Lifetime car payments.

[Cujet]

Originally Posted By: danez_yoda

One driver bought a car on 1/1/2000 and got a 20K 5 year loan at 4.5%.

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


I like your example, as it illustrates EXACTLY how not to spend money on a car. Don't purchase one for 5 years, just like "driver 2"

Taxi's Uber, the bus, rental cars and mom have a cost too....

Modest income individuals who desire a car, may not be able to place half their salary in a CD, while also paying for transportation using other methods. My brother tried this method. Unless you have good friends, you come out behind, alternative transportation is not a savings.

Note: I continue to mention "cost per mile", noticed it was mentioned above. Cost per mile remains relatively unchanged amongst class of vehicle, new or used. We must also recognize that purchase price may not be the major expense over a car's lifetime. In fact a well purchased vehicle's purchase price is often 1/3 of lifetime per mile expenses.

My 2009 F150
$33K new
$38K fuel so far (110K miles)
$15K insurance so far
I don't even want to talk about repairs, the multiple sets of $1000 tires and so on..,...

I could have purchased a used truck with 100K miles for 15K. Paid more in gas, repairs and insurance. Cost per mile is, in rough numbers, the same.

 

[WishIhadatruck]

Rust is always the reason I've sold my cars, no other reason. It is always to fix them than buy another car. Newer cars cost more in depreciation, they cost more to insure, etc. My cars are often old. I'm generally very fussy about what car I get, and sometimes they are unlike anything anyone else I know owns. Everyone knows our Woody Wagon, when we drive thru our small town, or my son drives it to school, everyone knows it is one of us. We love it and will miss it. I bought it when it was 10 yrs old for cash, it came from NC and was rust free. We've now had it another 11+ years and hope to drive it another 2 before it is too rusted. Still not much visible rust right now, but it exists in places. Bought my Suburban from TN, it was from GA and FL originally, still rust free. Bought it when it was 10 yrs old also. Sure, I paid $9800, by the time I did the upgrades I wanted, did repairs on it the first 4 years, always replacing with OEM parts, I probably have $15-16,000 into it total. That is about the depreciation on a new Suburban just in the first year and you can't buy a new 2500 Suburban anyways. My Cruze was bought new, but I got a great deal on it and will probably drive it for 300,000 miles or more. Almost at 90,000 already.

I did have a short loan on my Cruze but that was my first payment since 1996. No mortgage anymore either.

 

[Alex_V]

I don't, it seems the majority do, but it's a very uneducated and wasteful mindset.

The average owner has, say, between 60K and 150K on their car by the time it's paid off? If you can accept that for most models the treatment and maintenance of the machine is the only thing that will prevent it from reaching 250K in reasonably good shape, you'll only be making payments a maximum of half the time you own that vehicle which is much better than the mindset the OP speaks of. After the payments are done, put aside $100 a month for anything the car may need, don't let the car fall apart around the drivetrain, and you'll save thousands in the subsequent years you own the car.

The MO of the majority of repair shops doesn't help this equation, but once again an educated owner can save themselves from being at the disposal of hack mechanics that wind up with layers of poor repairs on top of one another until the car's pretty much unfixable - it's not an unwinnable battle... save for the rusty North.

 

[Andrew1972]

If you don’t DIY you still make payments of varying amounts for repair and maintenance beyond selling price.

A payment can help alleviate the variableness since you buy stuff in warranty and swap out shortly after.

I self warranty and make payments monthly to myself for auto slush fund

 

[grampi]

I have found the least expensive way to own vehicles is to buy them when they're one or two years old (let the original owner take the bulk of the depreciation), and keep them until repair costs exceed the value of the vehicle, while properly maintaining the vehicle the whole time. This usually results in a vehicle that lasts anywhere from 10 to 15 years, being completely paid off for the majority of that time...

