FINANCIAL SAVER GEOMATRYX

My random thoughts,useless and useful informations I gather, my financial thought process, investments, research, general knowledge, frugal consumerism ideas, Best deals - a mixture of all these are in my blog entries

Monday, January 23, 2006

New vehicle purchase - The frugal dilemma

It has been almost a 9 year itch now. I haven't had that sweet exotic smell of a new vehicle for a long time. I keep driving my 9 year old car and 10 year old van for such a long time now, I really getting that urge to buy a new vehicle. I have all the means to justify it, wanting a new and much reliable vehicle, with all those new gadgets, spacious roomy cozy looking interiors and trendy look. I have available finances, ( I have a great credit score, good income - if I want i could finance it with cash). I often rent van for long distance trips anyway. Hey after all money is for enjoying, to have a better living and happiness,,right ? One must take time to slow down a bit and smell the flowers..right ?

As I am looking into some of the practical choices, a mini van with reasonable equipment package should be around 26k to 28 k. Well you know these trendy japanese market leaders mostly has a high mark up. Hmm..now that number is not very tempting..how about a used vehicle, may about 3 years old where I could get the best value on the depreciation curve, may be a vehicle still within manufacturers warranty ?

I did some calculations...including the mathematics of all hidden charges to find out the REAL cost of owning a new vehicle in comparison with keeping my existing workhorses for another 3 years. I know, another three years is a real stretch, may be my considerations will change in the due course. The results really shocked me.

1)Cost of the Money raised for the vehicle ( either lost interest or APY on the loan), In my case I would say I am going to use cash of 27k, otherwise would have fetched me a very conservative interest rate of 5% across 3 years= 4370.00
2)Higher Insurance Cost for newer vehicle with full coverage=2700
3)Depreciation in 3 years(avg-various blue books)=9800.00
5)Higher taxes on registration etc =300.00

That is a whooping 17,170.00 for 3 years !!!

Holly Molly !! For now, I am going to just scratch that itch and drive my vehicles as long as I can. May be I will buy a used vehicle, may be I will even buy a new vehicle..but not for now. Looking at the calculations, renting a van for long trips sounds good. But I still need to stop and smell the roses on the way.....

1 Comments:

  • At 2/16/2006 5:07 PM, Blogger savvy saver said…

    Wow, $17,000 is a ton of money! I like our broken-in vehicles because we don't have to worry as much when the dog scratches up the seats or when someone dings you in a parking lot.

     

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