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Originally Posted by Snowdog
Thats the thing; the first step I took when I decided it was time for a new(er) car was I talked to my guy at the bank. We talked about borrowing against the mortgage, but they don't like to do that for a depreciating asset.
From the bank I can get a prime+1.5% financing for a new car or prime+2.5% for a used car (as of right now, prime is 5.250%), on 60 month terms.
The only dealer I've talked to about used car financing said they start at 5.8 for 36 month and go to 7.5+ for 60 month or longer terms.
Right now, dodge, ford, nissan, and mazda all have 0% financing on new cars I would happily drive.
As far as I can tell, a three year old car isn't half the price of a new car, its about 75% and the warranty is mostly expired. Insurance rates don't seem to drop off much until that car is at least 5 years old (using a website to compare a 2009-08-07-06-05 honda civic).
My frame of mind right now, as well, is that I'm looking at more in repairs for my current car than it is worth. I've done all the regular maintence when it should have been done. I know when the new car is 10 years old it won't be on warrantee either, but I'm scared to buy a used car and have an surprise major repair come up in two years.
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Civics aren't as greatly affected by depreciation as other models. I don't know why that is.
A brand new Hyundai Tiburon GT has an MSRP of $25 595, according to car guide. A 2004 with ~30 000 miles seems to go for about $15 000, although that varies a little bit obviously. The best warranty I was able to find offered 7 years or 120 000, which is quite competitive with any warranty offered on a new vehicle. Assume simple interest for sake of simplicity and we end up with a ballpark of ($15 000 + (7.5% *5)) or $20 625, which is nearly $5000 cheaper long-term. A 2006 GS appears to go for about $16 000 vs $19 000 on a brand new one. If financed at 7.5% the 2006 will cost more. I was unable to find any 2005's in my market during preliminary searches. The calculations look broadly similar across other makes and models. In one particularly dramatic example, I was able to find a 2006 Malibu that was $15 000 with 27 000 miles, which is less than half the $33 500 MSRP of a new model in the same trim level.
Keep in mind that I'm assuming a $25 000-$30 000 price range, and that the difference is more dramatic as you go up the price scale. A brand new Kia that costs $15 000 probably isn't going to depreciate as much, since it doesn't have very far to go to begin with.
Also keep in mind that I tend to approach vehicle purchases without financing in mind. I am not particularly wealthy, but I've found that I have been able to keep a sufficient amount of money set aside so that when I needed a new car I could purchase it outright. This is most likely because I don't have to make any payments towards financing and therefore get to keep more of my money. This is apparently not your situation, however you might consider keeping the Sunfire on the road as long as possible and putting the money that would otherwise go towards car payments into a savings account, which will allow you to make a larger down payment when you do finally purchase your car and thus pay less interest. Set a specific date for yourself; next September if you can manage it, or maybe immediately before renewing your registration. However, be prepared to abandon that date if the Sunfire gives up the ghost prematurely. In other words, drive it 'till it dies, then use whatever you've managed to save up in the interim as leverage to get yourself the best deal possible.