e. use uber, taxi, transit, bycicle) and 55k (i.e. the entry price). Funny story: when I was 25 I had no money but a decent income I financed a 30k brand new golf - great car but, financially, a stupid decision.


----------



## cainvest (May 1, 2013)

Saniokca said:


> Funny story: when I was 25 I had no money but a decent income I financed a 30k brand new golf - great car but, financially, a stupid decision.


Since you liked v dub's in the past .... brand new 2016 Jetta's starts at $16k + taxes


----------



## amitdi (May 31, 2012)

DollaWine said:


> I'm personally an advocate of buying older used cars. Not so old that they're risking falling apart (15+ years), but also not so newly used that they're still expensive (5 years or younger). A good place to look is in between that. Maybe cars from 2005 - 2010. They are cheaper off the bat, can often be purchased with cash so no loan or financing is necessary, and they lose their value much slower than a newer car. If you know how to pick a good one and have a good mechanic, an 8 year old car can last you another 8+ years. And again, no monthly payments. But you said you're not much of a car guy so that might seem like a risky route. If you have friends who know cars, I'm sure they can help you pick a gem for a much cheaper price.
> 
> For example I bought a used 2005 luxury car (still turns heads in 2016!) for $3.3k. Pristine condition, well-maintained. It doesn't look like an 11 year old car, and it performs like a 3 year old car. It all depends on the car itself. People love to label cars as horrible money pits, but that's often because they don't know how to pick em...
> 
> That's my 2 cents!


+1. i was in a similar situation (expecting a baby) when i bought my 2006 Corolla and its running pretty smoothly. if you just need a machine to go from point a to point b, go for an older reliable fuel-friendly car....


----------



## Charlie (May 20, 2011)

Saniokca said:


> The decision is between "0" (i.e. use uber, taxi, transit, bycicle)


depending on where you are and your lifestyle choices the no car thing can work until your kid reaches sports age. There are lots of car shares in my neighbourhood, and good transit, so a few of my neighbours did it with really young kids. Much harder once when the youngsters have early morning hockey, and soccer across town.


----------



## MrMatt (Dec 21, 2011)

cainvest said:


> Since you liked v dub's in the past .... brand new 2016 Jetta's starts at $16k + taxes


That Jetta doesn't have rear cupholders and the seats aren't very good in that base model, though even with the 1.4, it's quite nice.
The Jetta Comfortline is the one you'd want, but it has the sunroof.

I just got a base Golf (automatic) and love it, still pretty affordable, and a blast to drive, and the hatch really is much more practical. The base Golf is pretty similar to the mid level Jetta without a sunroof, and $1000 less, due to the lack of a sunroof.

If it was my only family car, I would have gotten the wagon, but the Hatch is just fine for everyday errands and groceries, better than my old Malibu.


----------



## dubmac (Jan 9, 2011)

I've been looking at VW. 
The cost for the Tiguan is around 26-27K. No? I'm looking at VW wagons, but the only one I see similar to a forester or Rogue (NIssan) is the Tiguan unless I am mistaken.


----------



## none (Jan 15, 2013)

treva84 said:


> You are not crazy - cars are huge money sinks (can you name any other depreciating asset that costs you significant amounts of money in ownership?). The majority of the population justifies this however as cars are a status symbol for most. Ironically, those who drive the most expensive cars tend to not have the most wealth.


This is the hard reality. Whenever I think of getting a car I think about not only the massive bill but the opportunity cost of that money. 20K for a car plus insurance is at about:
$1400 a year in opportunity cost;
$1200 a year in insurance
$2000 a year in depreciation
-------
$4600 a year or ~ $400 a month.

This is also ignoring any maintenance or repairs.

Anyway, this is largely what keeps me from buying a car - plus I know if I did get one I would bike a lot less and biking is awesome and really good for my BELLY.


----------



## atrp2biz (Sep 22, 2010)

none said:


> Anyway, this is largely what keeps me from buying a car - plus I know if I did get one I would bike a lot less and biking is awesome and really good for my BELLY.


Good for my belly too! This is my daily commute into the office (less start and end details for obvious reasons). Although we did buy a new van a few months ago which generally stays idle during the week and is used to ferry the kids around and to do errands during the weekend. It's a soccer mom van, but I love it!

Back to the OP, if you don't already have a vehicle, I could see worse ways to spend your $200k gross annual income than on a vehicle for a growing family.


----------



## RCB (Jan 11, 2014)

I pick up my new car tomorrow, and I have to say taking on a payment again is painful. I have only 40K in mileage on my 10 year old car. We tried very hard to find a used 4x4 or AWD, not too old, not too many km, that wasn't junk. We were unsuccessful. Perhaps if we lived in a more populated region we'd have had better luck.


----------



## Saniokca (Sep 5, 2009)

none said:


> This is the hard reality. Whenever I think of getting a car I think about not only the massive bill but the opportunity cost of that money. 20K for a car plus insurance is at about:
> $1400 a year in opportunity cost;
> $1200 a year in insurance
> $2000 a year in depreciation
> ...


Yes this is exactly what I am going through each time I start thinking about it!



atrp2biz said:


> Back to the OP, if you don't already have a vehicle, I could see worse ways to spend your $200k gross annual income than on a vehicle for a growing family.
> View attachment 9714


The hope is for my wife to stay at home for longer than a year which means our income will be closer to 100k. This should still be more than enough for us to live on and save a little but parting with so much money is painful .

The other option is to keep borrowing the car from in-laws as we've been doing for the last few years (not very often). It's a bit inconvenient but I would rather give them a few k a year vs. throwing it away. I won't be able to do this forever but when each year is worth 4-5k it may be worth it.


