I can foresee the future. My family with 2 vehicles. Convenient? Yes, of course. Insanely expensive? Could be.
A bit about our transportation history first. My wife and I have survived very nicely with just one vehicle between us for the last 7 years. Before this period, we had 2 cars. Mine was a fully paid off used car which I had for a number of years before we met. She bought a used car about a year into our relationship which took her a few years to pay off. We used these to vehicles until they both basically died, and decided to purchase a shiny new car, (a reasonable new car, if there is such a thing, make and model will remain unnamed) the same car we have now, in ’07.
Back to the present. I’m still not 100% sure that the second car is going to happen, but I feel that it likely will. If we do decide to go with a second car, I foresee it being a low use car, used mainly by Ms Fake Cheap, maybe she would put 10K per year on it. There are 2 broad options for purchase of course, a new car or a used car. I’m not dead-set on a make of vehicle yet, but I have been eyeballing the Toyota Matrix a lot. It is just a bit larger than the current car we have, and has gas mileage in the same ballpark. There is no way I want to pay a significant amount more for gas if this vehicle becomes our only mode of transportation in the event our current car kicks the bucket. I envision us temporarily returning to a 1 car family, for a year or so, after the ’07 new car dies, I’m hoping to get another 2 mostly trouble-free years out of it.
Would I buy a new car? Great question. It would have to be a great deal, for sure. I certainly don’t regret our new car purchase from ’07. It has worked out very well for us. It has been very reliable and we’ve only put about $500 into repairs into it. For reference sake, a quick glance at the Toyota Canada website I see the 2014 Matrix starting just over 20K, financed at 0%*. That rate is nice but 20K plus taxes and freight and whatever else? Ouch! Those payments come out to around $400/mth for 5 years, not what I’m looking for. And what about the cost of depreciation? Great question. You know what? I don’t give a sweet s**t about depreciation in this case. This would matter to me if I were to sell the new car in 1, 2, 3 or 4 years. This would be very very unlikely. If we bought new we would keep the car for a good, 7 or 8 years or so. What if we bought it and didn’t like it after a few months? Well then we would have to suck it up. Pretty simple.
Lets explore the more likely option – the used car. Even here, I can break this down into a “high-end” used car, maybe something in the 10-11K range. I can’t see myself paying more than this for a used vehicle. Or I could go more in the 5-7K price range. A quick look through the local Kijiji adds and I see 2010 Matrix with 55K with an asking price of $10,499 and not much in the 5-7K range but I do see an 05 with 140KM for $6,500. The nice thing about going with a 2010 car is that it is only 4 years old, so I would expect to keep it for 4 or 5 years, as long as it’s not constantly needing repairs. With the ’05, it is already 9 years old, I can’t see us keeping it for 4 or 5 years, maybe you hope to get 2 or so good years out of it, and then go through this process all over again.
I also like having at least 1 reliable vehicle, even if it is the lesser used of our cars. I wouldn’t want Ms Fake Cheap and Jr Fake Cheap stuck in the middle of nowhere in winter time in these parts.
How would I be paying for the car? Well I would need to borrow the funds unfortunately (see my history and other posts on why this is), however this would be done at a very low interest rate. If I went new, I would certainly get something in the 0-2% interest financing range. If I go used, I would use credit card promos, also in the 0-3% range if these are available, and they have been the last few years, and our line of credit, currently at 4.5% interest. I have also heard rumors of some dealers offering financing in the 2.99-3.99% range for used cars, but so far these rates are unconfirmed. Of course I will use these associated interest costs when looking at the overall cost of this purchase to me.
I’m kinda glad I wrote out this posting, it really has helped me with the direction I think I want to go for a used car. Right now I’m leaning towards a 2010ish car, maybe I can find something in the $9,000 range. I don’t want to get into a used car price discussion here, as prices seem to vary quite a bit throughout Canada.
Thanks for reading. Stay tuned.
*In my banking days, I had many clients come to see me for a car loan for a used car, looking for 15K or so for the car. With the crazy bank car loan rates that I was offering which were from 6-9% (pre financial crisis rates mostly, and you would have loved the look on people’s faces, like I was crazy wanting them to pay that high of a rate. Not to get off topic here, but most people did not get that the bank does not make any money offering them a 0% loan to buy a new car that the bank did not manufacture and sell.) I would often suggest for these people to look for a new car at 0%, the payments would work out to a very similar amount each month, and they would get a better, newer car with warranty and other incentives as well. Many came back to thank me in their new car. And yes, of course I will also keep these in my mind during my research.