Too Good To Pass Up?

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DividendGuy
Posts: 441
Joined: Sun Dec 05, 2010 9:58 pm

Too Good To Pass Up?

Post by DividendGuy »

Hey everyone!

I recently came upon the opportunity to potentially purchase a 2006 Toyota Corolla with 20,000 miles for $5,400. My girlfriend still keeps in touch with a former co-worker. This co-worker lives next to a woman who is a caretaker for an elderly woman who is 87 and has cancer. Her driver's license has been revoked and she no longer drives. So she's getting rid of her Corolla for what appears to be a steal. So my girlfriend's friend contacted us to see if we might be interested, knowing we have one old car between us.

The problem I have is that I recently begrudgingly purchased a 1997 Ford Escort with 90k for $1,800. I don't want a car, but my employer is moving to a section of town to where public transportation isn't possible. So I sold my scooter and have resigned to driving a clown car. It is what it is.

The question I have is whether this car is too good to pass up?

The value investor in me is chomping at the bit to buy a car this far below blue book value. It's a car that will probably last 10 years with proper care. The frugalist in me, however, tells me to save the money and keep the Escort. It's cheap and gets me from point A to point B, although probably will not last as long. It does have a check engine light on, a high idle and shifts hard from 2-1, so there's that to think about as well.

What's the ERE consensus? Buy a super reliable car for a cheap price, or keep the really cheap beater? I'm leaning towards buying the Toyota, but I'd hate to spend cash I could otherwise invest.

Thanks in advance, everyone!

theanimal
Posts: 2628
Joined: Fri Jan 25, 2013 10:05 pm
Location: AK
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Re: Too Good To Pass Up?

Post by theanimal »

How would you feel about buying it then selling for a higher price and keeping the escort? I'm not sure if you'd be comfortable doing that but it is another option.

George the original one
Posts: 5404
Joined: Wed Jul 28, 2010 3:28 am
Location: Wettest corner of Orygun

Re: Too Good To Pass Up?

Post by George the original one »

Running costs and resale/flip value and how much hassle the whole enterprise will be. Like theanimal, I can see flipping the Corolla and investing the proceeds in a replacement for the Escort.

Chad
Posts: 3844
Joined: Fri Jul 23, 2010 3:10 pm

Re: Too Good To Pass Up?

Post by Chad »

I don't think you can pass it up. Either flipping it or keeping it and selling the Escort are both good ideas.

Riggerjack
Posts: 3186
Joined: Thu Jul 14, 2011 3:09 am

Re: Too Good To Pass Up?

Post by Riggerjack »

it seems to me to come down to your willingness to work on cars. if you want to repair the ford with time+cash, or just cash, you can nurse it along for years.

if not, buy the toyota.

from edmunds.com:

Trade-In Private Party Dealer Retail
National Base Price $4,301 $5,241 $6,301
Optional Equipment $0 $0 $0
Color Adjustment - Gray $11 $14 $16
Regional Adjustment - for Zip Code 98225 $3 $4 $5
Mileage Adjustment - 20,000 miles $890 $890 $890
Condition Adjustment - Clean $0 $0 $0
Total $5,205 $6,149 $7,212

i didn't add any options, and used a base model, to keep the estimate minimal.

kelly blue book bases their numbers on average asking price. edmunds bases their numbers on reported selling price. reality is somewhere in between. asking prices get negotiated down, reported prices are sometimes under reported for tax avoidance.

either way, good luck.

Dragline
Posts: 4436
Joined: Wed Aug 24, 2011 1:50 am

Re: Too Good To Pass Up?

Post by Dragline »

No material good is "too good to pass up" if you already have a functioning alternative. But if you can sell the Escort and are committed to keeping the Toyota for a good long time, you might end up ahead on the deal. (Or sell the Toyota as theanimal suggests.)

You don't want to get stuck with two cars, though.

SimpleLife
Posts: 771
Joined: Wed Aug 21, 2013 8:23 pm

Re: Too Good To Pass Up?

Post by SimpleLife »

What toska said...

riparian
Posts: 650
Joined: Tue Oct 25, 2011 4:00 am

Re: Too Good To Pass Up?

Post by riparian »

Yeah. If you have to replace the transmission on the ford or buy a new car you'll be in $4k at least.

JohnnyH
Posts: 2005
Joined: Thu Jul 22, 2010 6:00 pm
Location: Rockies

Re: Too Good To Pass Up?

Post by JohnnyH »

Definitely buy Toyota, 20k of adult usage is essentially a new car... Finding a used car with 20k miles is very hard and the prices are usually ridiculous.

KevinW
Posts: 959
Joined: Mon Aug 02, 2010 4:45 am

Re: Too Good To Pass Up?

Post by KevinW »

How far out is your FI horizon?

If Toska is right about 5+ years, I agree with buying the Toyota.

DividendGuy
Posts: 441
Joined: Sun Dec 05, 2010 9:58 pm

Re: Too Good To Pass Up?

Post by DividendGuy »

Thanks everyone for the suggestions!

I decided to buy the car. It was a steal. The elderly woman I purchased it from was the original owner, and I verified that at the local Toyota dealership (where she's serviced it since new).

I thought about flipping it, but decided to sell the Escort and drive the Corolla. I don't think I'll lose much money via depreciation on this one. And if I reach FI sooner than I anticipate I can always sell it later for more than I paid. It'll be essentially a free car for the next couple of years.

I posted a pic of the car and the odometer on my blog if anyone is interested:

http://www.dividendmantra.com/2013/09/t ... o-end.html

Thanks again guys. Always appreciate all of your opinions!

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