Monday, February 07, 2005

car payments

Ok so I have a 95 integra that has some extra loving added into it. It is 10 years young. I say that because to look at the car you probably wouldn't guess that it is 10 years old. We have put some extra time into this car and put a better engine in it and changed the colour from black to pearl white. Overall it is a great car, as matter of fact I can't think of any car that can match it as far as price, performace and reliability go, with a whole bunch of practicality thrown in. There may be cars you might like better, or may look better but I assure you there isn't a better all round package then it. Ok that said, I think it is time to replace this car, the interior of the car is terrible and needs some work. The car has 250,000 kms on it, and is going to get to a point where several things are going to need replacement. Things that normally need to be replaced but because of its age there will be many at once. For example, tires, shocks/struts, brakes, altenator. It is structurally sound and can be driven very reliably at red line ( i know I drive it that way every day :)) But the thought of replacing everything and then still having a 10 year old car just doesn't appeal to me.

I talked before in other posts about buying a new car. Aside from the RSX-S there isn't a car on the market that is even in the same category as the Integra (teg). The RSX-S can match the performance and reliability of the teg however it fails in two areas, mainly the price and secondly the interior. The price at about $35,000 is just too much for this car, realistically it should be around the $27000 to $28000 range. However Honda wants to make the acura line its upscale brand, so it has to charge according. The interior, mainly the dash is terrible, whatever happened to wrap around interiors? And an arm rest should be standard. Although no other manufacturer can match honda's build quality, and I would miss feeling that quality whenever I drove a car.

So needless to say I'm not sure what car I want to drive but I did do some shopping and found some interesting things.

First the price you pay isn't always the price you pay. Second the lower monthly payment is not always the best deal. Third, its all about the product and has nothing to do with price. (if you buy a price you get a price)

Here are some details for this example I'll use a Mazda 3 for comparisons.

Option 1 2004 Mazda 3 sport, fully loaded, used, theft recovery, 39000 kms
Option 2 2004 Mazda 3 spott, fully loaded, brand new no KMS, full warranty + leather

Finance Option 1 - Finance $18,000 60 months
Finance Option 2 - Finance $18,000 60 months with buy back option
Finance Option 3 - Finance $25,000 60 months, special dealer 2.9% finance rate
Finance Option 4 - Finance $25,000 60 months with buy back option

so here are the numbers for these scenarios
Car Option1: Finance Option 1
Monthly: $360 Interest Paid:$3564.09 Buy Back: $0
Car Option1: Finance Option 2
Monthly: $288 Interest Paid:$4449.70 Buy Back: $5225

Car Option2: Finance Option 3
Monthly: $457 Interest Paid:$3625 Buy Back: $0
Car Option2: Finance Option 4
Monthly: $422 Interest Paid:$5506 Buy Back: $5225

So car option 2 Finance Option 3 although costs more pre month is the better deal, the dealer said they would also knock another $1000 off if I took it this week. However it does cost more out of pocket every month. In both cases doing a buy back option, although looks very tempting because the monthly payments are lower per month actually end up costing you more money in the end, and in some cases significantly more money. I guess the bottom line is look at all the numbers before deciding to buy the car, you may save in one area to pay too much in another area.

Don't forget if you run a small business you can deduct not only a portion of the payment but also a portion of the depreciation and gas.

That certainlys helps the bottom line if you have that option available to you.
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