 

[glock19]

I buy my cars cash, and since I work from home they only see around 6k miles a year (at this rate I'll die before the truck does). My wife on the other hand drives 35k+ miles per year for work, which means buying her a new car every 5-7 years. Luckily, she gets mileage reimbursement which covers the payments and the fuel each month.

 

[2010Civic]

My family buys cars that have been wrecked from the insurance auto auction. We fix them up (my dad had his body shop for close to 20 years), drive them for many years and usually break even when we sell them. Nobody in my family has a car payment.

 

[09_GXP]

In today's environment if you are buying a new car it makes the most sense to finance it, if you are able, at the extremely low rates. Then take the money that would've paid for the car in cash and invest it. Are investments guaranteed? No, but if you can be smart about it then it is all about your personal risk tolerance. I have two open loans right now and am in no hurry to pay them off. It's just something that is worked into the budget like anything else. I miss my college days of wrenching on cars but don't mind the reliability of having a newer car.

 

[jeepman3071]

I've never had a car payment, but I know many people my age who have always had one. I think a lot of it has to do with how someone was taught to manage finances, and what they could afford.

My dad grew up pretty poor. He was one of 7 kids. They usually shared a $500 car until they went to college and bought their own cheap cars. My dad has always saved up and bought cars with cash. The first vehicle he ever had a car payment on was his current 2013 Grand Cherokee, and it was because he got 0% financing and decided to use the cash elsewhere.

I have friends who started out with car payments on their first car at 16. They have never had a car that has been paid for, and to them it is just a fact of life. You have the rent, cell phone bill, student bills, insurance bill, and car payment. My current GF has a decent amount of debt, but she has been working to get it all paid off so she can be debt free hopefully by next year.

My sister just took on her first car loan, and at 25 she is in kind of a bad spot. She needed the car loan because she could only afford the monthly payments, she didn't have the ability to save much beforehand. Her payments are about $200 a month. I think a lot of people in this age range live paycheck to paycheck. She has an entry level job, rent, gas, and taxes are expensive in her area, student loans, etc.

 

[Anduril]

We've only ever bought one "new" vehicle, for the whopping high cost of slightly over $10,000, because the wife wanted the peace of mind that came with a 100k warranty and I was tired of doing work on vehicles for a while. Bought in Feb. 2017, owe $900 still.

Before that, she got 10 years and 137,000 miles out of the $2,700 car she bought in 2006 with 100k on it. I've gotten 10 years and about 90k out of the $4,000 car I bought around the same time, and with only 140,000 miles on it in a state where rust doesn't exist, it's probably got 5+ years left in it.

The truck was given to me by my dad, so that doesn't count, but if it hadn't been, we would have ended up with something much older and used, that probably would last quite a while because we only drive it maybe once or twice a week when we need to haul something, or on vacation to pull our trailer.

I'm considering getting an off-road SUV, likely an XTerra, in the mid-future. They're not made anymore, so buying new isn't an option anyways, but I see I can get a used one from 2008+ (when all the bugs were finally worked out) in the $9-10k range, and I can afford to wait a year or two, so I'm going to take advantage of a program that my employer offers where they'll set aside a percentage of my paycheck before I even see it and invest it in company stock at a 15% discount. I figure in 2 years or so, using 10% of each paycheck, I should have the $10,000 I need, and since I never saw the money at all, it's almost like it's not even my money.

The trick to keeping an old, high-miles car going without breaking the bank is having the time, place, and ability to do any repairs yourself. When the engine/transmission goes out, get rid of it. It also helps that we always had another vehicle one of us could use. Also lets me order parts cheaper online instead of paying local retailer mark up if I had to have them right now.

 

[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.

 

[Lyman]

I have only financed once in my life. It was a four year loan that I paid off in two years. The other vehicles that I have owned were all cash transactions.
Granted I don't buy new, I buy gently used and try to find them with maintenance records.

 

[Anduril]

Originally Posted By: Schmoe
Can't believe my 06 Accord is 11 years old and still running good with 130K.

