Personal Finance

Buy new or used car (Debts and Insurances Money)

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Jul 30, 2013
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Buy new or used car (Debts and Insurances Money)

Hi there, need some personnal finance advice.. (Sorry in advance english is my second language)

Totaled my card the other day and I'm gonna receive 20 700$ from the insurances company. I had a 2010 Subaru Impreza with 120 000km on it. (Had some options on my insurances : value paid + 5% / per year)

Anyhow, I don't know what I should do.. I have 17 000$ left on a line of credit at 3.67% so I could use the insurances money and completly pay it off.

I could buy a new car where my Dad's work and get a 2017 Cx-5 GS AWD at cost. I still don't know how much It would be since my dad is still in vacation (Around 450$/month for 84 months at 1.9% or 500$/month for 72 months at 0.9%)

Or I buy a used car with the 20 700$ and still have 17k left on my line of credit..
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Netixx wrote: Hi there, need some personnal finance advice.. (Sorry in advance english is my second language)

Totaled my card the other day and I'm gonna receive 20 700$ from the insurances company. I had a 2010 Subaru Impreza with 120 000km on it. (Had some options on my insurances : value paid + 5% / per year)

Anyhow, I don't know what I should do.. I have 17 000$ left on a line of credit at 3.67% so I could use the insurances money and completly pay it off.

I could buy a new car where my Dad's work and get a 2017 Cx-5 GS AWD at cost. I still don't know how much It would be since my dad is still in vacation (Around 450$/month for 84 months at 1.9% or 500$/month for 72 months at 0.9%)

Or I buy a used car with the 20 700$ and still have 17k left on my line of credit..
Your LOC interest is probably higher then the 1.9% loan.
Since you got a hookup to buy it at cost (assuming they are telling the truth and its not just a sales tactic)... I would actually just use the insurance money to pay off the LOC. That will leave you with a few G's left over. Then just finance the newer car @ 1.9%
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UrbanPoet wrote: Your LOC interest is probably higher then the 1.9% loan.
Since you got a hookup to buy it at cost (assuming they are telling the truth and its not just a sales tactic)... I would actually just use the insurance money to pay off the LOC. That will leave you with a few G's left over. Then just finance the newer car @ 1.9%
Thanks for the advice. My hookup is my Dad (the director of sales) so I hope he doesn't screw me over haha
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Netixx wrote: Thanks for the advice. My hookup is my Dad (the director of sales) so I hope he doesn't screw me over haha
If thats the case... Then great. If you're in the market for a new car, go for the mazda @ 1.9% since its a good deal and low interest rate.
This will leave you with a few G's you can put into your TFSA. Or new custom rims for your mazda. Just kidding, do the responsible thing & put it in your TFSA.... or should you? O_o
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UrbanPoet wrote: If thats the case... Then great. If you're in the market for a new car, go for the mazda @ 1.9% since its a good deal and low interest rate.
This will leave you with a few G's you can put into your TFSA. Or new custom rims for your mazda. Just kidding, do the responsible thing & put it in your TFSA.... or should you? O_o
+1

Although the interest rate on that LOC is relatively low, still better to pay it off. Car loan interest rate at 1.9% is lower.

Btw, when you're ready to pay the remaining car loan balance within a year, make sure you grab an MBNA PP with the 1% upfront, 0% for 12 months to save on a payment.
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We are rfd so I'm gonna suggest what I think most of us here would...why not get a used car? In the long run you're saving much more money.
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Epiclemon wrote: We are rfd so I'm gonna suggest what I think most of us here would...why not get a used car? In the long run you're saving much more money.
More variables come into play... mileage and condition vs. price. Generally speaking, a used car sold by a mechanic or if it was a lease from dealer tend to be good value. If the used car will cost more in maintenance, then not worth it.
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Epiclemon wrote: We are rfd so I'm gonna suggest what I think most of us here would...why not get a used car? In the long run you're saving much more money.
That's why I'm debating between the two.. On one end, It's probably my last chance to get a really good price on a new car since my dad is gonna retire in a couple of years.. And I also put 5k (repair/maintenance) in my Impreza over the last 4year so I'm hesitant to get a used car..

On the other end, there's the lost value of a new car.. :/
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titaniumtux wrote: Although the interest rate on that LOC is relatively low, still better to pay it off. Car loan interest rate at 1.9% is lower.
Careful with this assertion. Often the car will cost less if you pay with cash. After accounting for this, borrowing at 1.9% can feel more like 4 or 5% since you're paying that 1.9% on a higher base car price.
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bewiseman wrote: Careful with this assertion. Often the car will cost less if you pay with cash. After accounting for this, borrowing at 1.9% can feel more like 4 or 5% since you're paying that 1.9% on a higher base car price.
I could probably qualify for the -1% interest promotion by Mazda but I'm not sure yet. So that could put that 84 months at 0.9% instead of 1.9% and the 72 months at 0%
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Netixx wrote: I could probably qualify for the -1% interest promotion by Mazda but I'm not sure yet. So that could put that 84 months at 0.9% instead of 1.9% and the 72 months at 0%
0% for 72 months would be awesome. Kind of a no-brainer if it's the vehicle you want.
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titaniumtux wrote: 0% for 72 months would be awesome. Kind of a no-brainer if it's the vehicle you want.
It does fit all my criteria (AWD, Cargo Space) and I really like the redesign Mazda did with their vehicles in the past years!

