cars Archives — Beating Broke

Why Buying a Toyota Sienna Was One of Our Best Decisions

August 24, 2020 By MelissaB 1 Comment

Almost 16 years ago, my husband and I had one child—a four-month old—and we decided our Toyota Echo was too small for our growing family. We found a Toyota Sienna and made the leap. That car was by far our greatest financial commitment at the time as it cost $25K. (We didn’t own a home then.) While paying so much back then made us nervous, there are several reasons why buying a Toyota Sienna was one of our best decisions.

The Benefits of a Toyota Sienna

There are so many benefits to this vehicle for our family!

Reliability

When I was young, I owned a Ford Escort. I only owned it for two years, yet it left me stranded three times because it randomly broke down. One time it broke down after a high school dance. I was stranded at midnight when I was just 16!

In all the years we’ve had the Sienna, it has not broken down once. I’ve never been stranded. Considering I often drive alone with young children, this is a definite plus!

Sure, it’s needed regular maintenance and repairs, but that is to be expected. Its reliability can’t be beat, especially when we’re on long family trips like from Chicago to Boston or Chicago to Tucson.

Durability

Why Buying a Toyota Sienna Was One of Our Best Decisions — Photo by Jessica Furtney on Unsplash

Honestly, when we bought our Sienna when our child was four months old, I never, ever thought I would still own that vehicle when the baby we had then was old enough to drive.

However, this vehicle has been so durable! It’s still going strong even though it has 225,000 miles on it. Our mechanic says he’s seen some Toyota Siennas that are well maintained last until 300,000 miles.

I have no plans to get rid of this minivan until it costs too much to repair or it dies. This is much to my children’s chagrin because they find the vehicle embarrassing now. But my wallet loves it!

Versatility

The Sienna is so versatile. It’s a comfortable vehicle for our family of five. However, it can also take the place of a truck or a full-size van when it comes to hauling things. We’ve been able to buy large pieces of furniture and fit them in this vehicle. It’s also great when we buy a month’s worth of groceries.

When we used to travel 2,000 miles to visit family, we could easily pack all of our suitcases, two coolers worth of food, and our pets comfortably in the vehicle with us.

Final Thoughts

Sure, our vehicle is old and is starting to wear out. For instance, our car came with one manual sliding side door and one electronic sliding side door. The electronic door wore out more than five years ago, and we never fixed it because it would cost too much money. Thankfully, we still had the manual side door.

Also, the engine isn’t quite as powerful as it used to be.

Despite these minor issues, there are many reasons why buying a Toyota Sienna was one of our best decisions, especially because many vehicles with 225,000 miles aren’t even on the road anymore!

Is a Car an Asset or a Liability?

Haggling or No Haggling When Buying a Car?

How Much Car Insurance Coverage Do You Need?

Is a Car an Asset or a Liability?

January 9, 2020 By Susan Paige Leave a Comment

When it comes to determining assets and liabilities, there are only a few items that can divide the opinion of people like a car. While some people believe that a vehicle is a liability, others feel it is an asset. The split ideas occur because the maintenance of a car requires money from time to time. At the same time, it is still possible to sell a vehicle for a profit.

So, is a car a liability or an asset? Relax and read this article to understand everything about this subject.

First, let’s take some moments to understand the difference between an asset and a liability. This understanding will help us conclude whether a car is a liability or an asset.

What Is an Asset?

An asset refers to any item that a person owns and can get some value from it. Generally, your net worth increases based on the assets that you have. Retirement funds, cash, investments like bonds and stocks, and personal valuables such as collectibles and jewelry are all excellent examples of what an asset is.

What Is a Liability?

A liability, on the other hand, is an item, debt, or obligation owed to another person. Unlike the assets, your net worth will reduce when you have liabilities. Car loans, credit card debt, personal loans, mortgage, and students are examples of responsibilities.

The difference between these two terms is: anything you own outright can be regarded as your asset, whereas any item you need to pay a debt on is your liability. Your liability harms your net worth, while your asset has a positive effect on it.

Is a Car a Liability?

The answer to this question can be a little tricky because you can own your car but still need to pay money for its maintenance, fueling, and other things. The correct answer to this question is that your vehicle is an asset. However, it is a depreciating asset.

What Is a Depreciating Asset?

