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Tuesday, August 4, 2009

Was My Van Really A Clunker? My Wife Needs Convincing!

So, here I was, all ecstatic about having taken advantage of the cash for clunkers program to get rid of my van in exchange for a new car. I thought the timing had been perfect because there are a lot of ways in which this process could have broken down, leaving me with my van.

Let us go back to explore some of the history behind the van purchase decision and what has transpired since then. We bought the van in 2000 right before my second child was born. We had only one car at that time, and my wife stayed at home with no transportation when I was at work. We knew we needed a second vehicle so that my wife could be mobile while I was at work. The decision was made to get a van instead of a car because we had either my parents or my wife's parents staying with us to help take care of the kids. With the arrival of the second child, it would be impossible to accommodate 6 people in any car, so we bought a van.

To give credit where credit is due, the van did its job admirably over the years. We had lots of room to shuttle everyone in the family around without having to take two cars. It also had enough room for us to take kids to movies etc., when we had birthday parties. Having a 7-passenger vehicle was quite advantageous when it was really used to the max.

Over time, though, the number of occasions when I actually carried 7 passengers in the van went down significantly. Neither set of parents has lived with us in about 4 years now. I commute in the van because my wife is more comfortable driving a smaller car. Essentially, I was putting about 9,000 miles a year on a very fuel-inefficient vehicle just because that is all we had.

About a year back, I did some calculations to see if it would be worth it replacing my van with something more fuel-efficient. At that time, the van was still in good mechanical condition, so it was purely a fuel-efficiency play, not anything to do with improving my commute comfort or convenience. I figured my van consumed about 5 gallons of gas every 100 miles. I could probably get a good car that could do the same 100 miles on 3 gallons of gas. Over 9,000 miles, that translated to 180 to 200 gallons of saved gas. Even at the peak of oil prices, last summer, when gas hit $4.50 a gallon, I would save at most $1,000 a year by making such a switch. A new car would be at least $10,000 out of pocket, more realistically it would be closer to $15,000 out of pocket. So, even at peak gas prices, it would take me 10 to 15 years to recoup my investment based purely on fuel efficiency.

So, I stopped my research and continued driving my van. And then came all the problems that made the van such a pain in the neck to have. First, the repair bills started mounting for things that rarely break on new cars, but which break more frequently on old vehicles just due to age. My van's knock sensor went kaput and had to be replaced at a cost of almost $1,000. Then, at the end of winter, I noticed that the front passenger door was not closing properly. On closer examination, I figured out it was because rust was building up in the door panel and there were blisters in the door panel on the inside and outside, interfering with proper operation of the door. A body shop told me that I could mitigate the problem by replacing the door panel for about $2,500, but there was rust in other places too, such as the floor panels, wheel wells, etc. Replacing all of that was impractical, and they would eventually start causing problems by making the van structurally less sound and also allow water to get into places it should not, possibly causing other kinds of breakdowns.

Door panels rusting out on the passenger side

View of the door from the inside, showing rust damage all along the bottom

Door jamb area, showing rust blisters and other damage

Another view of the passenger side, showing the floor beam bent upwards in places due to rusting

Rust in the wheel well area

When summer started, I suddenly noticed that the air-conditioner was not working. I spent $300 on diagnosis and the verdict was that I would have to replace the radiator and condenser for about $800. And then, I started having problems with my battery. It was going to be $150 to replace the battery if I was lucky and it was just the battery having problems. If the entire charging system had a problem, it could end up being a $500 to $1,000 bill.

In top condition, this van is worth about $5,000 if I sell it to a private buyer. In trade-in value, it would be worth only about $4,000 even if it was in perfect condition. Essentially, I could spend about $3,000 to $4,000 on the van and make it worth about $5,000 at most. I was pondering all this when the cash for clunkers program came out, and I figured out that I could actually spend nothing on the van and make it worth $4,500. I was afraid that spending $3,000 on the van was just the tip of the iceberg as more and more things would keep going wrong with it as it ages. A new car would put a stop to that slow bleeding once for all.

So, things really accelerated at this point as I did all my research and then did the trade with hours to spare, literally. I thought I had gotten a good deal all around but I faced a new problem: my wife was not convinced that I had done the right thing. She had expressed minor misgivings when I talked about replacing the van with a car, but I think they were minor misgivings only because she did not actually think I was going to do it so soon. I am usually a very deliberative person who takes a lot of time to do his research and come to a final decision. Getting rid of the van and replacing it with a car in a week's time was just something my wife could never have predicted. The problem is that I had simply not had a chance to explain all my research to her. Most of the research was done at work. I did not have a chance to have long conversations about this with my wife because we had guests at home. And right after the guests left, I had very little time to put my research into practice if I wanted to because of the bad planning on the part of the government.