Not sure why you'd expect anything different. 100k is just broken in for pretty much any modern vehicle.

 

[SeaJay]

If you want a new car every few years with the updated features that will likely require minimal down time for oil changes and such, that is what you do.

If you like to spend hours fixing your older car when something breaks, keeping it on the road for decades, taking alternate transportation when waiting for a critical part to arrive, well then that is not what you do.

Different strokes.

 

[MCompact]

I usually buy a 2-3 year old CPO and keep it for 8-10 years. That said, I bought my Club Sport and Mazdaspeed3 new because they were limited volume cars and I wanted the optioned a specific way. I usually finance at the cheapest rate and pay it off in 2.5 years or less; for example, I financed the M235i on a 60 month note in January 2016 but I'll have it paid off by early next year. Prior to that I hadn't had a car payment for 10 years.
The i3 is leased, but the cost is negligible- $105/month for 24 months.

I don't have to have the latest and greatest car, but whatever I own must be entertaining to drive.

 

[69GTX]

Been buying, 3-7 yr old low mileage vehicles for the past 40 years. Nothing like getting a nearly new, 22K mile car for a fraction of the cost of new. Twice, I purchased such cars from dealers on 5 yr monthly payments. Didn't like it.

 

[ZZman]

Well for most of my life we had varied car payments. Almost all were for used vehicles. Leased a couple times. Currently no car payments.

 

[Jeffs2006EvoIX]

This is a very touchy subject.

This is what I know. Cars are depreciating assets. Unless you own some ultra rare car, your going to lose your shirt buying a car. Especially a new one. Years ago, if you had a car with a 100k miles on it you were frickin lucky and it would be junk by then. Now? Heck my 17 yr old Dodge Grand Caravan with 150+k miles still runs like a swiss watch. Many cars in our family have over 100k miles and they are still like new.

But here is the rub.

Unlike cars of yesteryear where everything was metal, modern cars are made of more and more plastics, rubber, and these parts just fall apart after 10 yrs or so. In my Dodge Caravan, I mean how many MILLIONS of these vans did they sell? I am having trouble finding parts for it now. Not mechanical parts, but interior bits and moldings and such. So you may be limited to how long you can actually KEEP a car by how long you can buy parts for it. If that makes sense?

I for one love cars, I am in my mid 40's now and have bought over 20 vehicles. Sadly, I never OWNED any of them. They were all financed, and I traded cars all the time. I look back and realize now that I am a little wiser that I lost my shirt in so many ways. If I would have just kept the one or two cars, I could have had enough money saved by now to pay cash for a new home. You dont really think like that when your younger.

When your younger though, you can afford to make financial mistakes like buying cars, assuming you have a decent secure job. When you get older, you look towards retirement and realize the car is not important, but being financially secure into retirement is.

So with all this in mind lifetime car payments are not good. Not at all. You will lose so much money over the years in interest and fees that you could have put that lost money into a 401k or Roth IRA and let that money build you wealth vs having a nice car that no one really cares about but you.

In the end, we all know a car is just a means to get to point A from point B. How you look going to and from is all Ego and how COOL we must look. Who cares right? If I drive my Old Van, or my new Truck, they both get me to and from just the same, so why waste the money?

Buy a car you like, maintain it, keep it till it falls apart, save your money in the meantime and you will win in the long term

learn from my mistakes. Dont make LIFELONG CAR PAYMENTS.


Jeff

 

[Nick1994]

Depends on everyone's situation. Some people in the rust belt have cars that have brake lines, fuel lines, etc. rusting out. Gotta get a newer car.

 

[PandaBear]

Pay them now or pay them later, purchase price insurance registration fuel maintenance.

Just try to keep the combined cost low. I don't see a point of buying a super cheap car that use lots of fuel or break down a lot, or a super expensive car that is fuel efficient but have high maintenance cost or won't last long just for cost reason.

Maybe a 5 year old econobox with good reliability every 10 years? That's probably a sweet spot.