After answering the question “is a car a liability?”, we should shed more light on what a depreciating asset is. A depreciating asset is a form of asset that has the potential to lose value as time goes on. Unless you are using your vehicle for some types of business, it is most likely a depreciating asset.

If you purchased a car at a particular amount last year, that car’s equity would have reduced significantly today. However, it is still an asset as you can sell it to make some amount, albeit lower than its original value.

Is Your Car an Asset If There Is a Car Loan on It?

This is another point where it gets even more confusing. But the answer is still the same. Regardless of the car loan, your car remains a depreciating asset. When you sell the vehicle, you can even get value from it. Nevertheless, when you have a car loan, the ownership of a car will hurt your net worth. Therefore, the car loan itself is a liability, whereas the car is an asset. In simple terms, the burden is not about the car itself but rather depends on the car loan.

One dicey situation is that if you sell the car and its value is lower than the car loan, is a car a liability in this case? In a real sense, it is still an asset that does not have a lot of value that can cover your debt. The car you sold has not reduced your net worth; it is the loan that could cut it. Of course, in some cases, you may sell the car and still have some money left. So, this makes it clear that the vehicle itself is not the liability.

How Can I Determine the Value of My Car?

Since your car affects your net worth, you will do yourself a lot of good by determining the worth of your car. Here’s what to do:

Determine the value

A brand new vehicle loses over 20% of its initial value by the end of the first year of its purchase. It will continue to lose its worth by 10% yearly in the second, third, fourth, and fifth year of its purchase. By using this knowledge, you can calculate how much your car is worth on your own.

Go to Kelly Blue Book and other similar websites

Blue Book is a site designed to help people determine the current value of their car. If you have all the information about your car, this site will calculate the worth of your vehicle easily and quickly.

Here’s what you need to provide on Kelly Blue Book to know the value of your car:

Your car’s make and model
Year of its production
Its mileage
Its color
Its current condition

The site will offer you different value options based on the method you want to use to sell your car.

In most cases, the lowest value for your car will come in a trade-in. However, you can easily find a dealership that will allow you to add money to your vehicle to get a new car. If you are looking for the most significant value for your car, you will need to sell to a private party buyer. Nevertheless, it may be not very easy to find someone who has an interest in buying your car.

Are There Any Options to Kelly Blue Book?

Besides Kelly Blue Book, other websites that offer similar services include Edmonds and NADA. These websites also have an excellent database and system that can help you know how much your vehicle is worth instantly and seamlessly. Although the values from these websites will not be the same, you can use those estimates to calculate the average cost of your car.

Check out the values of cars that are similar to yours

Some people are using the same car model that you are using. So, you may be able to find others who have already determined the value of their cars. Take the time to visit Craigslist, CarGurus, AutoTrader, eBay Motors, and other similar websites to check the worth of your vehicle. When searching for the worth of your car on these websites, pay attention to the local listings as the values of vehicles can differ based on the location.

How Can I Calculate My Net Worth?

The calculation of your net worth is simple and straightforward. First, you should make a list of your assets as well as your liabilities. Remember that if you bought your car outright, you would add its value directly to the list of your assets. Afterward, it would help if you calculated your net worth by subtracting your total liabilities from your total assets.

It is worthwhile to note that your net worth can be positive or negative. It will be favorable if your total assets are more valuable than your total liabilities. Otherwise, it will be harmful if the total liabilities are worth more than the assets.

How Do I Calculate My Net Worth If I Have a Car Loan?

If you have a loan on your car, you need to remove the amount owed from the value of the vehicle. Let’s assume that the current worth of your car is $20,000 and your car loan is $14,000. Subtract the car loan from the current value of your car, and the remaining amount will be $6,000. You should add the remaining amount to your net worth.

What Is the Importance of Knowing Your Net Worth?

Your net worth refers to the strength of your finances. It is an all-important number that shows the difference between your current assets and liabilities. Positive net worth means that your financial health is great. In contrast, negative net worth may indicate that you are not doing okay financially.

However, you should note there are instances where a negative net worth does not necessarily mean that your finances are bad. For example, if you are using lots of your income to settle a student loan, your net worth may be detrimental for the meantime. Nevertheless, such an action will help you gain financial freedom in the future after you have settled the student loan.

