Lifetime car payments.

[Gimpy1]

I bought my 05 GTO for cash in 07 and am still driving it today. Due to the nature of this car parts are very expensive and hard to find, but I will not sell it due to its rarity (less than 40000 cars were sold in the US mine is 1 of 400 because of the options and color), it only has 85,000 miles and I will soon be retiring the car from DD status to a weekend fun car. On another note, when I was a total loss/fire/ theft adjuster investigator and appraiser at a non standard insurance company I frequently saw people in nice SUV's at 24.99% APR's and the vehicle value was nil. These folks had taken out 10 or 15 K loans with crazy APR's and where so far upside down that it would take 10 years to get right side up. All that just to drive a fancy Tahoe or Escalade from a tote the note lot and 150000 miles (not to mention financed wheels and tires from Rent A Wheel). The total loss eval (ACV) would usually less than 1/4 of what was owed. It was simply absurd. I was always taught that a car is usually the 2nd most expensive thing you'll ever buy, take care of it and keep it until the wheels fall off of it or it no longer is reliable or suits your needs (like having a 2 door and a newborn baby). Nope I'll keep my Goat, and when I retire her. I buy a 5 or 8 year old Honda, and start teaching my 7 year old daughter how to fix and maintain cars which in today's disposable society is a dying skill.

 

[PandaBear]

Originally Posted By: HorseThief
Isn't that what gap insurance and car fires are for? I'm confused.


and that's also what jail is for too.

 

[dogememe]

I've had one vehicle with payments. New-ish, low miles... Figured I'll get years of trouble-free service out of it while I pay it off. Nope, the transmission died a year later, and that was after hundreds of dollars in work over the course of the year. That was the biggest mistake of my life. Only pro to this was everybody complimented how nice of a vehicle I had after "all those junkers" but to be honest with you, this is literally the least important aspect of car ownership.

Since then I've only gone with cheap used high mileage vehicles. I bought the 08 Escape with like 210K miles for $1000. It needs a $300 door and then it'll look nicer than most cars I see on the road. In the mean time it's treated me well. Started up every time. NO repairs beyond a $10 PCV valve and some LubeGard Red for the transmission.

I just sold my awesome mechanical condition 92 Chevy 1500 with 240K miles to pay off some credit card debt. I am going to clean up and fix up the 05 Ram 1500 I was given and sell it, and with that money I'm going to buy a Suburban. I'm going to keep that Suburban and my Escape for a long time.

No reason to have something newer and fancier when I have two vehicles that are reliable, cheap to get parts for, easy to repair, and will get me from point A to point B cheaper than anything I could buy new. Even if I have to buy a transmission and engine in a year that beats payments + the high cost of comprehensive insurance required for financed vehicles. And before you say, yes, but that's a large expense out of the blue and all at once vs a consistent payment over time... that's what credit cards are for.

As for the reliability, that's one of the pros of having two vehicles. Even if you don't have two vehicles, in my like four years of driving, I have never once been late to or missed work for car issues.

 

[fenixguy]

I've always had high mileage vehicles. My first car that I bought (grandpa gave me my first vehicle) had 99,000 miles on it and I paid it off in less than a year. Drove the snot out of it till 160,000 and wanted something more economical. I bought the '01 Civic with cash from selling my old car and had plenty left over. The wife and I decided we needed something besides two Civics so we bought the '08 CR-V with 80,000 miles on it. Paid it off in less than a year. For some strange reason, I decided I needed a truck to replace my old rusted out Toyota (the one grandpa gave me) so I bought the Frontier with 7,500 miles on it (at a substantial discount from a new one). I would sell the '00 Civic but the wife loves it and we wouldn't get enough out of it to make a dent in anything else.

My wife is getting her PhD at the moment and we're renting an apartment for her for the three nights a week she's at school. That certainly put a damper on us paying off the truck fast! She should be done with the apartment next spring and that money will go to paying off the truck. I hate car payments!

Moral of my story: No, you do not have to have a car payment all the time unless you want to. It just depends on what you value as important. Some people just like new cars, some people get bored after a while, some people like having a warranty... I like to go on week-long vacations and put miles on a car that's already well over 100k and paid for with clearance oils in the sump and Fram Ultra filters used 2 or 3 changes.

 

[exranger06]

All of mine are paid for except for my wife's car. None of them were financed except for the wife's car. We had a Subaru we were planning on paying off and keeping for a long time. Then we had kids and quickly realized it wasn't big enough for baby seats, strollers, and other stuff we need to carry. So we traded it in and got a bigger car, also financed because we didn't have the cash to buy it outright. We will hopefully pay this one off and keep it a long time and will hopefully have enough cash saved up by the time we need to replace it to not have another car payment.

