Should We Buy a New Saturn?

Unless you are into collector cars, you will always lose money on an automobile. You need to ask yourself which is more important to you - minimizing cost of ownership or minimizing the the risk of breakdowns or just driving a newer car. Once you decide which of these philosophies you have, the answer to your question should become obvious. It is almost a certainty that you will save the most money by running your current car into the ground. If you bite on the new car, within a couple years it will only be worth what yours is now and you will likely be out almost twice as much money, but you will be protected by a warranty.

Dana

SNIP

We're concerned that if we keep the current

Well - you are a little upside-down on the current car - I bet you won't get much more than 7000 for trade-in, so the new car is going to include an extra $3k in the loan. I think the main differences between the 2000 and the 2004 (aside from the cosmetic) are the standard hear curtain airbags and the bigger gas tank (the 2001+ models have a 15.7gal tank rather than the

13.2 gal in the 2000's). Other than that, the engine is exactly the same (same power rating and everything), cosmetically there have been a number of changes (projector headlights (nice), updated interior (yuck), different standard options, etc.

I haven't driven the new one, just our '01 L300, so I can't compare the two - so I guess the question for you is whether the new car (+ warranty) is worth the $3k penalty (or whatever the difference between what you owe and the trade is) you will pay to get it. I would drive the new car and see what you think!

You almost certainly have negative equity with a $10K loan, and it likely exceeds the 110% limitation. It's too late now, but what possessed you to buy it for so much money after the lease was over? Saturns are great cars to lease because the resale value is so poor, but bad cars to buy, for the same reason.

Also, what is the price of the 2004 based on? Are they charging MSRP, or is it a discounted price. Saturn has had endless big incentives on the L series in the past, and this is likely to continue.

You'll be in the same position with the 2004 before you know it--negative equity. It's a problem with cars that have high sale prices and low resale value. If you were buying the L series new then you'd get big discounts off MSRP, but I suspect that this deal that they're offering is based on MSRP; they couldn't do it any other way.

My thought is to forget about this deal. Pay off the 2000. Even in three years it'll still be worth $1500-2000.