----------



## MrMatt (Dec 21, 2011)

none said:


> This is the hard reality. Whenever I think of getting a car I think about not only the massive bill but the opportunity cost of that money. 20K for a car plus insurance is at about:
> $1400 a year in opportunity cost;
> $1200 a year in insurance
> $2000 a year in depreciation
> ...


I don't get those numbers, where did that $1400 in opportunity cost come from.

For me it is simple, taking the bus would add nearly 2hrs/day to my commute. Work is a 15minute drive. Transit is 1:11 minutes, but only if I'm willing to be an hour late, because the earliest bus would be at my house 5:40, instead of the 4:40 to get to work on time, ride back is another, so I'm losing 2hrs/day, or 10hrs/wk, at minimum wage that's $100/wk, or $430/month, plust $81 for the bus pass, I'm at $510/month.

My car payment is $70/wk, $20/wk for work gas, insurance is about $80/month, so $90x4.3wks+$80, so $487.

Having a car is $23/month cheaper than taking the bus, assuming I pay myself minimum wage.
If I add any errands, or value my time at more than a $10/hr, the numbers are even more compelling.


----------



## none (Jan 15, 2013)

The $1400 a year is 20K *0.07 the long term average of money invested.

It's different for all people. Some people live is **** places where they are stranded if they don't have a car. If you live somewhere where biking / decent transit exists you have choices. 

Anyway, looks like I low balled - $500 - $800 is true costs is probably a better measure of how much a car costs.

How can it be a 15 minute drive and a 71 minute transit? That's nuts. I bet it would be faster to walk.


----------



## MrMatt (Dec 21, 2011)

none said:


> The $1400 a year is 20K *0.07 the long term average of money invested.
> 
> It's different for all people. Some people live is **** places where they are stranded if they don't have a car. If you live somewhere where biking / decent transit exists you have choices.
> 
> ...


Transit is slow, that's why people buy cars.
23k, running it would be 2hrs, and even then that's pushing it for me, and I can't run 2 half marathons a day.


----------



## none (Jan 15, 2013)

MrMatt said:


> Transit is slow, that's why people buy cars.
> 23k, running it would be 2hrs, and even then that's pushing it for me, and I can't run 2 half marathons a day.


Well that's your failure.

I'm just kidding. Yes, in your case you need to take on your house location tax of $500+ a month. Too bad, so sad.


----------



## Saniokca (Sep 5, 2009)

This will sound silly but: When you buy with cash how do you pay? I emailed RBC with a question: can I pay 20k-30k with my debit card. Answer is: No (even if I specifically call in advance). Will it be a certified cheque/bank draft? I know that the transaction if very large but I still cringe every time I have to pay the $7.50...


----------



## OnlyMyOpinion (Sep 1, 2013)

We've used both a cheque and bank draft to buy new vehicles. Car wasn't being driven off that dy so the cheque wasn't certified and they (Honda) were fine with it.


----------



## al42 (Mar 5, 2011)

I do the same...write them a cheque when I purchase the car and when it's ready for pick up the cheque is cleared saving the charge for a certified cheque.


----------



## FI40 (Apr 6, 2015)

I'm a little late here, but thought I'd reply because I just did this move (downtown and 5 min walk to work, moved to Mississauga because of a 6 month old that was starting to crawl around and 650 sq ft condo was not enough).

I think if you do decide to move to the burbs, then buying a car is pretty much necessary. I bought a 2011 Elantra Touring, which I highly recommend. They are fairly reliable, and the wagon shape is VERY useful. I got one with 50k on it for 11k+tax.

I was also tiring of the city, and am now renting a house. I like it much better. One piece of advice, when choosing a place to live design your commute very carefully. There are plenty of express GO trains, but if you drive to the station the total commute time is increased because of traffic and stuff. Consider taking the bus, or ideally, walking or biking as much as possible. Not needing the car for your commute is great.


----------



## Saniokca (Sep 5, 2009)

FI40 said:


> I'm a little late here, but thought I'd reply because I just did this move (downtown and 5 min walk to work, moved to Mississauga because of a 6 month old that was starting to crawl around and 650 sq ft condo was not enough).
> 
> I think if you do decide to move to the burbs, then buying a car is pretty much necessary. I bought a 2011 Elantra Touring, which I highly recommend. They are fairly reliable, and the wagon shape is VERY useful. I got one with 50k on it for 11k+tax.
> 
> I was also tiring of the city, and am now renting a house. I like it much better. One piece of advice, when choosing a place to live design your commute very carefully. There are plenty of express GO trains, but if you drive to the station the total commute time is increased because of traffic and stuff. Consider taking the bus, or ideally, walking or biking as much as possible. Not needing the car for your commute is great.


You make very good points. We were very rushed to move (gave our notice and only had a chance to look at two places before the baby came). The place we got is OK but the commute would be quite bad. I am not too worried about it since I am on a leave until next year so will only need to suffer for a few months (at which point we will move again).

We tried looking for a house to rent but it was slim pickings - maybe we'll have more luck next year.

It looks like we are leaning towards a 2014/2015 RAV4 for anywhere between 20k-30k when all is said and done. It's not the wisest financial choice but we liked the car and with the savings of the past 4 years maybe it's time for some "crazy" luxury?


----------



## My Own Advisor (Sep 24, 2012)

I don't think it's horrible to treat yourself now and then. re: some crazy luxury.

While you need to plan for the future, you do only live once. It's all about balance, life that is, and finding yours.

Do in the end what makes you happy and stress-free as much as possible.....


----------

