My wife and I are looking for a new car right now. Our situation is changing and we will need more room to haul around more people. The first 3 manufacturers, the so called "domestic" automakers, are losing sales, closing facilities and asking for a government bailout. At the same time, the other 3, the "foreign" manufacturers, are convincing more consumers to buy their cars and building more manufacturing facilities here in the U.S. For me, the definition of a domestic car is: it is built here in the U.S. and is uses American workers.
At first, we considered the GMC Acadia. It looks nice and has the 3 rows we are looking for. The price for a new basic Acadia with leather is about $35,000. We test drove it and it handled nicely and was comfortable. But, Consumer Reports recently put the Acadia on its "Unreliable" list of new cars. Also, if we wanted to finance it through GMAC, the GM unit that provides loans to GM car buyers, the interest rate is 13%. Granted, you can find better financing at a bank, but GM was offering 0% financing just this year.
We started doing more research on what car to purchase and came across the Honda Pilot. Motor Trend, Car and Driver, Consumer Reports give the 2009 Pilot great reviews. So, we took it for a test drive. We loved the car. It ran smooth, felt secure and stable, and had plenty of room to fit 8 and luggage. The Pilot has more standard features than the Acadia and MSRP is about $1,000 less than the Acadia. On top of that, Honda Financing is offering 1.9% or 3.9% financing depending on the length of the loan.
Running the numbers, the monthly payment on the Acadia would be $938 for 48 months. The Honda Pilot monthly payment would come to $767. Total savings of $171 a month. Take those savings and invest them for 4 years in a 60% stocks, 30% bonds, and 10% cash allocation. This has an average return of 9.41% and would give you an extra $10,000.
For those 4 years, we drove a car that more than likely did not have any major mechanical problems, provided a pleasurable driving, and Honda is almost certainly here to service the warranty. Plus, we saved a substantial amount of money to use on other priorities.