I loved my Impreza but the sedan trunk was giving me headache for the camping trips.. Was like playing tetris :/
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I personally buy used cars (3-4 years old). Cars depreciate the most in the first 3-4 years. Why put money in a depreciating asset? My family drive is a 2014 Chrysler town and Country I got last year. Under $17k, buying the same car 2017 model would have been $32k.

I would pay off the LoC and put the remaining towards a used car. See if you can add some money on top and purchase a good used car with cash. Be debt free!

In my opinion you should only borrow money for things that will provide a ROI. Education, housing, investing.
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abc123yyz wrote: I personally buy used cars (3-4 years old). Cars depreciate the most in the first 3-4 years. Why put money in a depreciating asset? My family drive is a 2014 Chrysler town and Country I got last year. Under $17k, buying the same car 2017 model would have been $32k.

I would pay off the LoC and put the remaining towards a used car. See if you can add some money on top and purchase a good used car with cash. Be debt free!

In my opinion you should only borrow money for things that will provide a ROI. Education, housing, investing.
The thing is the used car I'm looking at are all at around 18k - 18.5k + taxes.. that takes all my insurances money. (Subaru 2015-16 / RVR 2015-16) I need AWD with max 50-60k mileage.

In 2014, I bought a 2010 Impreza with 51 000 km for 15k and it was really clean, nothing needed to be repaired, the brakes were new... 4 years later I've put 5k in repair and maintenance and I was at around 118 000km before I got it totaled and the timing belt needed to be done soon.

So that's why I'm debating getting a new car for the 0% financing..
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Netixx wrote: Hi there, need some personnal finance advice.. (Sorry in advance english is my second language)

Totaled my card the other day and I'm gonna receive 20 700$ from the insurances company. I had a 2010 Subaru Impreza with 120 000km on it. (Had some options on my insurances : value paid + 5% / per year)
How sure are you on that number? A car insurance payout should not be INCREASING the longer you own a car, unless we're talking about cars that appreciate in value (eg collectible luxury cars). Normally replacement value is either determined by current market price of a similar car or some fixed formula, for example value paid - (MINUS) 5% a year.

Unless it's an STI, I don't see a 2010 Impreza with 120k selling for 20k, and if it is an STI I have no idea how you got it for just 15k in 2014.
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danishh wrote: How sure are you on that number? A car insurance payout should not be INCREASING the longer you own a car, unless we're talking about cars that appreciate in value (eg collectible luxury cars). Normally replacement value is either determined by current market price of a similar car or some fixed formula, for example value paid - (MINUS) 5% a year.

Unless it's an STI, I don't see a 2010 Impreza with 120k selling for 20k, and if it is an STI I have no idea how you got it for just 15k in 2014.
I had that option from my insurance :

Protect it against depreciation for up to 5 years.

In the event of a total loss, based on the option you choose, you’ll receive the equivalent of:

- The price you paid for your vehicle, increased by an annual percentage (For me it was 5%/year for 5 year)
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Netixx wrote: That's why I'm debating between the two.. On one end, It's probably my last chance to get a really good price on a new car since my dad is gonna retire in a couple of years.. And I also put 5k (repair/maintenance) in my Impreza over the last 4year so I'm hesitant to get a used car..

On the other end, there's the lost value of a new car.. :/
Buy a car that is a few years old. Have it inspected by a mechanic before buying (I used Car Inspected in Montreal area). You will pay so much more for a new vehicle and the depreciation is expensive. The odds of needing anywhere NEAR the repairs on a good quality used vehicle that you will pay in cost differential to get a new car are astronomical. I bought a used 2013 Subaru Crosstrek in fall of 2016 with only 43,000km on it. It is the Limited edition (fully loaded top of the line model). I paid only $18K for it used. It has had zero repair issues whatsoever. None. Buying this car loaded like that brand new would have easily cost me an extra $20K more than I spent. How likely do you think it is to need $20K in repairs?
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Chickinvic wrote: Buy a car that is a few years old. Have it inspected by a mechanic before buying (I used Car Inspected in Montreal area). You will pay so much more for a new vehicle and the depreciation is expensive. The odds of needing anywhere NEAR the repairs on a good quality used vehicle that you will pay in cost differential to get a new car are astronomical. I bought a used 2013 Subaru Crosstrek in fall of 2016 with only 43,000km on it. It is the Limited edition (fully loaded top of the line model). I paid only $18K for it used. It has had zero repair issues whatsoever. None. Buying this car loaded like that brand new would have easily cost me an extra $20K more than I spent. How likely do you think it is to need $20K in repairs?
I thought my idea was made.... :( It's the possibility for me to clear my LOC that is appealing.. I guess it depend at how much I could get the new car no ? If I can pull off a 2017 CX-5 GT AWD for less then 30k (tx in) wouldn't be a good choice ?
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Netixx wrote: I had that option from my insurance :

Protect it against depreciation for up to 5 years.

In the event of a total loss, based on the option you choose, you’ll receive the equivalent of:

- The price you paid for your vehicle, increased by an annual percentage (For me it was 5%/year for 5 year)
seems odd to me but a quick google search says Desjardins does it.
I'm curious to hear what the premium was on your insurance for this. Obviously, because you totaled your car, it paid off for you, but I'd imagine for most people it could be quite expensive.
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danishh wrote: seems odd to me but a quick google search says Desjardins does it.
I'm curious to hear what the premium was on your insurance for this. Obviously, because you totaled your car, it paid off for you, but I'd imagine for most people it could be quite expensive.
You're correct. It was Desjardins. I was paying 60$ /month all included.

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