Conclusion

Finally, is your car a liability or an asset? Yes, your vehicle is an asset, albeit a special one that depreciates. You should bear it in mind that it will reduce in value as time goes on, but it will still retain some benefits as long as you own it. Nonetheless, this does not change the fact that it is still an asset. So when you are calculating your asset, you should add your car to your asset while you add any available car loan to your liabilities.

Image Source: Carolinqua.

Keep Your Old Car Or Buy A New One?

October 9, 2018 By Thomas Bawdy 1 Comment

If you have owned a car for a while, you may be visiting your mechanic for the fifth time this year and asking if it’s time to buy a new vehicle. In many cases, keeping an old car is more cost-effective than purchasing a new one. However, buying a new car can offer several advantages, including advanced safety features and broader employment opportunities. There’s no clear-cut answer to this question, as most factors that could influence this decision are unique to each vehicle owner. As you evaluate your options, make sure to compare the financial benefits against intangible factors that are important to you.

Reasons to Keep Your Old Car

There are a few financial upsides to keeping your car. With an older vehicle, the costs are generally limited to insurance and maintenance. However, with a newer vehicle, you generally have to pay a down payment, registration and titling fees and monthly payments if you choose to finance the vehicle. You may also end up paying more for insurance with a new car, losing the rates you had with the older vehicle. With this in mind, it may not be financially wise to purchase a new vehicle if you are on a tight budget, it. Furthermore, cars depreciate in value very quickly. This means that within the first year of purchasing a new vehicle, it will have already lost up to a quarter of its value. In this case, it might be better to keep your older vehicle.

One of the most common reasons people want to get rid of their car is the cost of repairs. You might find yourself regularly visiting the mechanic to figure out why your car isn’t running properly. If that’s the case, it’s important to compare the cost of repairs against the car’s cash value. A good rule of thumb when assessing this is using the following strategy: If the cost of repairs exceeds at least half of the vehicle’s market cash value, then it’s not worth repairing.

Keep in mind that as a vehicle’s mileage increases, so does the amount of repairs. For example, many vehicle owners must replace the engine’s timing belt around the vehicle’s 100,000 miles mark. Other repairs and replacement, such as the water pump are common once the vehicle reaches this mark. These are common maintenance repairs as mileage increases the vehicle’s wear and tear. However, if the vehicle is in otherwise good condition, a replacement might be the most cost-effective solution.

Reasons to Purchase a New Car

There are many reasons to buy a new car. The first and perhaps most attractive reason is the modern safety and technology features. The newer the vehicle, the more safety features it will generally include. Not only can these new features keep you and your passengers safer, but they can also affect your insurance. Some car insurance providers offer discounts to motorists with vehicles that have certain safety features. These features signal to the insurance companies that the vehicles are less likely to get severely damaged in an accident, and passengers are less likely to sustain major injuries.

Do you want the option of making phone calls in your car? Perhaps you want to listen to your curated playlist. Newer vehicle models are equipped with various technological features that older vehicles may lack. These include Bluetooth connection, access to premium radio services, garage door transmitters and more. For many drivers, these features make for a more enjoyable driving experience.

Moreover, consider your lifestyle. What does your commute look like? Long drives may not be ideal with older vehicles as they have already experienced wear and tear and are more likely to break down on the road. A new vehicle will provide a sense of security to the owner and make long commutes more secure.

Ride-hailing and food delivery services have grown in popularity as easy ways to make money. Many companies have strict eligibility requirements for drivers and the vehicle. Common qualifications for vehicles include a model year 10 years old or younger and mileage that does not go beyond 100,000. While it might vary slightly depending by state and organization, these are standard practices across most companies. If you are interested in engaging in this type of employment, consider purchasing a new car.

Additionally, getting a new car can give you a boost of confidence, especially if your job requires driving clients around. While this isn’t a quantifiable reason, how you feel while driving should play a role in your decision.

Third Option

There is also a third option that combines the benefits from both scenarios: purchasing a used vehicle. While many used vehicles may come with their own set of problems, you can find a good deal on a great car if you do a bit of research. This can be accomplished through a title check, requesting a Car Fax report or having a trusted mechanic perform a vehicle inspection. Through this, you can get a newer vehicle that fits within your budget, has newer features and is free of major issues without having to pay the high dollar amount for a brand new car.