So, when I drove my new car home yesterday, the welcome was less than enthusiastic. My kids were thrilled with the new-car smell and the nice appointments of the car. But my wife looked it over for a couple of minutes, said something like, "yeah, it looks good", and then went back inside the house. I had my dinner soon afterwards and then started the inquisition!

What are you going to do without a van? You can't even pick up your friend's family or my brother's family from the airport when they come for a visit.
We will rent a van for those occasions. A van rental costs about $60 a day. Even if I have to do it 10 times a year, it works out cheaper than spending $600 - $1,000 a year on extra gas, leave alone the higher maintenance and repair costs.

Why couldn't you have replaced the van with another van? The cash for clunkers program would not pay for such a replacement. I would have gotten $2,000 for my van and paid $25,000 for a new van, making the total outlay about $23,000 rather than $10,000. And on top of that, there would have been no savings in the long run in fuel costs.

What exactly was wrong with the van? I thought it was in good condition. Our friends bought vans at around the same time and none of them is replacing their van at this time. The air-conditioner does not work. The battery or charging system seems to be ready for a replacement. There is rust all over and the passenger side door is so rusted up that it does not even close properly sometimes. There could be problems with our friends' vans also and we may not know about it. Just because they say it is in pristine condition does not mean that it actually is.

Why couldn't you just repair it and go on using the van? It would cost a lot of money and there is no guarantee that the money would be well-spent because the van is getting old and could develop new problems that would require more money to fix.

Is it normal for a vehicle to last only 9 years? And the van had only 83,000 miles on it. That seems a little premature for it to be worn out so completely. The average life expectancy of a vehicle is supposed to be 12 years according to the US DOT. I am sure that is an average across the entire US and includes car-friendly climates like California as well as more car-hostile climates like we live in. I would say, where we live, the average life of a vehicle is probably about 10 years. Most people in the US replace vehicles about every 5 years (once the old car is paid off or comes off lease). Our van seems to have been a little less durable than average, but not by a huge margin.

Our other car is now 6 years old. Will we have to replace it in another 4 or 5 years then? Perhaps. The advantage that car has is that it has not been driven much. It has only 30,000 miles on it, so hopefully it is good for a few more years than the average.

Our friends bought Toyota's and Honda's when we bought our Nissan. Did we make a mistake buying a Nissan? I have no idea. It does look like our vehicle did not last as long as theirs. But then, we paid about $10,000 less for our van than they did for theirs. Is $10,000 worth it for a couple more years of life? No one can say.

Why did you make this decision so suddenly? Did you do proper research? What if you have overpaid significantly for the car or not gotten the best deal for the van? The decision was quick, but not hasty. A lot of research did go into the decision. Most of the research was not done with you by my side, so it seems as if there was no research done. The reason the decision had to be quick was because the window of opportunity for this deal was extremely small and was practically closed in spite of the quickness with which I pursued the deal.
The car was bought at $2,000 below MSRP and $1,500 below invoice. It was about $1,000 cheaper than even the CarsDirect price and CarsDirect was the service we used to get a very good deal on both the van and our previous car. Another dealer wanted almost $2,000 more for the same exact car, so I am sure I did not overpay for the car. I confirmed with the dealer that our van was worth only about $2,000 in trade-in value in its current condition. Since we got $4,500 for it in trade-in value, we could not have gotten a better deal than we did right now.

I am sure the questions will continue coming in the next few weeks as my wife mulls over her previous questions and my answers to them. I am not sure she has gotten over the loss of the van and the flexibility it provides to our family (more passenger capacity, a lot more luggage space, etc.). But hopefully she will see that this flexibility came with a high price tag that is difficult to put one's finger on, and therefore gets ignored in the math. Hopefully, she will also see that savings day-in and day-out is better in the long run even if flexibility has to be bought occasionally in the form of van rentals when the need arises.

2 comments:

Delsie Maidens said...

Your wife must have loved that van so much. But don’t worry. She will soon understand that the car is a good investment. Choosing a vehicle should depend on your needs and priorities. One of the most important aspects of choosing a family vehicle is the reliability and amenities that the car comes, with like ample space, a large trunk and safety features. Voice these needs to your car dealer so he can recommend a perfect car for you and your family.

Brittanie Holderness said...

I agree with Delsie’s reasoning – I think the van must have held a lot of sentimental value to your wife, and therefore found it hard to say goodbye but liked the new car all the same. I think that you were right to just buy a new car already, considering that problems kept popping up. You might have ended up saving more money by buying a new car instead of constantly spending on repairs for the van.

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