I drive old cars and keep them until they're dead. Even though they're old, they're still extremely reliable and rarely need repairs. If they do need repairs, I fix it myself at my own pace. I have other vehicles I can drive while one is down.

 

[Eddie]

If you can't afford to buy cash then you can't afford it. I rebuilt used vehicles for many years until my savings allowed me to pay cash. The only time I didn't pay cash was 0.9% financing while I was making 8.2% on a CD. Ed

 

[Alfred_B]

Originally Posted By: danez_yoda
I just did an analysis for my nephiew who is graduating college about buying cars. back in 2000 I was into dave ramsey and he preached buying cars with cash. I did a spreadsheet back them simulating two drivers.

One driver bought a car on 1/1/2000 and got a 20K 5 year loan at 4.5%. (some of yaull remember when loans were 12%)
driver 2 waited 5 years to buy his car and put the same amount driver 1 was paying on his loan into a CD making 1.5% APR

so in 2005 driver traded in his now paid off 5 year old car and got a new one which now cost 20% more (inflation). He got a loan for the new car price minus the trade in value. I estimated about a 30-40% trade in value if hes lucky.

Driver 2 walked in with his checkbook and bought the same car as driver 1 for the same price but paid cash. He then proceeded to put the same amount that driver 1 was now paying on his new loan into the 1.5% account to pay for his next car.

Every 5 years after that for 40 years this repeats.

In 2040, driver 2 has spent $53K less on the same cars. drier 2 bought since 2005.


Now the most important thing I told him is the different mindeset when you are paying cash vs a loan. $200 for lusterizing sealant. (loan - no problem, cash -- [censored]???) $500 floormat package!! All these little extras will get discussed when cash is getting laid out on the table vs just a signature on the page and a "few extra dollars a month."

I think this alone drives the paying cash savings better than simple interest calculations.


So driver 2 walked for the first 5 years of this simulation?

 

[Alfred_B]

Originally Posted By: Schmoe
I got no choice. The wife has a long, long commute to work, in the tune of 25K miles a year. I keep her in new vehicles for two reasons.....she feels safer and secure and I don't worry about her having a break down and freaking out 50 miles from home. You can tell which is her car and which is mine. Can't believe my 06 Accord is 11 years old and still running good with 130K.


For such extensive amount of time on the road, she needs to have a safe and reliable car. It's simple risk management as the chances of getting into an accident are higher.

You don't want to skimp on safety and reliability if you can.

 

[bigjl]

My wifes Smart ForFour is partly for Work Use, it was a good deal, nearly £5k cheaper than a new one as it was pre registered to meet sales targets with only 90miles on it.

Our 2014 Kia Picanto was used by my wife for work and has now been passed on to my daughter.

My S Class is mainly for work use.

The Picanto still has 3 years of the Manufacturers Warranty left and should see her through University.

We also have a 2007 Renault Clio Dynamique 1.4 petrol that i picked up at Auction for around £1500 in March. Had roughly 55k on it when purchased and it now has 63k and has cost nothing as it has just been serviced and MOTed when bought and had a recent Cambelt. Is probably still worth £1600.

If i have a car with some value i don't like it being out of Warranty.

If the Clio needed an expensive repair i would just scrap it.

I also think as i am getting older and more arthritic i don't want to spend my time fixing cars, i don't mind doing basic servicing and brakes but nothing more involved.

I don't see the point of Leasing unless it has tax advantages.

 

[wtd]

As you can see in my signature, I own mostly older vehicles that I tend to keep for awhile. Other than the Mustang, all of the vehicles I own, I have had for over 10 years at least with 30 years being the longest in the case of my 70 Monte Carlo.

I still owe money on the Mustang but it will be paid off next August and it only has 27,000 miles on it in over four years. I bought my 98 chevy K1500 new and have had it almost 20 years with only about 135,000 miles on it. I don't like car payments but I'm not apposed to them either as I like vehicles and sometimes just want something new.

 

[yugrus]

How about a person who's making at least double the loan interest rate investing elsewhere, after tax. Like their own business, stocks, options, efc. Heck, many blue chips even pay 3+ % dividend currently, not to mention high-yielders. Plus, if the person has business, most or all car payments could be deductible.
If you consider different people's circumstances, it makes sense all of a sudden.

 

[doitmyself]

Originally Posted By: yugrus

If you consider different people's circumstances..........

That's generally not done at BITOG.