Sunday, December 29, 2013

Buying a second (actually third) car.

At some point over the next year we will probably need another car.  My oldest son needs daily transportation back and forth to school about 50 km away and my second son is just over a year away from getting his drivers permit.

I was toying with the idea of getting myself a new car next year but I want to move up to a compact luxury and to get one with the same options as my Optima gets a bit pricey, even for leasing as mentioned in my previous post, so I think I will put that plan on hold for maybe two or three years (subject to change as usual).

There are two basically three options to choose from:

1) Buy a used beater and hope they get some good use out of it
2) Buy a gently used decent car
3) Buy a new car

I am thinking a compact sedan would be best, the sub-compacts almost seem too small and there are a lot more compact sedans to choose from, especially used.  There is also not a big price difference between the two but you can actually fit full sized humans in the back of most compacts, not so much with the sub-compacts.

Obviously the first stop is Kijiji to see what is out there in the used car market.  There are usually about 1,000 sedan type cars for sale at any given time.  The most abundant being in order Chevy, Toyota, Hyundai, Pontiac, and Honda.  So here are a few problems with that list..... I would never buy a used Chevy for starters, you just don't hear anything good about them.  Hyundai models before the restyling in 2011 are just plain ugly, the Accent hatch is not too bad but not great either.  Pontiac.... well since they no longer exist I would stay away from them as well.  Toyota only has the Corolla, Matrix or Yaris in smaller cars.  The Corolla will last forever, but it's just soooooo boring looking.  There is no way I can have a pink or beige Corolla parked in my driveway.  Next on the list is Honda, you really can't go wrong with a Civic, the problem is that used Civics are fairly expensive.

Then you have the Kia, Mazda and Fords.  Like the previous generation Hyundai, the Kia's just look so dated, although the Rio5 does not look too bad and can be had fairly cheaply.  The Mazda 3 makes for a good used car, the only problem there being we already own one and I can't have two of the same car.  As for Ford's, I wouldn't buy a used one.

If you look at the pricing of the used 2010 Civics, they are on dealer lots from about $12,000 - $14,000 with 40,000 km and up.  A 2013 Civic LX goes for $21,000 including delivery and pdi, so for about $8,000 you get a three year newer car with full warranty, no possible problems from previous owners, all the latest car gadgets and lower interest rates.

When buying used most times the rates are similar to bank rates, around 6% over 5 years.  Most new car rates now range from 0% (like my optima) to 3%.  Right now the 5 and 7 year rates on a 2013 Civic is 1.99%. Also, if you are so inclined you can get longer term loans on a new car to bring down the monthly payment.  The longer term and lower rates help bridge the gap between new and used.

There are a lot of things to consider and while conventional wisdom is that its always better to buy used since a car loses 15% - 20% of it's value once it leaves the lot, try to buy a one day old car for 20% less than a new one........  There is a lot of upside to buying new.

To be continued..... and I'm sure I'll change my mind 100 times by the time we get something.

Friday, December 20, 2013

Luxury Car Leasing

Doing my regular car price scanning I noticed something that I hadn't seen in a while.  Leasing rates for luxury cars seem to be coming down, especially for those with new models on the horizon.  Leasing fell out of fashion for a couple of years but it seems to be making a comeback in a big way.  I have leased several cars in the past and never had any trouble, the Pilot was my only lease where I was charged lease end costs.  I had two Saturns and a Focus with no return trouble whatsoever.

BMW are currently offering 0.9% 3 and 4 year lease rates on any remaining 2013 3 Series.  Of course the residuals have gone down on these so the payment has not gone down that much overall.  Even new 3 Series rates are not bad at 3.9%.  Check out my post on leasing basics here:

Mercedes are offering 2.9% lease rates on C Series, there is a totally new C Series coming in the spring so they have to make sure they get rid of all older models before the new ones appear.  Audi are also offering 2.9% rates on A4 Komforts and 3.9% on the other A4 models.

The lower rates combined with traditionally solid residuals mean you can really save on the monthly payments compared to purchasing compact luxury sedans.  The 3 year residuals are normally in the 58% - 60% range with four year residuals around 50%.  Of course leasing is not for everyone, if you like holding on to cars for a long time it won't work but if you're like me and switch cars every three or so years it can work out well.

I'll be doing a few follow up posts to provide more detail on the deals above.

Tuesday, December 10, 2013

Mercedes CLA - Part 2

Above you see two cars, one the left a 2014 Mercedes CLA and on the right a 2014 Mercedes C Class.  You will notice how they look nothing alike, and the one on the right costs about $6,000 more than the one on the left...... hmmmm...... something does not seem right about that.

Here's the thing though, in order to keep moving the current C Class they are offering extra content and lower rates than the CLA.  Standard on the C Class now for 2014 you get (avantgarde edition they call it) heated seats, panoramic sunroof, AMG styling, sport package and suspension and a few other goodies.  The CLA offers a similar package for $2,800, reducing the price gap to about $3,000.

The other benefit the C Class currently has is the finance rate.  The 5 year rate for the CLA is currently 2.9% while the C is 0.9%, the six year rates are 3.4% and 1.4% respectively.  This amounts to about $40 a month or $2,500 to $3,000 over the life of the vehicle.  That basically takes care of the initial apparent price gap.

So if these cars cost about the same for similar content which one is the better buy?  I have looked at as many online reviews as I can find and here is what I can see as the main benefits to going with the CLA:

Fuel economy - 6.6 l/100 km to 8.1 l/100km
Horsepower - 208 to 201
Torque - 258 to 229
0-100 time - 6.7 secs to 7.2 secs
Styling - Just look at the pictures, if you are over 50 you may like the on the right more, but Mercedes is not looking for you to buy a CLA.
Price - If you buy a base model it is less expensive but really all things considered it is about the same as a similarly equipped C-250.

Now from what I have gathered here is why you would prefer the C-250:

Leg room - rear seat leg room is tight on the CLA, if you care about that... and that's it.

If you bump up to a C-300 the performance numbers are comparable to the CLA but that will be an extra $2,500, although you get AWD, which if added to the CLA as an option brings you very close to the monthly payment of a C-300.  The C-300 offers 248 HP and 251 lb/ft torque but cuts into fuel economy with 9.1 l/100km due mainly to added weight and more thirsty engine.  There is no way I would go for the C-250, the C-300 would be the way to go for an extra $2,500 for more power and AWD.  But still I think the CLA would be the car of choice for me.

The thing to keep in mind here though is that the C-Series will be getting a complete overhaul next year.  It will be bigger, faster, and better equipped to be sure.  The CLA is the darling now but who knows what next year will bring......

Sunday, December 8, 2013

Mercedes CLA - Part 1

Mercedes has a new vehicle in their line-up, the CLA.  This is Mercedes' attempt to draw in buyers like me and you..... starting at 33,900 it seems like luxury car-dom is within our grasp.  This car is only about $6,000 more than my Optima before delivery and tax.  So I mean who wouldn't pay $6,000 more to get a Mercedes over and Optima???

Well.... here's what you don't get on the base CLA, heated front seats, heated rear seats, cooled seats, automatic climate control, panoramic sunroof, or back up camera.  That will be an extra $2,800 + tax or about $3,200 in total.  So now we are at about $9,000 more than my Optima.  But at least you get a rear wheel drive set up right, no not right, the new CLA is front wheel drive.  It does out hp the Optima 208 to 200 and really out  classes the Optima with 258 lb/ft compared to about 186.  The CLA also gets super gas mileage, with a stated average 6.6 L/100km.  

There are several good sites out there with good reviews on the new CLA however, the more you look into it I think the biggest competition comes from within.... To be continued.